It has been a busy week for the marine insurance sector as the International Union of Marine Insurance (IUMI) held its annual conference in Chicago.
While the event is focused on marine and energy underwriters there were some significant lessons to be learned for the wider industry.
It saw the publication of the fifth annual Global Maritime Issues Monitor which found senior maritime decision-makers believe the maritime industry will be most impacted by the decarbonization of shipping and new environmental regulations in the next decade.
Jointly published by the Global Maritime Forum, Marsh and the International Union of Marine Insurers, the report concluded that the decarbonization of shipping and new environmental regulations are seen as the most impactful issues for the second year in a row. Geopolitical tension and fuel price increases top the rankings in terms of likelihood. The industry feels least prepared for autonomy technology and failure or shortfall in infrastructure.
Issues linked to decarbonisation and climate change, decarbonisation of shipping, new environmental regulation, failure of climate change mitigation and adaptation, continue to rate highly across impact and likelihood. For the first time, the industry’s perceived level of preparedness for these issues has increased.
The finding may not come as a shock to many as the climate, environment and sustainability are all linked with regulators now looking to driver greater sustainability via new rules around ESG.
It is here where outgoing IUMI president Richard Turner said the world has reached a stage where insurers and reinsurers can no longer be seen simply as interested bystanders and it is a message that should resonate with the wider insurance community.
“ESG will be a dominant catalyst for change in our sector in the next few years. It is simply not credible for the marine insurance industry merely to ‘spectate’ on the issue and leave it to the ‘industry’ to resolve the problems. The growing pressures in society, in politics and regulation and in terms of investor expectations require us to participate and act.”
Although rated high, new environmental regulations and decarbonization of shipping dropped from the number one and two spots in likelihood in 2021 to third and fifth, respectively. Coming at a time when climate and ESG are at the top of many risk management and board agenda, to see the risks fall in the likelihood of having a major impact in the year ahead was seen as a concern.
Many observers expressed concern that the war between Russia and Ukraine, with its high impact on energy use, is drawing attention away from climate issues, and not only in the maritime industry. The fear is that the need to keep the light in will take precedence over the need to drive the transition to a net zero economy pushing the issues further down the road and in doing so will not only store up the challenges but make them more acute when the world turns its attention back to the risks and their effects.
Jon Guy, Editor