Advances in ship design call for insurers to propel their thinking into the future, says leading underwriter Mark Edmondson, By James Brewer
Insurance markets are struggling to keep up with the way technology is changing ship design and operation, it was suggested during the 2014 conference of the International Union of Marine Insurance which met in Hong Kong.
Mark Edmondson, marine class underwriter for Chubb Managing Agent, called on his fellow underwriters to ensure they familiarised themselves with the “complex systems which are part of today’s naval architecture.”
He spoke of innovations in propulsion technology, lightweight construction of ships, and of automation which could be vulnerable to cyber-attack.
Mr Edmondson asked of the insurance market at large: “Are we keeping pace with advancing technology? I would suggest not. Your risk profile is set to change very rapidly in the next 10 to 12 years.”
As examples of dramatic developments in the industry, he urged: “Have a look at DNV’s new one man vessel design, maybe a sign of things to come. And the UK Marine Accident Investigation Branch recently issued a warning about the use of electronic systems after the grounding of a tanker in the Dover Strait because of an improper use of Ecdis.”
Among questions to be asked were: “Do we know whether STCW [Standards of Training, Certification and Watchkeeping] is still fit for purpose?”
Mr Edmondson, a member of the IUMI ocean hull committee, said: “It is an assumption the soft market is set to continue, and a fundamental understanding of risk and change in the risk climate has become much more of a prerequisite.”
Certain vessel types were increasing in gross tonnage terms (notably container ships, passenger vessels, bulk carriers and LNG carriers) and there was a question mark over the capability and equipment to handle casualties and wrecks, at a time when the premium base looked very fragile. At present, one 10, 000 teu vessel was being put into commission every eight days. “Your risk profile is set to change very rapidly in the next 10 or 12 years, ” he told the IUMI audience.
Mr Edmondson strongly emphasised what he saw as the widening gap between the capability of the salvage industry and the developing risk profile.
In the Arctic, for instance, the number of Northern Sea Route transits had increased and would continue to do so. “It is not just about the vessels themselves, it is about how they are deployed.”
He quoted from the Lloyd’s 2013 report The Challenges and Implications of Removing Shipwrecks in the 21st Century a warning that the capability gap was only set to increase. How can the wider shipping industry counter that shortfall in salvage capability, he wanted to know. Should we require vessels to have a statutory salvage response plan and agreement with a contractor? Should we encourage more coastal state-funded salvage assets, and adopt the pollution fund model to finance more comprehensive salvage capabilities?
“These are issues I think we ought to be discussing in more detail, ” said Mr Edmondson. He summed up: “With prevailing rating levels as they are, these issues [outlined above] are more relevant than ever.”