IUMI president characterises marine insurance role as “strength and stability in turbulent seas”

Published on Thu, 21/09/2023 - 13:11

Opening the International Union of Marine Insurance (IUMI) annual conference in Edinburgh, IUMI’s president Frédéric Denèfle explained the event’s theme of ‘strength and stability in turbulent seas’.

The role of the maritime sector underpinning global stability was core to his message, noting that “support for the economic miracle is dependent on the mariners in this room and our colleagues”.

Denèfle began his remarks to the almost 800 assembled delegates by setting out what is essentially “business as usual” for marine underwriters, before turning to headwinds facing the maritime sector.

“As marine underwriters, we are used to managing an array of casualties and losses onboard a variety of vessels and in ports and other shoreside facilities,” Denèfle told the conference.

“Dealing with the fall-out from natural catastrophes such as earthquakes and weather events are also workaday issues,” he said.

“Similarly, operating amongst geopolitical chaos is an ongoing problem we face but this has been exacerbated recently with the war in Ukraine,” continued Denèfle, who is also managing director of French marine war risks specialist GAREX.

“Marine insurers actively supported the creation of the original grain corridor to ensure that Ukrainian exports could still continue. Now that agreement has broken down, marine insurers are in discussions with the Ukrainian government to provide cover for the vessels moving Ukrainian cargoes,” he added.

Delegates were also welcomed by the chief executives of two UK “host associations”: firstly by Sheila Cameron of the Lloyd’s Market Association; and by Dave Matcham of the London market’s International Underwriting Association.

Denèfle listed several factors as sources of “strength and stability”, including the strength of marine underwriting teams at local and global market levels, a focus on managing accumulation risks, and, from insurers’ perspective, pricing adjustments amid shifting market dynamics.

Under “turbulent seas”, he listed inflation, the shift towards new technologies, recent years’ marine loss activity, geopolitical uncertainty, and “world fragmentation”.

He explained how fragmentation was causing headaches for marine insurers and the sector they underwrite.

From a trade perspective, Covid-19 highlighted strategic dependencies, he emphasised. The pandemic led to a reduction in global demand and encouraged a relocation of supply chains and resultant trade activity to be closer to the consumer.

On the legal side, shipping and insurance was being targeted with increased sanctions as well as local green regulations, for which, for example, some jurisdictions will not register vessels above a certain age.

As the unified spokesperson for marine insurers, IUMI has liaised with various authorities and regulators to support both the industry and underwriters.

A consequence of inflation, caused by covid and the war in Ukraine was already manifesting itself in the increased cost of claims, the requirement to take on more risk as asset values increase, and a related need for more capacity in the market.

Added to this, a general technology shift in terms of clean energy, clean propulsion and autonomous vessels was creating more “turbulence”. However, all new technologies and climate change reduction measures are welcomed by IUMI which stands ready to act as an enabler to their introduction.

The marine insurance market is in a state of flux, Denèfle explained, although confident in its ability to weather the storm.

“As the world’s oldest insurance business, our sector has demonstrated its ability to flex to new needs and conditions, both market and macro-economic,” he said.

“I foresee a return to dedicated, experienced teams; a heightened reliance on intelligence and data systems to anticipate the consequences of geopolitical uncertainty; the emergence of local teams underwriting local business in their own areas to challenge fragmentation; an adjustment of market capacities and pricing to fight inflation pressures; and the creation of specialist teams to fully understand the implications of new technologies.

“Of course, much of this is already happening,” Denèfle said.

Turning to IUMI itself, he highlighted recent progress in recent years.

“During my first full year as president, I have come to understand that marine underwriters face a range of complex issues but that they share common risks and don’t operate in isolation,” he said.

“As a community, we must invest in our collective future. Our business is not well understood and so we must draw on IUMI to bring us together, to provide a common voice and a unified path ahead,” Denèfle continued.

“With that in mind, our 2030 strategy will lead us to become a stronger and ever-relevant association operating within a larger community of members and partners,” he added.