A Bermudian insurance company has helped the United Nations to proceed with a mission to avert one of the world’s largest man-made environmental disasters off the coast of Yemen.

Fidelis MGU, the privately owned, island-based managing general underwriter, acted as one of the lead underwriters in the successful binding of insurance coverage that enables the UN to proceed with FSO Safer ship-to-ship transfer.

Constructed in 1976 as an ultra large crude carrier and converted a decade later to be a floating storage and offloading facility for oil, FSO Safer is moored approximately 4.8 nautical miles off the coast of Yemen, holding an estimated 1.14 million barrels of light crude oil.

Conflict in Yemen prompted the suspension of maintenance operations on FSO Safer in 2015. As a result, the vessel’s structural integrity has significantly deteriorated, leaving the ship vulnerable to breaking up, and, without a functioning system to pump inert gas into its oil tanks, the vessel could explode at any time.

The UN-led operation involves transfer of the oil to a replacement vessel, very large crude container Nautica, and the towing and scrapping of the FSO Safer at a green salvage yard.

The most immediate danger of an oil spill will be prevented once the oil has been transferred to the replacement vessel.

The UN Development Programme is undertaking the emergency phase of the operation to remove the oil.

FSO Safer is 362 metres long, and holds four times the amount of oil spilt by the Exxon Valdez. A catastrophic spill will not only pollute the environment, but also destroy livelihoods in coastal communities and endanger food and medical supplies in a war-torn region already suffering chronic shortages.

Howden Group Holdings, the insurance intermediary group, was appointed by UNDP via a public tender process to identify the insurable risks and arrange insurance cover for the non-standard STS operation.

The insurance is supported by significant engineering expertise, which has been mobilised to undertake the movement of the oil, and includes naval architects, chemists, surveyors and oil spill response organisations, as well as government entities and the UN.

Coverage for FSO Safer for the duration of the STS operation and for the replacement vessel, the Nautica, was successfully bound in the Lloyd’s, London and P&I markets, with Fidelis MGU acting as one of the lead underwriters.

Richard Brindle, group CEO and chairman, Fidelis MGU, said: “Whenever the insurance industry has the opportunity to play its part in vital efforts on behalf of the environment, it must step up. This is one such opportunity and we are very pleased to be able to work alongside Howden, UNDP and our industry peers to provide the protection necessary for the successful outcome of this important project.”

The insurance negotiations have resulted in 13 different underwriting entities being “on risk”, while more than 100 individual underwriters have been involved in the risk assessment of an exceptionally specialised set of policies for the operation further complicated by the fact that the FSO Safer sits in high-risk waters, as designated by the Joint War Risks Committee.

Insurance has played a pivotal role in de-risking the operation, which is highly complex and covers a range of environmental, geopolitical and humanitarian risks.

Coverage has been placed to respond to a wide array of hazards that could arise over the course of the operation, including pollution from the transfer, explosion of the gas on the ship, personal security of the individuals involved in the operation and the removal of the Safer wreck.

The entire process is expected to take several months.