What a year 2017 has been! As this year draws to an end it is quite remarkable to look back and see what has happened in just one year…. President Trump’s inauguration, the UK activating article 50 to withdraw from the Eurozone, increasing acts of terrorism all over the world…the list goes on and on.
The current uneasy political and financial environment is what provoked us to choose this year’s annual conference theme “Disruptive times – opportunity or threat for marine insurers?”. And it was a hugely successful conference thanks to our great speakers, hardworking Technical Committees, the impeccable organisation of the General Insurance Association of Japan (GIAJ) and the IUMI secretariat.
Over 500 delegates and 60 speakers and panelists descended onto the city of the rising sun, Tokyo, and discussed innovation, digitalisation, disruption in shipping and logistics, as well as other aspects of society, including politics and technologies. After three days of fascinating presentations, interesting discussions and heated debates I believe three main themes emerged relevant to the marine insurance industry.
The market environment: The IUMI Facts & Figures Committee reported that the global economy was showing signs of recovery after two poor years which is good news for marine insurers. However, the increase of protectionist measures worldwide with free -trade agreements in danger, and political instability in various regions of the world has the potential to cause serious disruption.
Our business is also still under pressure. The international cargo and hull markets continue to be in a soft market state. The offshore energy sector also looks gloomy with strong pressure on rates and the depressed oil price which has led to a massive reduction in exploration and production.
In contrast to past years we have seen an intensive hurricane season with Harvey, Irma, Maria and Nate equally hit marine insurers. On the basis of various estimations, we expect that the total insured market loss from these events might exceed US$ 100bn. These huge losses will have an impact on the insurance markets globally not just in the affected regions.
There are of course positive signs on the horizon with the China's Belt and Road initiative which will undoubtedly unlock new opportunities for marine insurers and an upswing in the global economy will push trade volumes and values.
Technological, legal & regulatory challenges: With ships growing larger and larger, new floating offshore technology and the impact of climate change, government intervention and stricter regulations are becoming common practice. As marine insurers we must have a clear focus and understanding on the changing supply chain risks and increasing accumulation of values on ships and storage. Underwriting excellence means intelligently managing these risks in our books.
Disruption, innovation & digitalisation: Technological innovation and digitalisation is going to massively change the shipping and logistics industry. E-navigation, smart port logistics, intelligent containers, blockchain, the Internet of Things are going to alter our clients’ businesses and their expectations towards their insurers.
Digitalisation will also impact our own business as it will change the existing insurance value chain. Marine insurers are very well positioned to tackle these challenges if we focus on our competencies; expertise, service and relationships. Together with the willingness to promote innovation and understand the changing expectation of our clients, we will be ready to turn disruption into opportunity.
Looking forward to 2018 I am excited to see how the market develops and am confident that marine insurance will prevail by continuing to offer high quality services to our clients.
I wish you happy holidays and look forward to working with you next year!
Dieter Berg, IUMI President