Climate change and its impact on losses and claims featured highly as major challenges to be faced by marine insurers in the future, according to a general consensus reached at the 150th anniversary conference in Berlin of the International Union of Marine Insurance (IUMI). Changing weather patterns would place increased strain on supply chains causing delays and risk accumulations.
Coupled with this were advances in technology including AI and cyber-risk. People would be encouraged to work smarter and it was thought likely that fewer people would be engaged in a wider range of activities. Enhanced regulatory obligations and global conventions were also thought to have a significant impact going forward.
The views were gathered at a workshop on the future of marine underwriting which was part of the three-day conference.
Opportunities
Some of the challenges would create opportunities encouraging underwriters to innovate, invest in advanced technologies, become more proactive with loss control and develop more sophisticated risk assessment and management strategies. It was agreed that marine insurers had proven their ability to adapt but that more comprehensive risk management processes and better collaboration would be required going forward.
“Digitisation and technological advancement are leading to the creation of new types of data within transportation domains. The insurance and reinsurance market can utilise this data in enhanced underwriting, new product creation, and more efficient claims processing”, said Mr Markus Spielmann, head of Marine at Munich Re, who was a member of the panel at the workshop.
Increased engagement with regulators was also thought to be a good thing. In addition, to thrive into the future an optimum legal environment was required alongside solid government support and an adequate supply of relevant data to allow informed decision-making. The digitalisation of trade documents was also considered to be important.
Changes in government policy would also create significant change. Using the offshore energy market as an example, Ms Melanie Raven, active underwriter with Ark Syndicate and chair of the IUMI Offshore Energy Committee said, “Significant growth will driven by society’s transition to clean energy sources. As a consequence, insurance products will need to adapt, adjusting for the integration of new tech and unique risks associated with these technologies. Governments will be a driving force here and, in the UK, we’ve already experienced guidance for carbon capture, utilisation and storage (CCUS), for example”.
Geopolitical tensions
Geopolitical tensions were making the provision of cover more challenging in certain regions and this was said to be of growing concern in the future, possibly with the potential of making certain activities uninsurable. There was agreement that events with the potential of resulting in “gigantic loss aggregation” would be unlikely to be able to attract adequate cover – examples included radio-active or bio-active contamination or large-scale cyber warfare.
Where sectors were in transition – the move from fossil fuels to renewables, for example – there was little or no historical data or experience on which to assess the likely risk. Whilst it was likely that these activities would remain insurable, it was thought that limited market capacity might create an issue going forward.