Allianz SE says car-shipping incidents are now a major cause of loss for the insurance industry after a cargo ship with about 4,000 Volkswagen AG vehicles caught fire and sank in the Atlantic two months ago.

Fires on board car carriers have become a loss driver over the past decade, according to a report published on Tuesday by Allianz Global Corporate & Specialty, the German company’s industrial insurance arm. In many cases, fires resulted in the total loss of cargo and vessel, it added.

Car carriers, the largest of which can hold as many as 8,000 vehicles, are susceptible to stability issues and fires, said Justus Heinrich, head of marine in Central & Eastern Europe at AGCS. The vessels were already under scrutiny following a string of incidents, he said. “And now we have the Felicity Ace. These casualties are very complex and expensive to resolve,” he said.

The Felicity Ace, transporting Porsche, Audi, Lamborghini and other VW Group cars, sank off the coast of Portugal’s Azores after being battered by waves and leaning 45 degrees to its starboard side, the ship’s operator said at the time. 

Allianz said open decks allow fires to spread quickly, while any water ingress will affect the stability of the so-called roll-on roll-off vessels. They are under commercial pressure with short turnaround times at port, which can result in ships sailing before the crew has verified ballast calculations or completed lashing and securing watertight doors, it added. 

Research points to additional fire risks from electric vehicles, Allianz said, as tests have shown that ship water sprinkler systems alone are not effective at extinguishing an EV fire.

Vehicle vessel incidents according to Allianz report:

• The Hoegh Osaka ran aground in 2015 on its way from Southampton to Bremerhaven carrying more than 1,400 high-end cars.
• The Modern Express developed a list in the Bay of Biscay in 2016, while carrying trucks and logs.
• The Honor suffered a fire in 2017, which led to damage to its cargo of about 5,000 vehicles.
• The Grande America suffered a fire and subsequently sank in 2019. The ship was carrying 2,000 cars.
• The Sincerity Ace caught fire in the Pacific on New Year’s Eve, 2018, with more than 3,500 cars onboard.
• The Diamond Highway had to be abandoned in the South China Sea in 2019, due to fire, while carrying thousands of cars.
• The Golden Ray capsized just outside the U.S. port of Brunswick in 2019 with over 4,000 cars on board.
• The Höegh Xiamen caught fire in 2020 in Jacksonville, Florida, resulting in the loss of its cargo of about 2,400 used vehicles.
• The car carrier Al Salmy 6 capsized and sank in the Persian Gulf in rough seas in March 2022.