Overview of the Incident
Morningstar DBRS, a credit ratings agency, estimates that total insured losses from the 10 February 2025 collision between the MV Solong and MV Stena Immaculate could range from $100 million to $300 million. The collision resulted in significant damage, a fire, and a fuel spill in the North Sea. While most of the crew were safely evacuated, one sailor from the Solong remains missing.
Investigation and Potential Sabotage
Given the Stena Immaculate‘s role in the US government’s Tanker Security Programme, an investigation has been launched to rule out the possibility of sabotage, a factor that could further complicate insurance settlements.
Insurance Policies and Coverage
Morningstar DBRS expects multiple insurance policies to be activated in response to the incident. Hull and machinery (H&M) insurance will likely cover the structural damage to both vessels. Preliminary assessments suggest they may be declared total losses. The estimated insured value of the ships, including salvage costs, is between $50 million and $100 million.
Environmental Impact and P&I Insurance
The financial burden is expected to be heaviest on protection and indemnity (P&I) insurance, due to the environmental consequences of the fuel spill. The extent of pollution cleanup required will determine the final cost, but these claims could exceed those related to hull damage.
Role of the P&I Clubs
P&I insurance, provided by mutual insurance associations known as P&I clubs, offers shipowners and operators protection against third-party liabilities, including pollution mitigation and wreck removal. Members of the International Group of P&I Clubs share liability above a $10 million threshold, with additional reinsurance available for claims exceeding $3 billion.
Cargo Insurance and Liability Disputes
In addition to hull and liability insurance, cargo insurance will also play a role in the claims process. The owners of any cargo aboard the Solong and the Stena Immaculate are likely to file claims for their losses. However, disputes over liability could delay settlements, particularly if one vessel is deemed responsible for the accident.
Financial Impact and Industry Concerns
Morningstar DBRS estimates that total insured losses from the incident will range between $100 million and $300 million. While this figure is expected to be manageable for the global marine insurance industry, the agency highlights growing concerns over the long-term profitability of marine underwriting.
Future Implications for Insurers
Although the event is not expected to have a material impact on the credit ratings of marine insurers, Morningstar DBRS warns that rising claims costs could lead to changes in underwriting strategies and pricing models in the coming years. As environmental risks, regulatory changes, and geopolitical instability continue to shape the global shipping industry, insurers must navigate an increasingly complex risk landscape.
