Op-Ed: Insurance crisis looms over Europe’s inland waterways

Armand Lans, Senior Broker at FDR

By Armand Lans, Senior Broker at FDR

There is a potential insurance crisis brewing in Europe with vessels registered with the Dutch Flag in peril of losing their license to operate. Armand Lans, Senior Broker at FDR, explains.

The European inland waterway market is facing a potential crisis that could have major consequences for shipowners, operators and marine insurers. The crisis, which has been bubbling largely under the radar for several months, could result in a loss of insurance coverage as well as a license to operate for some of the approximated 70% European inland waterway market registered with the Dutch Flag.

What has led up to this insurance crisis?

Currently, inland vessels operated commercially—including passenger and cargo ships—must comply with the Dutch Inland Shipping Act, which includes proof of the ship’s classification in the form of a certificate of trade issued by the Netherlands Bureau for Inland Shipping Inspection (NBKB), among others. Historically, surveyors in the form of individuals working for private companies would conduct the majority of inspections on behalf of the NBKB.

Back in December 2023, the NBKB had its license to issue certificates suddenly revoked by the Dutch government.  Even though it has since been reissued, many surveyors declared they would not work with the NBKB, citing a loss of trust. 

And this is where the crisis was born. 

With surveyors’ withdrawal of support, shipowners have been forced to seek alternative inspection bodies out, but there are just enough to manage the backlog. Rather than seek out an issue to resolve the crisis, the Dutch Human Environment and Transport Inspectorate (ILT) stepped in and kicked the can down the road, extending 108 certificates on a one-off basis—however, these are now due to start running out from May. 

From a marine insurance perspective, this is very much a looming crisis which deserves full attention. If a vessel cannot obtain a certificate to trade, then underwriters will withdraw insurance, deeming them not “seaworthy.” An appropriate analogy is to compare this to running a car without proper insurance. In a worst-case scenario, a crash or casualty could ruin lives and cause bankruptcy. 

European-wide consequences for the entire inland waterways network

With so many European inland waterway vessels flying under the Dutch flag with certificate renewals pending, many vessel owners could be left in a desperate situation that renders them unable to operate.

The knock-on effects could be substantial, with the potential for vessel-owning and cargo-owning companies facing the prospect of sitting idly while they await certification. Inland water trade could also be severely disrupted due to a lack of vessels being able to operate. 

Disrupted maritime trade could also have a knock-on effect for consumers, as well as ramifications for financiers and investors. With vessel owners and operators facing a prolonged absence from the market as certificates start to expire, they could be left defaulting or even seeing share values for investors dropping. 

For smaller shipowners with one or two ships, an uninsured ship can have consequences for staff retention. After a period of inactivity, it will be hard to hold on to good captains in this scarce personnel market. Looking further ahead, we could even face a crisis where an owner’s ability to pay mortgages on vessels could start to come into play.

Prioritize sooner rather than later

This crisis is not going to resolve itself overnight. As time goes on and the backlog remains unresolved, more vessels will start losing their certificates. 

Shipowners and operators who are aware that their renewal is coming up must be proactive in initiating dialogue with their insurance brokers. Through acting fast and opening up clear communication channels, risks can be better understood. This also provides a platform for contingency plans to be discussed. At FDR, we also advocate for owners to begin looking to secure surveyors for inspections months in advance of their vessel’s certificate expiry date.