Best's Review



A Global Conversation
Marine Life

Industry professionals talk to AMBestTV about the challenges in the marine insurance market.
  • December 2019
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Butch Bacani

Butch Bacani
Program Leader
United Nations Principles for Sustainable Insurance Initiative

“Another interesting initiative is our initiative to address issues related to the ocean and the ocean economy. We have produced recently, for example, a guide for the marine insurers to address the issue of illegal, unreported, and unregulated fishing.

Statistically, approximately one out of five fish is caught illegally around the world. We want to make sure that insurers are able to reduce the risk of insuring vessels or companies associated with illegal fishing activities. This is really a sustainability issue because we have unsustainable fishing happening in many waters around the world.”

Christian Stobb

Christian Stobb
Managing Director-Asia
Markel International

“Historically, the marine industry has looked to London for its insurance. The DNA of the Lloyd's market has been marine insurance.

What we're seeing more recently has been a rise in the level of sophistication and a rise in the level of capital and capacity in the local Asian markets. That means that the insureds and the marine companies out here in Asia are increasingly looking locally for that insurance product.”

John Miklus

John Miklus
American Institute of Marine Underwriters

“Container ships now are being introduced that are approaching 24,000 TEUs, twenty-foot-equivalent units. There's just been a steady rise in the size of these vessels over the last decade.

There was just in the news that the newest, largest ship is being launched, and it carries containers 24 wide on one of these new vessels.

The value of the cargo aboard one of these vessels is easily over $1 billion. The vessel itself, hundreds of millions of dollars, so there's a tremendous concentration of value aboard these vessels. That's an ongoing concern for marine insurers.”

Pascal Millaire

Pascal Millaire
Chief Executive Officer

“If you look at the total aggregate exposure in errors and omissions, in property business and eruption towers, in directors and officers, and even increasingly in lines that you wouldn't have thought about, like aviation, marine, energy, there really isn't a sector of P/C insurance that isn't transformed by cyberrisk.

Therefore, getting a handle on that silent cyber exposure, particularly the aggregation exposure to a catastrophic event, is really important.”

David Piesse

David Piesse
Chief Risk Officer

“The marine industry has been suffering for a while from high expenses and a lot of paper. We decided to utilize blockchain technology to address that pain point and put shipping onto an online blockchain platform.

We put together a consortium of the insurance industry, of brokers, a reinsurance panel, and insurers, along with shipping companies like Maersk. This consortium is working together with Guardtime and Ernst &Young to put together this solution.

We've recently done a hull and war cover. When a ship went through a recent war zone, we managed to do real-time pricing, and the captain chose an additional premium before he went through the war zone.

That was in his time zone, and in real time with granular data. This was a premium that wouldn't have been had so quickly in the industry.

Blockchain itself is evolving, not only as we see it today. The prime directive of blockchain is protection of the data layer, and then you see a lot of architectures coming in, ledgers, the smart contracts, but we'll see blockchain like it's a mutual kind of approach. We'll see this evolving into financial inclusion area, definitely a benefit for capital markets securitization.

Eventually, it will become mainstream as a layer over the internet that will make the internet tell the truth as opposed to just trusting the internet, which we all realize is probably not a good idea.”

Sean Dalton

Sean Dalton
Head of Marine, North America
Munich Re America

“These are challenging times for the marine insurance industry. Probably the most recent statistic that was put out by the International Union of Marine Insurance, which is the global trade organization for marine underwriters, is that global marine insurance premium is just shy of $30 billion.

Now what's really interesting is from 2012 through 2017, that's down about 12% as far in real dollar terms. Alarming as well, is that the largest lines of business, cargo, and hull insurance, are unprofitable and have been so for many years.

While there's certain markets around the globe that outperform and underperform, and companies within markets that do the same, when you aggregate these results on a global basis, it's really challenging and concerning.

Marine is a specialty line of business, and one of the motivations for being in that business is that you hopefully, over time, can outperform your property/casualty counterparts. We're showing globally we're underperforming. It's a challenging time for underwriters, and brokers and insurers alike.”

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