By Armand Lans, FDR Risk


Critical insurance policy blind spot: It’s time to move beyond simple asset replacement


There’s a compliance gap that could sink Europe’s green shipping goals, writes Armand Lans from FDR Risk (pictured left). As a senior broker for a marine insurance consultancy firm, Lans warns that ‘compliant’ replacement can triple costs.


As European regulators accelerate their decarbonisation push, a hidden challenge is emerging – outdated insurance policies that fail to reflect the realities of the energy transition and pose a serious threat to shipowners and operators.


Across Europe, thousands of inland vessel owners and operators are under mounting pressure to meet ambitious EU climate targets. Regulations such as the Renewable Energy Directive (RED II) and the FuelEU Maritime regulation are forcing operators to phase out fossil- fuel engines in favour of cleaner, low-emission alternatives.


Like-for-like replacement doesn’t work for ‘compliant’ replacement


Most existing marine insurance policies are structured around the assumption of like-for-like replacement. For instance, if an engine is damaged beyond repair, the insurer covers the cost of replacing it with an equivalent model. But ‘equivalence’ has taken on a new meaning under EU law. The compliant replacement is no longer a diesel unit but a cleaner, costlier, and often more complex system. The price gap and vessel configuration requirements can be substantial.


148 | ISSUE 115 | MAR 2026 | THE REPORT


For instance, an inland barge transitioning from marine diesel to an ammonia-compatible engine must also invest in new fuel tanks and safety systems, as ammonia’s lower energy density requires greater storage volume. This space comes at a premium, often at the expense of cargo capacity. The owner faces not just higher replacement costs but also reduced earning potential. Yet none of these factors are reflected in current insurance structures, which still calculate compensation based on legacy technology.


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