Published November 2019

A full round up of the issues currently being worked on by the Policy Forum.

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Published November 2019

Traffic in polar waters is increasing with more commercial vessels using this route to transit between Europe and Asia; and an upsurge of cruise ships operating in the region. Ice conditions, the role of class, ship design, remoteness, support networks, availability of ice breakers, search & rescue (SAR), and the experience and training of crew are some of the key issues for underwriters to consider when assessing this risk.

IUMI’s position

IUMI is supporting and participating in industry discussions, with the IMO for example, to create the necessary standards, regulations and infrastructure for safe operations in polar waters.

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Published November 2019

Autonomous shipping/transport is gaining traction within the industry with the possibility of driverless trucks and vessels becoming a reality in the near future. Insurers need to address the various legal and liability issues that this poses as well as the risks related to new technologies and the internet of things. 

IUMI’s position

For autonomous/unmanned transports to become insurable the use of autonomous systems must rely on proper industry standards, certification and regulatory regimes. IUMI is monitoring industry and government-run projects. IUMI is also encouraging classification societies to take an active role in the technical and operational risk aspects of autonomous vessels and encouraging the development of industry standards.

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Published November 2019

The marine and offshore sectors are becoming increasingly reliant on information technology, data networks, transmissions and connectivity in their daily work. This increases their exposure to cyber related risks.

IUMI’s position

Stand-alone ransomware insurance products are already available but consequential damages to hull, cargo and third-party liabilities from a cyber-attack poses a different and more costly risk. The limited data available on such attacks is a challenge to underwriters.

IUMI takes part in developing industry guidelines on maritime cybersecurity practices. IUMI will continue to monitor the development of this risk and support loss mitigation initiatives, including through IMO.

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Published November 2019

The growing pressure and urgency across all fields of society to respond and find solutions to environmental, social and governance (ESG) issues has led to some rethinking within the marine insurance industry. Individual companies are reconsidering their targets and responsibilities beyond their core businesses to incorporate sustainability.

IUMI position:

Based on the many initiatives and expectations concerning ESG issues and how this is handled by marine insurers, IUMI will play a role by facilitating a dialogue within the IUMI membership and addressing IUMI members’ position on ESG issues towards public stakeholders, authorities and industry partners.

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Published November 2019

The EU Directive on safety and environment for offshore oil and gas operations was adopted in July 2013. The aim of this Directive is to reduce, as far as possible, the occurrence of major accidents related to offshore oil and gas operations and to limit their consequences.

Article 4 of the new Directive states that evidence of provisions to cover potential liabilities shall be included in the application for a licence. Specifically, with reference to financial security the Directive states “…the Commission should undertake further analysis and studies of the appropriate measures to ensure an adequately robust liability regime for damages relating to offshore oil and gas operations, requirements on financial capacity including availability of appropriate financial security instruments or other arrangements…”

IUMI’s position

IUMI supports a voluntary financial security system rather than a legislative compensation system over and above existing provisions. This is likely to be most effective, given also the capabilities and limitations of insurance as a financial security instrument.

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Published November 2019

The EU Recognised Organisations (ROs) have established procedures and technical requirements for Mutual Recognition (MR) whereby, under specific circumstances, they will recognise certificates for material, equipment and components from other class societies. However, insurers expect the surveys of safety critical materials, equipment and components to

be carried out by the RO classing the vessel and are concerned that allowing MR in these circumstances will undermine the significance of ship classification as a vital component in today’s safety regime at sea.

IUMI’s position

IUMI recommends that mutual recognition is clearly limited to materials, equipment and components of proven low safety criticality. Where appropriate, IUMI also participates in workshops and consultations to convey this view.

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Published November 2019

Machinery damage is the most frequent cause of loss in marine insurance. 40% of hull claims, by number, are due to this cause and they comprise 30% of costs. This is likely to increase with the introduction of low-sulphur fuels.

Cat fines are small particles of metal deliberately introduced to fuel oil to ‘crack’ the fuel and, unless removed, will cause serious damage to a ship’s engine and machinery. Cat fines are the most typical and well-known dominant cause of machinery damage and their impact is likely to increase with the wider adoption of low-sulphur fuels.  

IUMI’s position

IUMI is increasing awareness of this issue, monitoring and supporting developments and encouraging the implementation of new IACS recommendations for petroleum fuel treatment systems for marine diesel engines.

