(Reuters) – When Captain Will Whatley steers a ship through Arctic waters, he's fully aware of what could go wrong.
Dual manpower needed to navigate. Lookout shifts are held for just one hour, so sailors do not lose concentration and lack a lot of liquid ice. Large icebergs appear on radar, but smaller "mountainous pieces" in truck size – even more dangerous – can be missed, says the captain.
The cold can freeze equipment and the earth's magnetic field disturbs compasses. If something goes wrong, "you're so far from help," said Captain Whatley, 31, who sails through Arctic and Antarctic waters for the British Antarctic Survey.
As climate change opens up new sea routes, Polish captains such as Whatley are sought after for Arctic travel that could save money on flights between Europe and Asia. But when activity in Arctic waters picks up, insurance companies try a fundamental question: If something goes wrong, who pays?
To date, it is unclear that the cost of a major accident would be fully covered by insurance. Damage from a ship that wastes oil, hits an iceberg or gets marooned can end up in the hundreds of millions of dollars.
"This is very new territory," said Helle Hammer, chair of the International Union of Marine's political forum. Insurance (IUMI), the leading association for the global marine insurance market. Without many years of data on the number of injuries, accidents, collisions or oil spills, she said, "it is impossible to do the risk modeling."
More than ten insurance companies or brokers interviewed by Reuters said they still had little knowledge of the region to resolve all liability issues.
In recent years, marine insurers have generally paid more for ship damage than they collected in premiums according to IUMI data. Brokers say that some withdraw from the market completely. So the appetite to take risks in the Arctic market is not great.
It is "not like the rest of the world, with proven shipping routes and known risks," said Michael Kingston, an Arctic Marine consultant and adviser to the Arctic Council, an intergovernmental forum on Arctic issues.
For insurance companies considering new ice roads, there is a dramatic precedent: the Titanic, which hit an iceberg and sank in the icy waters of the North Atlantic in April 1
That cruise ship sank in relatively familiar waters. But only about 6% of the Arctic Ocean is mapped, said Ian Church, an acoustic mapping specialist at the University of New Brunswick.
Improvisation of premiums
The risk may be worth it. A journey between Europe and Asia via the North Pole takes about 30 days – at least 10 fewer than the Suez Canal route. It can save a cargo ship transporting iron ore or grain $ 200,000 or more on fuel, food, crew pay and tolls.
Such potential savings attract large shipowners – to transport cargo including natural gas and oil, mostly from Russia, Canada and China. – to water where so far most fishing trawlers have dared.
The North Sea Road along Russia's Arctic coast is becoming increasingly popular. During the four years until 2019, the number of trips that used at least part of that route increased by 58% to 2,694, according to a study from the Norwegian University of Norway.
"This trade will get bigger and bigger," said Andrew James, CEO of the British Insurance Broker's arm and risk manager Arthur J. Gallagher & Co. "Underwriters have to answer that."
Larger cargo ships involve a higher risk. Complete with cargo, crew, fuel and ballast water, such a vessel is much more difficult to maneuver or tow than a trawler.
So far, the most common problems have not been hitting icebergs, but equipment that freezes and grabs.  Of the 512 reported incidents up to 2019, machine damage or failure accounted for almost half, according to a 2020 transport and safety report by insurer Allianz Group. Other incidents included a crack in the hull, explosions on board and sinks.
This means that a large part of the insurer's cost is to get a damaged ship back to port from remote locations. "Tugboat charges can cost millions of dollars," said Gallagher. James. "The claim itself can be quite small for the physical damage, but the total claim can be a lot of money."
To assess Arctic risks, insurers improvise effectively. In interviews with Reuters, those covering Arctic voyages said that they carry out their own assessments and then add up to 40% to the base premium of $ 50,000 to $ 125,000 for the single ship to guarantee a single Arctic voyage. The final price depends on the ship, the route and how close an icebreaker is, the insurers said.
In 2010, a passenger ship, the Clipper Adventurer, ran aground with more than 100 passengers in the Canadian Arctic. It was lucky: the country's only coastguard ship was only 500 nautical miles away and arrived about 40 hours later.
"Fortunately, the weather was perfect that day, sunny and completely calm, so we could get everyone away," said the mapping specialist Mr. Church, who was on the lifeboat.
Clipper Adventurer had to return to Europe for repairs. Its owner sued Canada for $ 13.5 million for the grounding, but lost the case, according to Canadian court records. Canada sued and was awarded approximately $ 445,000 for pollution control costs.
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In 2017, the United Nations International Maritime Organization introduced new standards for Arctic navigation, including ship design and equipment, search and rescue protocols, and special training for captains.
These have reduced the accident rate from between 50 and 71 per year to 43 in 2018 and 41 in 2019, the Allianz study shows.
But compliance with any of it is "Polar Code" voluntary. In addition, there is no central authority that compiles national accident reports and corporate accident reports, so there is no way to know the full extent of Arctic accidents.
This year Norway launched an expert group on maritime safety, two years after a Norwegian flagged trawler ran aground while fishing off the icy Svalbard archipelago on 28 December 2018.
The Northguider's 14-member crew was evacuated and the fuel on board was safely removed. But it took another two years for the ship to be completely rescued, as work crews struggled to dismantle the ship and remove it in pieces in the middle of bad weather and months of darkness.
"The Northguider was a wakeup call," said Rune Bergstrøm from the Norwegian Coastal Administration. "The whole operation – rescuing people, unloading the fuel and removing the ship – was a challenge. If there had been more people and a larger ship, it would have been very difficult to have saved the people.
Best Maps Available
Aside from the cold and the rogue ice floating, heavy fog can obscure sightings.
And the lack of maps makes the seabed largely a mystery. As routes often change with changing ice conditions, navigation is even more treacherous.
This was a problem two years ago for another passenger ship, Akademik Ioffe, which ran aground in the Canadian Arctic.
There had been too much ice in the bay where the ship was scheduled to sail, so it made a last-minute change of route.
"They definitely had the best maps available to them," said Dwight Coleman, a marine geologist and coastal surveying expert at the University of Rhode Island who helped steer scientific efforts on board.
"It was just an unfortunate incident of a grounding on a shoal or a rock that was not mapped." Church said that map coverage of the Arctic is slowly increasing, but it is expensive and time-consuming to issue charts again. Even when new dangers are discovered, they are sometimes only registered as messages to sailors, so it can be missed.
"What this is about is a cost-benefit analysis," Church said. "How many ships are up in the Arctic navigating around versus how much does it cost to map it?"