Insurance

Significant COVID-19 impact on marine insurance

IUMI president Richard Turner

By Ranamita Chakraborty

The uncertainty stemming from the coronavirus pandemic has significantly affected the global insurance industry and, inevitably, that has impacted the marine sector, according to IUMI president Richard Turner.

Mr Turner was speaking during a keynote address to the International Union of Marine Insurance (IUMI) annual conference.

Mr Turner was speaking during a keynote address to the International Union of Marine Insurance (IUMI) annual conference.

“The slowdown in world trade coupled with an earlier slump in the oil price should result in a reduction in the overall premium base. We are seeing disruption and delays at some ports with queues of vessels waiting for a berth, and this is building an unwanted accumulation of risk as a consequence,” he said.

He also noted that the COVID-19 pandemic is disrupting supply chains which, in recent years, have become more globalised than ever before.

After the pandemic, he said it is possible there will be a shift to a simpler and local logistics pattern as geopolitical tensions and the impact of the virus exert a longer-lasting influence.

Meanwhile, he also pointed out that marine insurance tends to cover physical damage and so COVID-19 is not directly impacting the claims profiles of the marine sector. However, as part of a much larger insurance business environment, the sector is being affected indirectly.

“With a recent history of unprofitable underwriting years, COVID is increasing the pressure on marine lines of business to return to a sustainable technical profit,” he said.

IUMI is said to be focused on four areas that are set to exert maximum impact on the marine insurance sector of the future. These were identified as the COVID-19 pandemic, the changing macroeconomic and geopolitical situation, climate change and sustainability as well as data and digitalisation.

In terms of digitalisation, Mr Turner held the view that the marine sector was lagging behind other insurance lines, probably because of its relative size. He believed that the sector was now ripe for change with the pandemic changing the way the market operates, particularly in London.

“Brokers and underwriters have embraced remote-working and we have seen more online placing than ever before. It is difficult to see this process reversing significantly once the pandemic is over,” he said.

Asia Insurance Review

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