At the opening session of IUMI 2019 in Toronto, IUMI president Richard Turner thanked the secretariat, now consisting of three full-timers based in Hamburg, while noting that IUMI continued to be built on the foundations of a volunteer workforce, with more than 100 committee members devoting their own time to the committees.
He said that when he took over as President after the 2018 Cape Town conference the association’s priorities were to be an ongoing continuity of change.
“Today our external profile is indicative of an organization that is running throughout the year. It is a consequence of the value of having a professional secretariat,” Turner said, confirming that “our pathway over the next few years is to continue this journey”.
Turner said that IUMI’s five priorities remained: Membership; Education; Data and Digitalization; Advocacy, and Communication.
- He said that for the Membership, the aim was to serve IUMI members well, to stay highly engaged and to seek opportunities to expand. “In 2007 about 60% of our business was in Europe, while 22% was in Asia. The Asian percentage has now risen to over 30%. “It maximizes our authority when we can show that we are a truly global organization”.
- Education, Turner said that “our goal is to establish IUMI as an educational provider of technical marine insurance skills.” Referring to a booklet produced more than 20 years earlier by Dave Matcham, Turner said that it was likely that the availability of bespoke marine training was not what it was. “So the challenge is how to attract people into the industry and to get them technical skills. And it is here IUMI can come into play”, said Turner, referring to the recently published tutorials in cargo and hull.
- Data and digitalization: Turner said that the claims database developed by Dave Matcham and announced at Cape Town, was really beginning to bear fruit. He added that helping members prepare for an underwriting world where there was more focus on data and digitalization.
- Turner said that IUMI aimed to act as the voice of the marine insurance industry. It intended to continue to build its presence at IMO. “Advocacy and lobbying is a major part of our function. The Policy Forum now holds positions on a range of topics, including cyber risks, cargo theft and places of refuge. We are closely involved on policies on Containership fires and autonomous ships”. said Turner. He added that, as part of IUMI’s lobbying and advocacy role, it had published a joint paper with Marsh highlighting maritime issues. He also said that a stronger organizational platform was now in place.
Turner reported that Lars Lange was to become the independent chairman of the International quality assessment review body (IQARB), part of the International Association of Classification Societies (IACS). The purpose of IQARB is to review the certification process of the quality management systems of IACS members.
“There has been a long history of cooperation between classification and insurance”, said Turner, referring to Lange’s new role, which will be in addition to his existing role at IUMI, Turner said that “I for one see his forthcoming chairmanship as being a real acknowledgment of his standing in the wider industry”.
Finally, on communication, Turner noted that IUMI had improved its utilization of multimedia to engage with members and to increase IUMI’s profile.
Turner said that five clear priorities represented an evolution of the longer strategic direction of IUMI.
“Social attitudes towards pollutants are hardening. The question for IUMI is what position should we take to these emerging issues over ad above what we are doing right now. This is a topic that I am keen for us to look closely at”, said Turner.
Turning his attention to the common theme, Turner said that this acted as a rallying point for conversation and gave a common idea to the outside world. “It is worth considering the word “chaos”. Is it the reality of the marine insurance market? We surely require a more coherent and articulate response.” Turner supplied three perspectives.
- Cyclical changes. Turner said that “we have seen a change in the behaviour of the market and many capital providers have run out of patience”.
- Structural changes, which are more permanent in nature, need to be addressed. In particular there was an emergence of digitalization. Meanwhile there were also:
- External influences that were causing change, emanating from areas nothing to do with insurance, but directly impacting the industry.
On the cyclical side, Turner said that the supply of capacity for years had been out of balance with the demand for insurance. “However, today there are clear signs that the supply of capacity was contracting, or at least becoming more demanding.”
Turner noted that it was not IUMI’s role to police or supply indications of pricing (indeed, at the same session Lars Lange emphasised the need to comply with anti-cartel laws in this matter) . “But we do wish to see a market that is healthy and will be for the long term.” One of the sad outcomes of deep cyclical dips was, Turner noted, the loss of expertise to the market, jettisoned in the short-term in search of cost reduction.
Turner emphasized that in the modern world there were no hiding places, and that affected today’s management of the cycle. “There can be no sentiment. Marine insurance must earn its right to attract and retain capital”, he said, observing that “the emotional attraction to marine outside the mutual sector has not sentimental attraction to marine that we might have. We have to earn the rate to attract and retain capital.”
Turner said that the way the marine sector worked was changing in lots of ways. “We can now start to think in terms of enhancements of the products we offer. Surely there is an opportunity to rethink some of the coverages we provide”. He added that “We are already seeing shifts with the online placement of risk. These changes will affect all forms of insurance. We have to adapt to what is coming.”
Some of the changes in the world would inevitably impact insurers, he said. The growth of the Asian market, the growth in the size of ships, causing bigger concentrations of values on board and in port areas. Outside of insurance there was much external disruption that was relevant to the industry.
Perhaps top of the list of the worrying factors for the industry was the growth of protectionism. “If these measures lead to fewer goods being shipped, less cargo means less premium, greater spare capacity, lower freight rates, lower ship values, and therefore lower total Hull premiums.”
On the external front, Turner said that protectionism was the major current concern. and, although he felt that “protectionism creates winners and losers, the overall impact could be a decrease in trading levels.
Meanwhile, insurers in the UK had spent millions establishing subsidiaries elsewhere in the EU so that they can write contracts for EU clients post Brexit.
Climate change and changing social attitudes could see marine insurers being forced to adapt or die. On the plus side, and with an optimistic conclusion, Turner said that the marine insurance sector had always managed to adapt and survive in the past. “Cycles come and cycles go, and although the shape of them may be changing, we have as an industry consistently found ways to reinvent ourselves. It would be the failure to adapt and change that would represent the greatest threat to our industry.”
Turner’s presentation followed two welcoming speeches from the host nation, Canada. Isabelle Therrien, president of the Canadian board of marine underwriters (and vice chair of the IUMI cargo committee) highlighted the significance of the St Lawrence water highway to the Canadian economy, as well as the engineering feat in building 16 locks that rise a total of 183 metres from the Atlantic to the American midwest.
Peter Hohman, president of CEO of the Insurance Institute of Canada, had noted that many more students and millennials were choosing to work in insurance from an earlier age.