Explosive cocktail of challenges ahead for marine insurers, says IUMI president
By James Brewer
Marine insurers will have to deal with “an explosive cocktail” of challenges in the period ahead, Dieter Berg, president of the International Union of Marine Insurance, said in his address closing the 2016 conference in Genoa of IUMI.
Among these were the massive cargo values at risk in ports, the growth in size of containerships, car carriers and cruise liners, the risks associated with innovation and new Technologies, cyber risks, the prospect of unmanned ships, and the advent of big data.
Insurers and reinsurers were working in a market environment of narrow margins, falling profitability in nearly all lines of business, and even profitable niche lines feeling the impact of hungry competitors.
The macro-economic background was of sluggish growth and weakening emerging market economies, with plunging commodity prices resulting in major container line Hanjin Shipping becoming a prominent insolvent victim.
Insurance brokers were looking for new sources of income by combining risks in facilitation, especially for relatively small lines like marine, where “we are running the risk of losing expertise we need to serve our clients,” said Mr Berg.
He urged marine underwriters to make the most of their intensive services and consultancy to ensure they were “staying relevan to our clients.”
with incrreasing technological change, “everything seems to become more complex and more expensive.”
The IUMI president said that the final ‘workshop’ session of the2016 conference, looking at cargo accumulation in ports and terminals, had underlined the scale of exposures from both man-made and natural catastrophes.
This was about the need to take into account worst-case scenarios and he added:”Portfolio transparency is really vital for our business. We have to co-operate with our clients more closely to figure out what cargo is in transit and where it is stored.” The use of specific marine catastrophe models would help get a much better grip on this.
Speakers agreed that the massive explosions at the port of Tianjin, China, in August 2015 had been a wake-up call for the insurance industry given the substantial loss of life and injuries to firefighters, police and nearby residents, and damage to more than 12,000 vehicles, 300 buildings and 7,500 containers.
Peter Ulrich of catastrophe modelling company Risk Management Services, underlined that vast quantities of automobiles stored in port areas had become one of the most vulnerable insured exposures globally.
Mr Berg said that ovr the past year IUMI had made considerable progress in areas including a clear focus on Asia, improved communications strategy and branding, and starting an education initiative.
Mr Berg was re-eelected for a further two years as president. The 2017 conference will be in Tokyo.