The International Union of Marine Insurance (IUMI) – which recently called on the International Maritime Organization to regulate the use of new marine fuels – has warned that: ‘Changes to fuel and propulsion types will impact the hull sector and underwriters must be in a position to understand the risks before adequate insurance products can be developed.’
Consequently, the IUMI concluded that: ‘Decarbonisation of shipping is underway but remains a long way from reality.’
The IUMI – which held an online conference from Seoul yesterday (9 September) – added: ‘Technology and infrastructure must be developed and crews must be trained appropriately.’ And, like others in the industry, it is calling for a ‘holistic industry response, together with governmental support, to achieve a low carbon future’.
Speaking at yesterday’s online conference, Rama Chandran, chairperson on the IUMI’s Ocean Hull Committee, also expressed concern over the long-term sustainability of the hull and machinery insurance sector.
‘Whilst it is encouraging to see the 2020 premium base growing from the previous year alongside improvements in loss ratios,’ said Chandran. ‘We mustn’t forget that we are operating from a very low position and that the premium base has only recently begun to creep upwards following a sustained decline since 2012. The improvement in loss ratios for 2020 largely stems from reduced shipping activity during the recent COVID period and a subsequent lack of claims.’
Chandran continued: ‘The first half of this year (2021) has seen a potential deterioration in the overall premium base from 2020 – it continues to develop, but growth appears to have slowed, or even plateaued since 2020. This is likely due to increased market capacity, particularly from London. As shipping activity returns to pre-COVID levels, it is inevitable that we’ll see a rise in claims and that will dampen the more encouraging loss ratios IUMI reported for the 2020 period. Overall, the ocean hull sector is improving but it is not yet certain how sustainable that improvement will be.’