Marine premium adjustment on the cards as exposures increase says IUMI President

A combination of rising inflation and increased global exposures will add to pressure for rating readjustment in the marine (re)insurance market going forward, according to Frédéric Denèfle, President of the International Union of Marine Insurance (IUMI).

Denèfle’s comments were made as part of the opening address to delegates at this year’s IUMI Conference in Edinburgh.

In a wide-ranging address, he conceded that the market is facing a number of considerable challenges at the moment, including inflation, claims and the continuing conflict in Ukraine, and that – as a result of this conflagration of concerns – profitability is a core target for the marine insurance sector at present.

He said that inflation caused by COVID and the war in Ukraine was already manifesting itself in an increased cost of claims, while there is also now a requirement to assume more risk as asset values increase, with a related need for more capacity in the market.

Added to this, he said, a general technology shift in terms of clean energy, clean propulsion and autonomous vessels was creating more “turbulence”.

“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,” he said. “Dealing with the fall-out from natural catastrophes such as earthquakes and weather events are also workaday issues. Similarly, operating amongst geopolitical chaos is an ongoing problem we face but this has been exacerbated recently with the war in Ukraine.”

“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.”

Continuing the theme of turbulence, Frédéric Denèfle explained how fragmentation was also causing headaches: from a trade perspective, COVID has highlighted a range of strategic dependencies, while from a legal perspective, shipping and insurance is being targeted with increased sanctions as well as local green regulations where, for example, some jurisdictions will not register vessels above a certain age.

Although the marine insurance market was in a state of flux, Frédéric Denèfle was confident in its ability to cope, however:

“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. 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.”