Richard Turner, International Union of Marine Insurance (IUMI) president, yesterday kicked off the first ever online IUMI conference. Initially intended to be held in Stockholm, Sweden, the conference had to be moved online at what was relatively short notice, particularly for a major conference.
Turner paid the organizing committee high praise. “Some months ago we took what looked like a very brave decision to move the conference online. We did so at a time of great uncertainty”, he said, noting that it took a great deal of courage to see years of preparation for a major conference suddenly turn to dust, and then to start again and to organize an online conference from scratch. He said that the response of members had also been gratifying, with the online conference generating 600 attendees from 40 countries.
In his keynote address to the International Union of Marine Insurance (IUMI) annual conference, Turner focused on four areas that were set to exert maximum impact on the marine insurance sector of the future:
- the Covid-19 pandemic,
- the changing macro-economic and geopolitical situation,
- climate change and sustainability
- data and digitalisation.
Speaking on this year’s conference theme, “Navigating changing climates. Delivering expertise to shape the future”, Turner noted that IUMI had settled on this theme back in February at its London meeting, which was the last time that the organization had a “normal” meeting. “While Covid-19 was in our minds at the time, it wasn’t quite the global issue then that it has become since”, said Turner, although the title was even more apt, given recent developments.
Looking back on developments over the past 12 months, Turner welcomed Thailand and the Philippines as the third and fourth associate members, with the Philippines joining on September 1st.
He was pleased to report that 175 students had now signed up to the IUMI online training courses in cargo and hull insurance. Also in education, a memorandum of understanding had been signed with the World Maritime University in Sweden.
IUMI also now has a formalized Data And Digitalization Workgroup. Turner noted that the role of the underwriter was changing, blending the art of underwriting with the science of data management. He said that Covid-19 had not been the cause of this. It would have happened anyway. “Our sector needs to learn new skills, and it is already doing so”, he said.
A main focus of Turner in his introduction of the common theme was Environmental, Social and Governance (ESG). He saw three areas where this would impact on marine insurance:
- Climate Change
- Asset Change
He said that there was little doubt that the frequency and severity of natural catastrophe claims had increased as a result of climate change. The predicted rise in ocean levels between now and the end of the century needed to be considered in the light of how many of the assets in marine insurance are moving through coastal areas.
In the longer term, as a large part of marine insurance is dominated by a reliance on fossil-fuel – either assets powered by oil, carrying oil or producing oil – a move by society away from this type of energy would inevitably have an impact, he said. Similarly, some other industries had the potential to become unsustainable (the future viability of the fishing sector is an example of what might happen if sustainable living conditions in the world’s oceans continue to be challenged), or less acceptable to insure (such as coal) and this would also have a negative effect. More positively however, the continued growth of new industries such as offshore renewable energy, had the potential to offset this predicted future loss of business.
On Covid-19, Turner said that “the uncertainty stemming from the coronavirus pandemic has significantly affected the global insurance industry and, inevitably, that has impacted on the marine sector. The slowdown in world trade coupled with an earlier slump in the oil price should result in a reduction in the overall premium base. We are seeing disruption and delays at some ports with queues of vessels waiting for a berth, and this is building an unwanted accumulation of risk as a consequence. Covid is also disrupting supply chains which in recent years have become more globalised than ever before. Post-Covid, it is possible we’ll see a shift to a more simple and local logistics pattern as geopolitical tensions and the impact of the virus exert a longer-lasting effect”, Turner said.
“Marine insurance tends to cover physical damage and so Covid isn’t impacting directly on our claims profile, but as part of a much larger insurance business environment, we are being affected indirectly. With a recent history of unprofitable underwriting years, Covid is increasing the pressure on marine lines of business to return to a sustainable technical profit.”
He said that climate change had begun to influence the size and severity of marine claims; and rising sea levels in areas where sea defences are weak (or merely sufficient to manage historic peak sea levels) would continue to exert pressure on the sector.
Moving to digitalisation, Turner discussed “blending the art of underwriting with the science of data management and insight”. Big Data, Internet of Things and digitalization in general would soon be making its presence felt..
“COVID has changed the way the market operates, particularly in London. Brokers and underwriters have embraced remote-working and we’ve seen more online placing than ever before. It is difficult to see this process reversing significantly once the pandemic is over”, Turner said.