Oman’s maritime sector hit by higher insurance premiums

The inclusion of waters off the Sultanate in a list of areas of ‘perceived enhanced risks’, following recent acts of sabotage targeting tankers in the Sea of Oman, is saddling merchant vessels transiting these waters with higher insurance premiums. Among those impacted by a spike in insurance premiums are National Ferries Company (NFC), the wholly government owned coastal transportation services operator, and Oman Shipping Company, the Sultanate’s ocean-going freight transportation provider, it was announced here yesterday.
The revelations came during a ‘majlis’ hosted by Asyad Group — the Sultanate’s logistics flagship representing government stakes in Omani ports, free zones and multimodal transportation companies — at the Oman Convention and Exhibition Centre (OCEC). Top executives representing all of the subsidiaries operating under Asyad’s auspices participated in the majlis.
In response to questions from the media about any fallout for Oman’s shipping and maritime industry stemming from the recent tanker attacks, officials representing the Port of Sohar, Oman Shipping Company and NFC acknowledged that the incidents had led to a sharp increase in insurance premiums on ships plying the Sultanate’s territorial waters and the wider Sea of Oman.
Mark Geilenkirchen, CEO of Port of Sohar, said the Sultanate is now subject to higher marine insurance premiums following a decision taken by Lloyd’s of London, the world’s leading insurance market, in the wake of the first set of tanker attacks in the Sea of Oman last month.
Geilenkirchen explained: “Lloyds of London has a Joint War Committee that looks at insurance risks (in areas of conflict). Oman has been added to the list of war zones (that become subject to higher insurance premises), based on the perception of an increased risk of operating in Omani waters, although not as high as in other places. That’s a worry we are addressing together with other logistics players and ports in Oman. We are trying to go off that list again. But this is normal in any region when risk increases: you get added to the list, insurance premiums will go up, and then you have the task of convincing people that the risk is minimal and insurance premiums can be lowered once again.”
The CEO stressed however that the tanker attacks had no impact on vessel movement in and out of Port of Sohar. “It remains calm, and I hope it continues to remain calm. That’s good for all of us!”
A representative of Asyad Group, speaking on behalf of Oman Shipping Company, said the state-owned firm had taken immediate precautionary steps to safeguard its vessels and seafarers when word got out of the attacks.
“Oman shipping has got a very stringent and well-governed process of dealing with such incidents. When they happened, we followed our agreed protocol — all of our vessels were handled in the right way. We communicated with the captains and moved away from the area, making sure the cargo they were carrying, and obviously the primary focus was our people, were safe. So there was no impact on Oman Shipping at all. Going forward, we are very vigilant, and we are keeping our vessels very safe. In terms of insurance premiums, we are currently addressing (these issues), ensuring that we are negotiating to make sure that the impact is minimal in terms of premiums.”
For National Ferries Company, the impact from higher insurance premiums was immediate, said Mehdi al Abduwani, CEO. “We have seen a 36 per cent variation in insurance premiums since the (tanker attacks) happened. This has impacted our financials.”
NFC operates a fleet of high-speed ferries for passenger, vehicle and freight transportation connecting a number of coastal communities along Oman’s coast. A total of six crude and petrochemical carriers were the target of sabotage in two sets of attacks occurring in the Sea of Oman over the past two months.