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Published November 2019

The Incoterms® rules are an agreement between seller and buyer relating to the formalities and obligations concerning the tasks, costs and risks involved in the delivery of goods. The International Chamber of Commerce (ICC) began the process of revising the Incoterms® rules 2010 rules in late 2016. The terms chosen for the transfer of risk will have a direct impact on the cargo insurance obligations, and the revision is consequently of interest to property insurers.

IUMI’s position

IUMI considers wordings of relevance to insurers and has provided input on three occasions throughout the revision process.

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Published November 2019

Ships in distress should be allowed a place of refuge. The current practice of some states refusing access to their ports is of major concern to insurers and other stakeholders.

IUMI’s position

IUMI is lobbying for better accommodation of ships in distress through the implementation and enforcement of existing measures. IUMI supports the EU Operational Guidelines on Places of Refuge and their implementation and is actively encouraging global adoption. 

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Published November 2019

Container vessels are rapidly increasing in size, and with fires onboard and misdeclaration of cargo being two of the worst hazards in the shipping industry, insurers are highlighting several issues related to the safety of these ships.

IUMI’s position

IUMI supports measures that improve the monitoring of containers and their contents, including supporting internationally harmonized legislation and national regulations based on the Code of Practice for Packing of Cargo Transport Units (CTU) Code. IUMI continues to monitor and support measures to ensure the structural safety of large container ships and assessing with other stakeholders the need for further action on the installation of necessary firefighting measures.

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Published November 2019

Marine underwriters have witnessed that the frequency of fires in the car/roro segment is currently at a level twice the frequency of fires on most other vessel types.

Cargo fires are the most frequent type of fires onboard these vessels, which could be related to the fire risk of cars in general, as well as challenges with detecting, locating and extinguishing fires on these vessels.

IUMI’s position

IUMI supports the Interferry RoRo Deck Fire Safety Operational Best Practice Guidance and the ongoing work at the IMO to improve safety of roro vessels and car carriers.

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Published November 2019

International marine insurers can be affected by a wide range of barriers when doing business internationally including: limited movement of data across borders; unfair competition from state-owned enterprises, lack of transparency and the need for due process of law. What’s more, recent developments – the looming ‘trade war’, Brexit, China’s Free Trade Agreements, Belt and Road Initiative - are all affecting the movement of goods and trade flows. Accordingly, this is also impacting marine insurance.

IUMI’s position

IUMI supports free trade and is monitoring all developments. The Trade in Services Agreement (TiSA) (which was launched by the US to improve and expand trade in services) addresses major and fundamental barriers to trade in services and suggests a more liberal approach to cross-border regulation in areas such as marine and energy insurance. TiSA proceedings however came to a complete halt in January 2017 with the Presidency of Donald Trump in the US and IUMI encourages these proceedings to resume in the near future.  

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Published November 2019

The International Maritime Bureau (IBM) reported 180 piracy and armed robbery incidents worldwide in 2017. The Gulf of Guinea, Gulf of Aden and the Indian Ocean are areas of serious concern for marine insurers.

IUMI’s position

IUMI will continue to monitor and inform the IUMI membership of developments. A strong supporter of the Best Management Practice (BMP) 5 guidelines, BIMCO and ICS guidelines, IUMI also supports the implementation of ISO PAS 28007.

Overall it is vital for owners and insurers to remain vigilant in the Indian Ocean and governments to support counter-piracy operations through naval task forces and other means of support.

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Published November 2019

International sanctions continue to be used by countries to encourage other nations to conform to international agreements, particularly trade. The current targeting of financial services has demonstrated the necessity for marine insurers to keep up-to-date with new sanction regimes and how to comply with them.

IUMI’s position

IUMI will continue to offer guidance on where information can be found from the key sanction regimes and recommends proper due diligence is taken by marine insurers.

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Published November 2019

The theft of cargo in the Americas, Asia, Africa and Europe has reached alarming numbers. Cargo crime is encouraged by a low detection risk and limited law enforcement capabilities. Whilst much is being done by the industry to prevent cargo theft, action is also necessary from relevant authorities to reduce losses.

IUMI’s position

IUMI encourages and supports measures that contribute to the safe and secure flow of goods within the global supply chain and increases the safety of people working within the transport sector. IUMI will continue to monitor and inform its membership of relevant initiatives and best practice.

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