Posted on: 10 May 2023
Eloquent and timely are the words of a leading academic who concludes in no uncertain terms that “Micromobility devices [incorporating lithium-ion batteries] should NOT be charged or stored indoors”, starts Part 1 of Stephenson Harwood’ article on risks associated with lithium-ion batteries.
That, in the domestic setting. Translate to the marine setting, and it begs the question: are alarm bells not ringing for owners of yachts, their managers, their crews, marina owners, the financing banks, the yards, the manufacturers in the yacht sector, to say nothing of the original manufacturers of the batteries who may feel they can hide away behind the scenes at the end of complex supply chain contracts, and the insurers of all of the above? We unhesitatingly say “yes, they should be”; and we should know, having experience of one of the most significant reported yacht fires involving batteries and having followed the topic now for some years. The uptick in attention on the topic is consistent with that view. Yes, there is much armchair commentary and misconception surrounding the topic, but that by no means diminishes the real issues that are known and pressing.
In short, the problem is that not enough is being done quickly enough or in a joined-up fashion to address and mitigate the risks. Whilst progress is being made, lithium battery usage continues to grow, with the ever increasing risk – which is still in too many quarters just dismissed as overreaction – falling to insurers. That is unsustainable and dangerous. What is needed is a concerted industry- wide drive, from the manufacturers (where it all starts, after all, as so often is forgotten in the aftermath) through to end-users, to improve understanding at all levels to reduce the risk of loss, to understand those risks and mitigate against them, and then ensure the risk is properly allocated and priced.
Stephenson Harwood Practice group leader Alex Davis, Partner Richard Hugg, and Associate Henry Cunnington, who authored the briefing, explore what green shoots are appearing in this respect, not least with the UK Maritime & Coastguard Agency stating in its draft guidance MGN 681 (regarding “Fire Safety and Storage” of Lithium batteries on yachts) that “Increased understanding of the fire risks from Li-ion batteries among yacht crew, designers and owners should lead to better practice and increased fire safety”. And there are insurers out there trying to challenge the status quo and rightly seeking to raise the bar to encourage, through proactive underwriting, education, awareness and risk mitigation. So for example Beazley are proactively offering to help owners and their crews to manage the risks by e.g. providing concrete, practical guidance. However, it is critical that all stakeholders collaboratively and openly maintain the pace.
Download the full briefing here.
