In January 2020, the International Maritime Organization (IMO) enacted a stringent new regulation capping a ship’s sulphur emissions from 3.5% to 0.5%. This meant that ships would need to reduce their sulphur oxide emissions by 80% mainly by switching to fuels that emitted less sulphur. The positive aspect of this is that sulphur in fuel wreaks havoc on the ozone layer and contributes directly to acid rain. The unfortunate aspect is that, even though vessel operators were aware this new cap on emissions was on its way since 2016, very few did a thing to prepare for the shift.

A company with a manufacturing site in China had a solid solution – marine scrubbers. While not a new technology (cleaning exhaust gas with “scrubber” tech to reduce sulphur oxide output has been around since the 1960s), the fast and safe solution had vessel operators scrambling to get their ships retrofitted in time to meet the IMO compliance and avoid regulatory fines. 

For the marine scrubber factory, they needed to ensure they could retrofit as many ships as possible in the timeliest way possible. Their operations across China included inland transit from their factory to three different shipyards, storage of the marine scrubber components while awaiting each vessels arrival, and ultimately, the actual installation and subsequent testing and commissioning of each ship. 

Munich Re was able to provide a hybrid insurance policy that provided the company seamless protection. This coverage was unique in that it guaranteed a “cradle-to-grave” protection between multiple policies and insurers with no gaps. With the ease the cover offered to both brokers and the Assured to communicate with one insurer for a single solution proved extremely valuable for the manufacturer.

Ultimately, the company saved costs while successfully installing over 100 systems in over 40 different types of ships, including containers, bulk carriers, and oil tankers. The insurance guarantee helped mitigate this jump towards maritime compliance that is reducing the industries carbon footprint in line with global regulations and expectations.