Cruise Ship Coverage Uncertain After Coronavirus Debacle

The Last Ships Coming In

Source: Neilson Marketing Services | Published on April 24, 2020

View from cruise ship on Grenada island, Caribbean

On April 20, the last three cruise ships sailing in the world came into port in Marseilles, Los Angeles and Barcelona, respectively. The worldwide coronavirus pandemic has affected the cruise ship industry in a devastating way. With no one cruising the world’s oceans now for the first time in recent memory, cruising officials report continued losses. The CDC issued a 100-day ban on cruises, which began on April 15, and other countries initiated similar policies.

From the very beginning, the public viewed the cruising industry as either desperate victims or greedy boogeymen of the pandemic. Each of these three cruise ships found no refuge in ports from Australia to Chile, and some needed to evacuate passengers, but not all.

Economic Impact on Cruise Ships

The losses for the cruise ship industry will not be known until the end of this crisis, but they will feel the pinch just as much as anyone else, if not more so. Every cruise scheduled during the quarantine has been canceled. There is also the fear factor to consider, since cruise ships do not exactly encourage social distancing – the opposite of that is true, actually. 90% of ships are expecting to see investment returns fall off during this time, which will lead to increased marine liability claims.

Insurance Issues

With so many cruise companies facing losses and other issues, insurance industry officials expect liability claims to increase. Some cruises have seen passengers and crew take sick, and a few have even seen deaths as a result.

Added expenses add to the list of items to be covered, such as repatriation and quarantine expenses. Some of the biggest cruise lines in the world have no insurance coverage for loss of revenue due to the interruption of operations.

So, while the Protection and Indemnity Coverages may be leveraged to help mitigate the losses. These policies are massive, with $10 million deductibles in most cases, most plans covering in the range of hundreds of millions of dollars. Premiums will definitely increase next year with plans typically renewing in February when the ice in northern seas begins to be passable.

A Future for Cruise Ships?

Some people try to blame cruise ships for spreading COVID-19 around the world, but things do not seem to be slowing down too badly for this industry. Cruises are already being booked for July. In most cases, the current bookings include those who canceled previous cruises.

Ship owners and company representatives insist that their policies for keeping the ships clean and sanitary remain rigorous and sophisticated, and that conditions were not as bad as popularly reported. There were no “plague ships” floating in the oceans, although there were, of course, some infections. It seems likely that the cruise lines and passengers will continue to cruise into the future.