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Pandemic-related shortages, supply chain disruption, and a shortage of skilled workers is putting even more pressure on marine contractors.

By

Marine team, North America, AXA XL

In the US, nearly 9% of the country’s 612,677 bridges are considered structurally deficient and the average age of those bridges is 67 years. Even those bridges not considered deficient are an average of 40 years old. The country’s bridges need updating.

That is just one of the myriad issues the marine construction industry must face, including pandemic-related shortages of materials and manpower. Amid a booming business, contractors are dealing with a shortage of supplies, and an ongoing dearth of skilled workers that is putting more pressure on current employees to get more done.

Add to that the growing recreational boating market, expected to reach $22.92 billion by 2026, an increase of 11.02%, and a 2020 hurricane season, which was the most active on record.

All of this comes as a double-edged sword for the marine contractor community. The growing workload from marina expansion and storm recovery allows the industry to expand, yet the lack of materials and skilled workers puts downward pressure on the industry. Marine contractors perform risky work in and around water. Therefore, protecting their property and assets requires considerable attention to managing on-the-job exposures.

The Human Element
Working on or near water is fraught with issues. Contractors can be swept off their feet by wave action, tide action, strong currents or swell from passing water traffic. Working conditions can change quickly, increasing the dangers that maritime construction workers face daily. Consider the following examples:

  • In June 2021, a worker was seriously injured when he stepped onto a tug vessel and fell onto the wharf when the boat’s crane was triggered, dragging the boat away from the dock. Despite having had training, crew members accidentally triggered the crane’s slewing mechanism, which caused the fall.
  • In August 2020, a pipeline explosion near Corpus Christi, Texas resulted in lawsuits filed against the company responsible for operating a dredge that hit the pipeline. The explosion killed four people and injured six others.

The more than 400,000 maritime workers across the country are exposed to chemical, environmental, and respiratory hazards, but the most common injuries for the marine construction industry include:

  • Overexertion
  • Slips, trips and falls
  • Contact with objects or equipment
  • Transportation incidents
  • Being struck by falling objects

Operating heavy equipment around waterways poses unique safety challenges. Along with the usual wear-and-tear damage, equipment can be damaged or deteriorate due to water damage or the damage caused by sea air, or from improper ballasting during operation. Pumps and motors can become overstressed, and operators may not know how to conduct proper maintenance checks.

Hazardous conditions - intensified by worker shortages, supply chain disruptions, and increased third party liabilities - could bring operations to a halt if not mitigated properly.

Sharing the Waterways
According to the Coast Guard, there were 26% more accidents in 2020 than in 2019. The top reasons include:

  • Operator inattention
  • Operator inexperience
  • Improper lookout
  • Excessive speed
  • Machinery failure

With more vessels on the waters, third party liability risks increase. Inexperienced operators may collide with marine contractor vessels while they are performing their work, particularly at night where they may not be seen. Operators may come too close to contractor operations, endangering themselves and their passengers as well as the contractors.

Worker Shortage
As COVID-19 ground a sizable portion of the maritime and marine construction industries to a halt, skilled workers looked elsewhere for employment. The specialized work performed by marine contractors makes the shortage even greater. With so many gaps in experience, risks to safety increase significantly.

Supply Chain Hiccups
Supply chain issues due to pandemic-related manufacturing and shipping delays have further exacerbated the problem, slowing the ability to get materials – everything from lumber to computer components for equipment. Shipping is also being delayed even more by the inability to get vaccinations for seafarers, and outbreaks of COVID-19 on ships is further disrupting trade.

Protecting Operations
As pandemic restrictions lift and operations ramp up again, marine contractors face even more risks. Hazardous conditions - intensified by worker shortages, supply chain disruptions, and increased third party liabilities - could bring operations to a halt if not mitigated properly. Your broker and AXA XL’s marine construction experts can help identify changes in your operations, especially when outside forces impact your risk portfolio. We can then help you build an insurance program that protects your business.

Here are some of the insurance products available to marine contractors:

  • Marine General Liability includes coverage for products and operations liability for work performed from watercraft.
  • Marine Contractors’ Liability provides coverage for property damage to marine structures.
  • Commercial Hull and Protection & Indemnity (P&I) protect vessel owners against physical damage to the ship and legal liability.
  • Umbrella provides excess liability coverage for companies with major marine exposures. Such policies cover both non-marine and maritime liability exposures - that is, protection and indemnity, general average, collision, general liability hazards, among others.
  • Builder’s Risk and Installations includes materials, labor and reasonable overhead and profit
  • Contractor’s Equipment provides broad coverage for your equipment
  • Property includes insurance for buildings, contents, and business interruption
  • Auto can also be packaged with the marine contractor’s program

Your marine contracting business is unique. Our comprehensive insurance packages coverage specifically designed for marine contractors, simplifies insurance buying, and minimizes the potential for gaps in coverage should a loss occur. Marine insurance carriers also employ marine claims specialists who understand the specific maritime laws and liabilities that apply when working on or along the water.

Smooth Sailing
As the marine contracting industry responds to our country’s vital infrastructure and maritime needs, insurance becomes a vital part of maintaining operational resilience. Industry demands are growing. So too are the risks. We’re here to help.

 

About the Authors

Stephen Clark is the Head of Hull & Liabilities, Marine, North America for AXA XL and Mike Perrotti is the Head of Inland Marine, North America at AXA XL.

 

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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.