As the first quarter of 2020 draws to a close, it’s fair to say that marine insurance is in a bit of flux. There’s been a reduction in capacity across the UK and Europe as a number of major international players have taken a hit and either reduced coverage oropted out entirely as a result.
“It’s a certainly a fluid situation at the moment,” says Nick Rowley. For just under two years, Rowley has been national cargo product manager at NTI’s Marine Protect,and he’s already weathered numerous marine insurance storms in that time.
Rowley attributes much of the current situation to insurers trying to compete onprice – a situation that’s understandable when you’re trying to build new market share, but one that almost always proves unsustainable in the long run.
“You’ve always got a finite lifespan when you go that route,” Rowley says. “It’s good from a buyer’s perspective, but the crunch always comes, and I think we’ve seen a lot of that play out over the last 12 to 18 months.
”The good news, however, is that such a situation presents an opportunity for Australian insurers to bring their own talents to bear and fill the gap where international insurers have fallen short.
“I think it’s a great chance for Australian players in the market to step up and look at what they can bring to the industry, ”Rowley says. “At our end, we’ve obviously got a sizeable capacity and broad risk appetite, which we can leverage – so, day to day, it’s about finding that sweet spot between being able to support clients and brokers with their needs while still ensuring it’s being done at a sustainable price point for all parties.”
Commodities and coverage
Of course, Rowley is well aware of the complexities inherent to marine insurance. Given that shipping is one of the oldest means of transporting goods around the globe, it’s perhaps not surprising that it’s an industry with its share of legacy issues and eccentricities.
“We’re working to do our bit to keep pace with technology changes, but that’s just standard practice,” Rowley says. “What I think we’re going to need further into the future is closer attention being paid into specific areas of marine insurance in order to develop even more up-to-date products – that’s something where brokers are invaluable, because they’re the ones on the front lines with customers every day, helping them assess where their exposures might be. It’s invaluable information.”
Rowley points to commodities as one such area of marine insurance. The nature of commodities is such that clients can have wildly different needs for their products.
“It’s a sector that’s very influenced by technology,” Rowley says. “So, for certain horticultural or food produce, you might need to ensure that climate and temperature control is being utilised to make sure they’re going to arrive safely at the other end.”
This would be a reasonably obvious consideration for most brokers, he adds, but there are other situations where more specific insider knowledge is required to ensure the best possible outcome for the client. The traditional method of offering varying levels of coverage across a variety of classes is becoming increasingly outmoded. Today, it’s crucial to ensure that clients have not only the correct coverage, but also the correct resources to ensure safe passage.
“For example, think about fruit and vegetables, meat and seafood – they’re a few common items that might require some form of climate control,” Rowley says. “Freight is very rarely just about sticking something on a ship anymore, and brokers need to be asking their clients the right questions.”
Responding to a pandemic
As might be expected, the spread of COVID-19 has also had a significant impact on the marine industry. Though the disease has already caused issues worldwide, Rowley believes the full effects will emerge over the coming months.
“We’ve already seen cancelled voyages, which you’d expect,” he says. “But China is such a major centre of world trade and manufacturing – we’re going to see a lot of flow-on effects across a whole range of industries.”
“There’s a broader desire in the market to better defi ne risk appetite and draw some delineation around what can and can’t be done from an insurance perspective” Nick Rowley, NTI’s Marine Protect
He points to Australia’s seafood industry as one example. China is one of Australia’s major purchasers of seafood, but that had almost entirely dried up when IB spoke to Rowley. It represents a microcosm of the wider issues that have been raised by the coronavirus pandemic, he notes.
“It raises a whole host of questions for marine operators,” he says. “Do these operators want to be sailing and taking risk for produce they might not be able to sell afterwards? Then you’ve got the actual transport issues – ships won’t be visiting certain ports, so produce is getting o oaded at intermediate ports, which adds additional steps to the supply chain process.”
Rowley also points to the ongoing tensions between the US and Iran as a potential issue that could resurface later in the year. The risk of war naturally means increased risk for businesses and, by extension, insurers.
“It’s not a situation that would necessarily impact every marine client – but it’s certainly something that could affect those who have trade connected to the region,” Rowley says.
He’s swift to add that he’s no doomsayer, but it’s crucial for those in the industry to stay up to date on wider world events, because they can have a very direct impact on the field.
“There’s a broader desire in the market to better defi ne risk appetite and draw some delineation around what can and can’t be done from an insurance perspective,” Rowley explains. “We always want to work closely with brokers to keep them up to date on coverage requirements. World events are just part of that process.”
Broker support and beyond
One of the key areas of focus for NTI’s Marine Protect in 2020 and beyond is ensuring brokers have the tools they need at hand. Rowley is well aware of the demands brokers have on their time and is keen to look for the most e cient solutions – primarily digital. More generally, Rowley notes, NTI is aiming to ramp up its interaction and messaging to keep the broking community as up to date as possible.
One of the first touchpoints is NTI’s various blogs, Rowley says. These are updated regularly to keep pace with industry news and world events – it’s an easy way to disseminate information that brokers can digest at their own pace. NTI also puts webinars and seminars with subject-matter experts online, and they’re recorded so they don’t have to be watched live.
“We’ve got the capacity to get the message out there,” Rowley says. “With all of the developments taking place in the industry, we want to make sure that brokers are able to provide the best possible service and prod-ucts for their customers’ needs.”
