The global shipping industry faces several potential knock-on effects from the pandemic, an annual review from Allianz Global Corporate and Specialty (AGCS) has warned.

AGCS says the cruise ship and protection and indemnity sectors will face the biggest impact through shipowners’ liability to passengers and crew and disruption to operations.

“Cruise ship operators may hold specialist business interruption policies, although such cover will typically exclude pandemics and infectious diseases unless specific extensions have been intentionally purchased,” the review says.

The cargo insurance sector is also predicted to be hit with claims arising from lockdown measures to contain the spread of the virus. High-value, perishable or temperature-sensitive cargo held in storage or transit faces a higher risk of damage if stored for longer-than-expected due to disruptions in the global supply chain.

Fatigue among shipping crew is another risk as border restrictions keep them working on extended shifts, with management unable to bring in replacement staff as scheduled, the review says.

Other virus-linked risks to the shipping industry include weaker economic activity and disruption to maintenance.

AGCS says the number of large ships lost last year fell by more than 20% to 41 from 2018 and almost 70% over a decade.

Waterways in the areas of South China, Indochina, Indonesia and the Philippines remain the top loss hotspot, accounting for nearly 30% of losses in the past year with 12 vessels lost.