The International Union of Marine Insurance (IUMI) held its annual Winter Meeting, discussing about fundamental challenges facing the marine insurance market.
peaking at its winter meeting, Frédéric Denèfle, President of IUMI, said:
IUMI has a responsibility to navigate and support the marine insurance industry. A downturn in trade, geopolitical tensions, inflation, Environmental, Social and Governance (ESG) factors – as well as onboard safety – are all creating complexity
According to IUMI, one of the many challenges that marine insurers are facing is the reluctance of the reinsurance market to provide cover for risks involved in insuring maritime vessels in war-related regions. More specifically, the question insurance companies face is “how would they find their way around the risks without the support of reinsurers?”
Marine insurers are also currently confronted with geopolitical challenges amid ongoing sanctions, the war in Ukraine, and increasing tensions in Southeast Asia.
What is more, there has been a significant recent reduction in demand, resulting in slower vessel turnarounds in ports due to low cargo volumes. This, together with declining freight rates, shows that the market is decreasing. In turn, it impacts marine insurance as there is far less value to insure.
However, Mr. Denèfle told delegates that digitalisation must remain at the forefront of developments in the industry.
Keeping up to date with data-led innovations and digitalisation is essential for marine insurers. This includes the technical development of vessels and the ongoing challenges regarding fires on container and RoRo vessels. IUMI must advocate for proper regulations to address these challenges
At the end of 2022, IUMI released its 2022 global marine insurance market analysis, noting that building on the gains made in 2020, 2021 was another positive year for marine insurers.
According to the report, 2021 saw a robust macroeconomic recovery, but in 2022 worries about inflation and recession are gathering. For this reason, the International Monetary Fund (IMF) has lowered its global growth projection to 2.7%.
Furthermore, global marine insurance premiums in 2021 reached USD 33 billion, up 6.4% on 2020. Premiums have been lifted by increased global trade volumes, a stronger US dollar, increased offshore activity, higher vessel values and a reaction to deteriorating results in previous years. In fact, insurers in Europe and Asia, in particular.