LEGAL & REGULATORY MATTERS
THE “DARK SIDE” OF MARINE INSURANCE BY ANDRÉS FÍGOLI
R
ecent statistics presented at the plenary session of the International Cable Protection Committee (ICPC) 1 continue to clearly attribute the cause of telecom submarine cable failures to human activity, accounting for 85% of all cases, with fishing followed by anchoring as the main factor. Other causes such as natural events (e.g. seabed slides), wet equipment failure and abrasion (permanent contact of the cable with rocks) remain at very low levels. Unfortunately, there are no official statistics on how actively cable owners pursue legal claims against the perpetrators. However, based on the author’s more than 20 years of experience investigating cable failures worldwide, including international waters, it is fair to say that one-third of these cases were settled with the shipowners 1 Palmer-Felgate, A. “Global Cable Repair Data Analysis”, ICPC Annual Plenary, Singapore, 1 May 2024.
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or their insurance companies within months of the date of the cable failure, a further one- third have to wait a few years in litigation with mixed results depending on the evidence and case law, while the remainder had no conclusive evidence for finding a suspect to blame. So where are the missing insurance companies that should be providing coverage for these vital telecommunications infrastructure owners? Insurance companies are mostly reluctant to issue these policies to submarine cable owners, and in this article, we will also address and analyse the reasons why this same industry is generally negligent in controlling its own customers (e.g. fishermen) who damage telecom submarine cables.
INSURANCE COVERAGE FOR WET PLANT
Typically, insurance companies will not provide coverage for the wet plant portion of a subsea telecom system
(underwater components), unlike the terrestrial segment, against third party risks such as fishing activities or even earthquakes. In recent years, however, there have been a few exceptions where international connectivity is regularly affected by seabed landslides or volcanic activity. Yet, this leaves 85% of telecom submarine cable failures without adequate insurance coverage. Even the floating wind industry, still in its infancy, has adequate bespoke coverage because those involved have made risk management a priority. Their projects get bigger every year, and they always make sure they are both bankable and insurable. It can be argued that power cables are shorter and therefore less risky than telecom cables. Nevertheless, today’s major energy projects, such as the link between Morocco and the UK show that their days as 70-100 km systems are long gone. Moreover,