Sri Lanka’s landmark $1 billion court ruling over the 2021 X-Press Pearl disaster has sent shockwaves through the global marine insurance industry.
A report by the UK-based Financial Times says the judgment could trigger a significant increase in marine insurance premiums and drive more vessels into the unregulated “shadow fleet,” lacking proper insurance coverage.
James Bean, Chief Executive of the London P&I Club—the insurer for the ill-fated X-Press Pearl—described the ruling as “alarming,” warning of potentially far-reaching consequences for the global maritime insurance market.
The X-Press Pearl caught fire off Colombo after a container carrying corrosive chemicals leaked, triggering a catastrophic blaze.
This disaster was further compounded by the ship carrying plastic pellets, which spilled into the ocean, causing severe environmental damage.
A key concern is Sri Lanka’s non-adherence to international maritime conventions that limit ship owners’ liability.
Unlike many maritime nations, Sri Lanka allows unlimited liability claims, exposing ship owners to massive financial risks and consequently raising marine insurance premiums for vessels docking at Sri Lankan ports.
Existing maritime conventions do not cover environmental damages related to plastic pellet spills, a critical issue highlighted by the X-Press Pearl incident.
This regulatory gap has added to insurers’ worries.
Bean stressed that escalating premiums could force some operators to turn to uninsured vessels—“shadow fleets” operating without Western insurance standards—thereby increasing risks in key shipping lanes.
“Such vessels will have no insurance at all,” he added.
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