The global offshore energy and shipping sectors are under a greater than expected threat from climate change as extreme weather becomes more commonplace.
This is among the findings of a new report from specialty re/insurer, Chaucer. It says that assets such as oil platforms and wind turbine installations are on course for a material change in risk exposure from worsening extreme weather conditions, including changes in storm patterns.
Chaucer cautions that some offshore facilities may not be designed to sufficiently withstand such environmental challenges and are calling for industry and the insurance sector to better understand the evolving risks. Wind energy faces a particularly acute threat as the offshore sector continues its rapid growth. Manufacturers are advised by the group to evolve their designs to withstand the potential for greater frequency and severity of catastrophic weather events.
The shipping industry, meanwhile, is facing more threats from climate change than previously anticipated, including more severe storms, sea level rises and coastal erosion, with damage to lower-lying ports like Rotterdam and those in South East Asia a particular concern, as well as the increased risk of grounding due to coastal erosion. Ocean salinity changes are also anticipated to make ships gradually less stable as the issue progresses.
New shipping routes may develop as a result of these changes, according to the report.The Northwest Passage above North America could become a viable commercial route, for instance. Canada and the Great Lakes could see greater use as routes into North America, while the cruise industry could also expand its footprint across the poles.
James Brown, head of Natural Resources at Chaucer, commented: “The whole insurance industry needs to start working with their customers to adapt to climate change and to support increased resilience of their infrastructure, facilities and supply chains. Insurers have the opportunity to drive tangible change with marine and energy customers, brokers, regulators and governments.
“Collective action is imperative to ensure we manage these risks, mitigate against future impacts and create new solutions for emerging opportunities in a rapidly changing market.”