Challenges Ahead for Marine Insurance
The marine insurance sector is undergoing a rapid period of change and it is critical that insurers understand the risks the industry is facing and offer products that match these new trends, Dieter Berg, president of the International Union of Marine Insurance (IUMI) said.
He outlined four new risks the industry is facing that insurers must endeavour to better understand.
The first was cyber threats, thanks to the industry’s growing reliance on IT within shipping companies, ports & logistics and offshore. “Underwriters need a better understanding of these risks and must tailor their products to meet client needs,” he said.
The second was Ultra Large Container Vessels, a trend that is affecting insurers due to the huge cargo values transported aboard; integrity of vessel structure and stability; and the ability of global salvors to respond to an incident. “This increases exposure for insurers. In addition, recent incidents involving car carriers raises a question about accumulation issues in automotive policies,” he said.
The third was the increasing complexity of offshore installations including larger Floating Liquefied Natural Gas (FLNG) and Floating Production Storage and Offloading units (FPSO) operating in remote locations, including Arctic waters. He also noted that more complicated mooring systems and increased on-water traffic surrounding these installations is also causing concern, as is the current volatility in oil price.
Finally, he said the rise of mega subsea construction projects in remote offshore areas pose huge challenges to insurers in determining risks, including the value of equipment and the likelihood of salvage.
“The marine insurance sector is undergoing a period of change. We are experiencing a number of external challenges due to increasingly complex technologies and the impact from the financial environment,” Berg said.
“We are facing increased exposure from information technology, from the growth in offshore oil & gas exploration and from the never-ending search for economies of scale within the shipbuilding and operating sector. Added to that, uncertainty over oil prices and the general economic picture is exposing marine underwriters to a level of risk we’ve not experienced before. We need to ensure we fully understand the risks our industry is facing and offer products that match these new trends and deliver adequate cover for our clients.”
