Marine insurance, a sector traditionally rooted in centuries-old practices, is grappling with a modern-day peril: the explosive fire risks posed by lithium-ion batteries. These energy-dense batteries, which are now common in electric vehicles (EVs), are increasingly being transported in large quantities aboard container ships and car carriers. As a result, insurers are being forced to rethink their risk models and policies, which were originally established under vastly different circumstances.
A Modern Risk to Ancient Traditions
Since the 17th century, marine insurance has been a cornerstone of global trade. Lloyd’s of London, which was founded in 1688, played a pivotal role in formalizing ship insurance, with underwriters in a coffee shop drawing up contracts to cover voyages. The principles of these early contracts remain largely intact today. However, lithium-ion batteries have introduced an entirely new set of risks that have yet to be adequately addressed within the traditional framework.
The introduction of these batteries into the maritime supply chain has led to increased fire hazards. Unlike traditional fuels or flammable cargo, lithium-ion batteries can catch fire or even explode due to thermal runaway, a phenomenon that can occur when the battery’s temperature exceeds its safe limits. This creates a dangerous chain reaction that can spread rapidly in confined spaces like cargo holds, making it difficult to control the blaze and threatening the vessel and its entire cargo.
A Recent Catastrophe: Morning Midas
One of the most alarming examples of this emerging threat occurred in June 2025, when the 600-foot car carrier Morning Midas caught fire off the coast of Alaska. The ship, carrying 3,048 vehicles, many of which were electric, encountered a fire on a deck loaded with EVs. The fire spread uncontrollably, forcing the 22 crew members to abandon ship. The blaze continued for weeks, and despite efforts to extinguish it, the Morning Midas and its entire cargo eventually sank into the Pacific Ocean.
Authorities and maritime experts have indicated that the lithium-ion batteries in the EVs are likely the cause of the fire, though the exact origin is still under investigation. This catastrophic event has raised alarms within the marine insurance industry, highlighting the growing risks posed by the transport of lithium-ion battery-powered vehicles.
Rethinking Risk and Policy
As the shipping of electric vehicles continues to rise, insurance companies are being forced to adapt their risk assessments to account for the volatile nature of lithium-ion batteries. The current insurance models, which were designed to cover traditional risks like rough seas, piracy, or accidents, may no longer be sufficient to handle the unique hazards posed by these batteries.
Marine insurers are already working on revised underwriting policies that will address the risk of lithium-ion battery fires. This includes better risk mitigation measures, such as fire-resistant cargo holds, improved firefighting systems, and better tracking of lithium-ion batteries during shipping. Additionally, some companies are exploring new insurance products tailored specifically for the unique risks associated with EV transport.
The Way Forward
The rise of electric vehicles and the widespread use of lithium-ion batteries is part of the broader global shift toward sustainability and green energy. However, this transition is bringing new risks that require innovative solutions. As the marine insurance sector grapples with these challenges, it will likely need to embrace new technologies, refine its policies, and collaborate with industry stakeholders to develop best practices for safely transporting battery-powered vehicles.
This modern dilemma, driven by an innovative but risky technology, is a stark reminder that even industries with centuries-old traditions must evolve to meet new realities. As the shipping world continues to adapt to these risks, it will be crucial for insurers to balance innovation with safety, ensuring that the global shipping network remains protected while navigating the complexities of a greener future.
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