Marine insurers gathered in the Scottish capital Edinburgh this week for the annual conference of the International Union of Marine Insurers, and after four days of debate and discussion the venue choice could be considered apt.
The city has the nickname Auld Reekie, due to the clouds of smoke that used to engulf Edinburgh during its industrial past and the fact that for those in the country the city had a distinctive and unpleasant smell.
For underwriters the issues at the top of the agenda were focused on the new risk landscape and while there was a firm view on preparing for the future the past and current could not be ignored.
The arrival of two merchant vessels into Ukrainian ports was announced as the delegates gathered and the middle of the week saw one loaded with grain look to break the Russian blockage and reopen albeit an unofficial corridor across the Black Sea.
Results were positive, rates are good, and profits are being made but that cannot take away from the concerns for the future risks around decarbonisation, new technology, the growing cargo accumulations risk as vessels get ever larger.
While they are planning for the years ahead and supporting their clients on a journey to a greenhouse gas free future, much uncertainty surrounds the risks that will emerge with many unanswered questions around the ability to meet the GHG emission targets in the next decade and beyond. They heard that alternative fuels will be late in arriving and will be at a premium given the ability for their provision in scale is still far from certain. These new vessels and new technologies will require 750,000 seafarers training by 2050, a task which one expert expressing his concerns around the ability to train so many so quickly when the technology is also under developed and not yet implemented.
Therefore, insurers and reinsurers will have to wait for the smoke to clear and for a clear view of the risk horizon before they can react with any certainty whatsoever.
The invasion of Ukraine and the war risks that it has created are a real challenge. Underwriters say they have not abandoned their clients despite a withdrawal of reinsurance capacity for war and believe that the year ahead will bring a degree of normality back into the class. However, one shot across the bow of one of the vessels heading out of Ukraine may well blow those hopes out of the water.
Discussions also centred on the potential for a geopolitical crisis between China and Tiawan and the implications for access to the world’s biggest ports.
The current climate looks rosy as underwriters see solid premiums, increasing demand for maritime traffic and goods, and claims levels which are turning the market into profit.
However, the challenges of the future and the potential for the unforeseen has the market concluding while things look rosy at present there is a scent of future tests to come, some of which have the potential to test the market to its limits.
Editor, Emerging Risks