Smooth sailing as challenges are steadily overcome
Mike Brews and Viviene Pearson, representing the SA Organising Committee of IUMI 2018, is congratulated by Matthew Lewis for an outstanding conference.
Members of the South African Organising Committee of IUMI 2018 From left: Kwanele Sibanda (SAIA) Paul March (Horizon Marine Underwriters) Hilton Adams (Munich Re) Viviene Pearson (CEO of SAIA) and Mike Brews (Horizon Marine Underwriters)
For the first time in 144 years, the International Union of Marine Insurance (IUMI) held its annual conference in Cape Town from 16 to 19 September.
The IUMI conference is the biggest of its kind in the world and brings industry leaders in marine and marine insurance together to plot the future of the industry.
An industry colleague – Johan du Toit – attended the conference and highlighted some of the most important points that were discussed.
A healthy industry
To kick off the conference, IUMI presented its annual statistical report, which made for interesting reading.
According to the report, while global marine premiums were up by 2%, an increasing mismatch between income levels and covered risk was highlighted.
The Vice-Chairperson of IUMI's Facts & Figures Committee, Astrid Seltmann, said that the overall premium income reached $ 28.5 billion in 2017 which represents a 2% increase compared with 2016. “This upswing is largely attributable to growth in trade plus strengthening of European and other currencies against the US dollar. But it masks the dramatic situation which is unfolding when current premium levels are viewed in relation to covered risks and the impact of claims,” said Seltmann.
She pointed out that the cargo market was recently affected by unprecedented natural catastrophes and outlier event losses and this has negatively impacted underwriting results.
Seltmann stressed this downward trend is particularly worrying given the relative absence of major hull losses in recent years. The last ten years' statistics clearly show an increasing volatility in the impact of claims on underwriting results caused by the random occurrence of claims with unprecedented cost.
Sustainable underwriting
“In general, the IUMI statistics clearly illustrate the need for sustainable underwriting by understanding the simple - and sometimes not so simple – mathematics of evaluating the risks and expected costs associated with a prudent marine portfolio," says Seltmann.
The distribution of the $28.5 billion global income between geographic regions remained stable, with only a 1% increase in the share of Asia and Latin America as compared with Europe. In 2017, Europe represented 49% of the global income, Asia/Pacific 29%, Latin America 10%, North America 6%, Middle East 4% and Africa 2.4%.
For global marine premium by line of business, cargo continued to represent the largest share with 57% in 2017, hull 24%, offshore energy 12% and marine liability (other than Protection & Indemnity) 7%.
Read the Du Toit’s full article here.
Global cargo insurance market
Sean Dalton, chairperson of the IUMI’s Cargo Committee, said in his annual overview cargo remained the largest commercial ocean marine line of business globally in terms of Gross Written Premium (GWP).
“The modern cargo insurance policy provided some of the broadest first party insurance coverage that is available in the non-life insurance market. Cargo insurance, combined with service offerings including claims and risk engineering, remains one of the most comprehensive polices available in the market.”
Dalton said whilst there were geographical differences, the global cargo insurance market remained highly competitive with an abundance of capacity. “Following the 2017 natural catastrophes there has been a ‘firming’ of market conditions for cargo accounts impacted by these events and on loss affected business.”
Read Du Toit’s full article here.
Poor regulation and enforcement
The South African fishing industry is a robust and vibrant industry that is an important contributor to the country’s gross domestic product.
But, it is also an industry that faces its own challenges, some of which could prove to be perilous if not dealt with effectively.
This is the case with most fishing industries across the world. One of the biggest challenges that needs to be overcome is poor regulation and enforcement.
Most legislation concerns only certain fishing vessels (more than 10 metres or 7 metres and/or motorized), while small-scale fishing vessels are not properly regulated and controlled at all.
“Enforcement of regulations is, in most cases, weak and even vessels that are regulated do not comply with regulations. Furthermore, lack of oversight throughout the commercial fishing industry means vessels can operate with few or no safety measures in place,” said Jeremy Prain, Legal Partner at Bowmans Law in Cape Town.
Lack of data
Prain added that lack of data makes it difficult to compile accurate statistics and it is not yet standard practice to collect data from marine accidents.
“Safety at sea is not given great consideration by many governments, because the magnitude of the problem is not even known. In cases where data collection systems do exist, only those accidents that have involved Search and Rescue operations are registered. Accidents with small-scale vessels are often not recorded and it is impossible to gain a global perspective,” said Prain.
Read Du Toit’s full article here.
Editor’s Thoughts:
An increase of 2% in global premiums indicates that the marine insurance industry is vibrant. South Africa plays an important role in the industry but safety concerns within the local fishing industry needs to be addressed. It was pointed out at the IUMI conference that Medical care is often inaccessible and migrant fishers make up a high proportion of workers on the high seas. There needs to be tighter regulation to address this. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
