The Insurance Business Perspective on the Risk of Transporting Electric Vehicles by Sea

Purpose: The primary objective of this article is to explore insurers' perspectives on the risks associated with the maritime transport of electric vehicles (EVs), whose production and sales have been rising steadily in recent years, introducing new challenges and potential hazards to maritime shipping. Design/Methodology/Approach: To achieve the study’s objective, a combined approach of desk research and open-ended interviews was chosen. The desk research relied on secondary data, including analysis of the EV sales market, data on ship and cargo losses due to EV-related fires, shipowner regulations on EV carriage, and industry reports from reputable sources (e.g., IUMI, IMO, EMSA). To capture insurers' perspectives, a qualitative method using open-ended interviews was selected as the most suitable approach. Findings: The research reveals that the maritime transport of electric vehicles presents specific risks primarily due to the presence of lithium-ion batteries. Insurance policies must address these risks; however, uncertainties regarding EV-related incidents and firefighting limitations have led insurers to impose strict coverage limits or, in some cases, deny comprehensive coverage. These concerns also extend to hull insurance and shipowners' liability, as marine insurers exercise caution due to the evolving nature of these risks. Developing standardized procedures for transport and firefighting is essential, with standards endorsed by insurers, insurance associations, and regulatory bodies like the IMO. Practical Implications: With the rising presence of electric vehicles on board the vessels the risks are growing. Recognising and mitigating these risks is essential to protect the safety and security of all parties involved in maritime transport. This research underscores the need for insurers to re-evaluate policy coverage for EV shipments, including specific protections for lithium-ion battery hazards. Originality/Value: This issue is both recent and crucial for marine insurers, cargo owners (e.g., EV manufacturers) and shipowners. Given its evolving nature, there is minimal literature on the topic, with only limited industry reports available. Existing literature mainly covers the technical challenges of lithium-ion battery construction, operation, and fire suppression, but it does so exclusively from a safety engineering perspective.