The collision of a cargo ship and a fuel tanker off the eastern coast of England in the North Sea is likely to hit multiple marine insurance policies, carrying an estimated combined insured value of between $50 million and $100 million, according to credit agency Morningstar DBRS, in a market commentary.
Morningstar expects that these claims will remain manageable for the global marine insurance industry and are unlikely to materially affect the credit profile of marine insurers in 2025.
However, the incident adds to the credit agency’s concerns about the profitability of this business line given substantial claims in 2024, which included the collapse of the Baltimore Bridge and the Red Sea attacks, said the Morningstar report, titled Navigating Liability: Collision in the North Sea and Marine Insurance Fallout,” which was published on March 12.
The cause of the collision on March 10 between the MV Solong, a Portuguese-flagged cargo ship, and the MV Stena Immaculate, a tanker transporting jet fuel for the U.S. military, is still unclear. However, Morningstar expects that the incident will activate multiple insurance policies, broadly categorized into hull and machinery (H&M) insurance, protection and indemnity insurance (P&I), and marine cargo insurance.
“We estimate that liability and salvage losses will exceed the cost of hull and cargo claims,” the report said, noting that visual reports indicate significant physical damage to both vessels, suggesting that H&M insurance will likely be triggered. “Preliminary footage shows that both ships may be considered a total loss.”
(Editor’s note: While it is unclear how much fuel leaked into the sea, “early assessments suggest the impact is limited, with some fuel having burned off and evaporated,” according to BBC reporting. The crews from the two vessels were rescued except for a sailor from the Solong who is still missing and presumed dead. The Russian captain of the Solong has been arrested for gross negligence manslaughter in connection with the collisions, confirmed a Bloomberg article.)
Protection & Indemnity Policies
Morningstar anticipated that most financial losses will fall under the P&I policies because of the potential cleaning costs associated with any pollutant spill. “Depending on the volume of chemicals and fuel released into the ocean, recovery and cleaning costs could significantly exceed claims made under the H&M policy, even if both vessels are declared a total loss.”
Given the possible environmental repercussions of the incident, the P&I insurance policies for both the Solong and the Stena Immaculate are likely to be activated, the report said, explaining that P&I insurance is typically offered by a P&I club – a mutual insurance association that provides risk pooling, sharing of information, legal representation, and risk mitigation for its members. Members include ship owners, ship operators, and charterers.
“Members of the International Group of P&I Clubs (the Group) engage in mutual reinsurance above $10 million. Additionally, the Group typically buys general excess loss reinsurance for amounts exceeding $3 billion above an attachment point of $100 million. This attachment point represents the dollar amount of potential insured losses retained by the Group,” Morningstar said.
“P&I insurance covers nearly all maritime liability risks associated with ship ownership and operation, including third-party liabilities related to damaged cargo during transit, the risk of environmental pollution, and war and political risks (if included in the policy).”
In addition, Morningstar said, the owners of any cargo aboard the Solong and the Stena Immaculate will likely file claims under their cargo insurance policies for any losses incurred.
“However, we expect litigation to arise to ascertain legal responsibility among the involved parties and their insurers, which will activate subrogation clauses,” the report said. “If courts determine that any of the ship owners or operators are liable for the accident, cargo insurers may then recover their losses from the liability insurers of the ships involved.”
Morningstar explained that the Stena Immaculate was part of the U.S. government’s Tanker Security Program, which contracts commercial vessels to transport fuel for the military when necessary.
“Marine traffic tracking data indicates that the Stena Immaculate was safely anchored when the Solong hit it. Given the nature of the Stena Immaculate’s cargo, the U.S. government has launched an investigation to rule out sabotage. The findings of this investigation could have significant implications for the handling of any insurance claims related to the incident.”
Source: Morningstar DBRS
Photograph: Smoke billows from the MV Solong cargo ship in the North Sea, off the Yorkshire coast in England, on Tuesday, March 11, 2025. (Dan Kitwood/Pool Photo via AP)
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