Updates from the International Union of Marine Insurance Annual Conference and Latest Dynamics Observed

Whilst the challenges may not always be new, they continue to test the resolve of the market.

As we draw towards the end of 2023, it is a time to reflect on the year that had been. We continue to work in a very dynamic line of business which has had both global and local issues to contend with as we continue to provide insurance solutions for our clients.

Whilst the challenges may not always be new, they continue to test the resolve of the market. We have the ongoing Russia and Ukraine conflict, which in addition to the tragic loss of life and devastation of Ukraine, is also disrupting shipping and the provision of goods, especially foodstuffs.

We saw some respite with the Black Sea corridor initiative, which gave some hope but was unfortunately terminated in July, but not before 31 Metric Tons of grains and other agricultural products were shipped.

Unfortunately, these were not our only geopolitical issues, the Gaza-Israel war is another such tragic situation, and it has already, and continues to threaten the stability of the Middle East, bringing pressure on marine insurance concerning Middle East areas and the Gulf and Straits shipping routes. These are so important for maritime traffic, and as a strategic route to export oil into Asia and Europe.

We have also seen several large losses that have impacted the sectors and the Freemantle Highway loss featuring in 2023, again highlighted the ongoing concern with fires on board vessels, whether on car carriers, ro-ro’s, or container vessels, which impacts Hull, Cargo, and P & I underwriters.

Despite these, the IUMI Facts and Figures committee reported that the 2022 Global premiums show a clear increase on the prior year as seen below.

Spilt by Line of Business:

Cargo: U$ 20.5Bn +8.3% on Prior Year

Hull: U$8.4Bn + 5.7% on Prior Year

Offshore Energy: U$4.1bn + 7.3%

P & I: U$3.81bn +22.8%

Whilst these figures are presented a year in arrears, the positivity was overshadowed, by the geopolitical tensions referred to above and with similar concerns existing between the relationships that China has with Taiwan and with the US. ?All of which question the strength of the present global economy and the geopolitical situation.

The other “special issues” that were covered within IUMI included the following slides that were shared to highlight the multiple issues we are facing within the sector:

Recognizing that we are going through a significant period of change - which includes technological, industrial, and environmental evolution - happening at a time when we are also seeing more conflict and wars break out and a more fragmented rather than a global view of risk.

Taking into account just a few of these:

ESG is now a regular and prominent factor, and with the International Maritime Organization’s (IMO) decision to reduce shipping’s Greenhouse Gases (GHG) emissions to assist with the fight against global warming, shipowners are expected to reduce their consumption of fossil fuels to align with the new IMO 2050 policy.

Whilst strategies are in development, as Marine Underwriters, we will need to ensure we understand the various solutions, risks, and exposures which new technology will bring with it and the impact to wider marine ecosystem including bunkering.

Marine as a segment is inextricably linked to the global economic situation, we are impacted by the world economy and trade levels, and we are still responsible for over 90% of the goods moved.

This can, however, be disrupted by multiple changes including but not limited to:

• Post-Covid and trade disruption: We have seen a large scale of onshoring or reshoring industrial production.
• Fragmentation directly caused by a nationalistic approach being taken by a growing number of states for the sake of strategic industrial advantage.
• Changing NAT CAT events as we see the global climate change impact.
• New technology, including fuels, larger vessels, and of course higher values across Cargo interests and Hull assets, all of which will bring challenges as well as opportunities.

The impact and potential consequences for Marine Underwriters are still to be assessed.

The challenge for all of us is to work within and understand the dynamic and complexity of the risks and exposures that are developing. Recognizing that we are going through a significant period of change - which includes technological, industrial, and environmental evolution - happening at a time when we are also seeing more conflict and wars break out and a more fragmented rather than a global view of risk.

Despite the headwinds and concerns, we have grown and continue to provide solutions to our clients. Long may that continue.

The writer, Mr. Paul Hackett, is the Convenor of the General Insurance Association Singapore Marine Insurance Committee, an IUMI Facts and Figures Committee member, and also sits on the IUMI Nominating Committee.

Paul worked in various UK and European marine roles at Royal & Sun Alliance (RSA) in the UK and London before moving to Singapore as Marine Manager, Asia & Middle East in 2006. Paul returned to London in 2011 for 18 months with RSA before joining Catlin in Singapore, spending three years as Head of Marine Asia Pacific and Middle East. In 2016, he became a Director and Head of Marine at Aspen Singapore, responsible for hull, cargo, liabilities, and FAS.

He joined Canopius Singapore in 2018 leading the Marine, Energy & Engineering teams, went on to become the Joint Global Head for Marine, and more recently took responsibilities as the Head of Short for APAC & MENA.