Sustainable Recycling Interest - new cover supports clients facing 'total loss' sustainability challenges
Every year, around 1,000 of the world’s commercial vessels reach the end of their service lives and become waste. Recycling these ships and their components is the most environmentally considerate way of handling such obsolete vessels. However, only a small proportion are sustainably recycled with workers’ safety and the environment in focus.
The European Union has, through its Ship Recycling Regulation (EU SRR), sought to establish a system that ensures that all end-of-life EU-flagged vessels are sustainably recycled at one of its pre-approved yards.
Building on the requirements of the 2009 Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships, the EU SRR goes further, demanding higher standards for both worker safety and environmental considerations. The European Commission requires that all recycling facilities on the EU pre-approved yards list have been audited and certified by independent third parties. The commission has the authority to add or remove facilities from the list.
Many of Norwegian Hull Club’s clients take an active stand when it comes to working towards the sustainable shipping industry of tomorrow; they want to be part of the solution. To them, their responsibility doesn’t end until their ships have completed their operational lives with due consideration shown for the related social and environmental aspects.
However, if one of their vessels ends up becoming a total loss or constructive total loss, far from an EU SRR-approved recycling yard (and depending on the legal requirements in the jurisdiction the casualty occurs), a responsible ship owner may face having to cover the additional uninsured costs of transportation to an EU-verified yard for recycling at their own risk and cost - despite having reputable P&I insurance.
Norwegian Hull Club is deeply committed to knowledge sharing and a hands-on approach to loss prevention, emergency response and the claims handling process, to the benefit of our members and clients. Concern for lives, health, the environment and property set the agenda when an incident occurs.
We know that experiencing a total loss or a constructive total loss is a stressful situation for ship owners and managers; in such circumstances, we believe they should not have to consider compromising their commitment to sustainability as well.
Norwegian Hull Club therefore has a solution to such challenges in accordance with the EU SRR, independent of vessel flag, to support our clients and the industry in our common efforts towards a more sustainable future for all: Sustainable Recycling Interest.
A subsidiary to ordinary P&I cover, Sustainable Recycling Interest is triggered by a total loss or constructive total loss and covers the assured’s added costs for recycling the vessel at an EU-verified yard. Transportation and recycling costs are included, as these costs reduce the proceeds of sale. Cover limit is up to USD 5 million and is available to both existing and prospective clients.
Typical issues SRI provides cover against include:
• Recycling / disposal of a Total Loss or Constructive Total Loss independently of legal requirements to do so, in accordance with the EU requirements on ship recycling for EU-flagged vessels;
• Gaps in P&I cover for sustainable recycling of a wreck in certain jurisdictions.
You can read more about the cover on its product page here or contact your dedicated underwriter or the global specialty team to discuss a solution.