From disrupted supply chains to inflation and weather events – the issues faced by the marine sector are far from negligible, and here NM Insurance’s New Zealand manager Lianne Waru (pictured) examines what’s happening and what it means for the world of insurance.
“The NZ market is going through some risk changes at the moment,” Waru told Insurance Business. “We are seeing underwriters starting to reduce capacity on the higher-valued vessels, and older vessels that are on swing moorings are becoming hard to place. So, there is a lot of movement within the market as underwriters review their risk appetites.
“This is requiring some brokers to seek support offshore from potential marine syndicates as the local market is declining to insure. It is not always easy to seek an international marine market as [there is constant] changing and adapting to current environments as well as local appetites.”
NM Insurance itself, as an insurance agency that operates across New Zealand and Australia, has had to undertake more diligence on reviewing the risks it writes, said the NZ manager.
Meanwhile Waru highlighted: “New Zealanders are very passionate sailors; however, we [are] a nation with an aging fleet. When the COVID pandemic hit, vessels were laid up and nothing was done with them, i.e., general maintenance, mooring checks, etc., so these things are being caught up… so we are finding the marine supply industry busier than ever as boaties get ready for the summer period.”
She also pointed to vessel sales being at an all-time high since 2020.
“This is probably down to a lot of people having extra funds to spend, so they are spending this on personal assets,” noted Waru. “We are also seeing supply and demand for these types of assets, which is pushing values of vessels upward similar to what occurred with the housing market.
“The problem with this, however, is what goes up must come down at some point, so reviewing these types of queries when increasing values from original purchase price [is needed], as the market demand is not a true reflection of an insured’s asset.”
Then there are the even wider issues being contended with on a global basis that put further pressure to the market.
The marine insurance expert told Insurance Business: “The NZ market is no different, I feel, to the rest of the world; we are experiencing the same issues here. With supply chains being disrupted, weather events, inflation, political unrest, the war in Ukraine – these all have knock-on effect to the overall marine industry.
“Logistics has been a huge issue on the marine transit/cargo side, where there has been delayed coverage, rejection into certain countries with the pandemic, and sanctions being imposed on certain countries. We also must contend with internal logistical issues at ports, with staffing shortages and backlogged supply chains.”
In Waru’s view, the easing of the above is not on the horizon yet.
She shared: “I don’t see this settling anytime soon. As borders and countries start to fully open up for business, we still have parts of Asia that are still locked down or working on a partial lockdown basis, which affects the supply chain in New Zealand. With Asia being one of NZ’s biggest exporters/importers, this has major implications here for us with trade.”
It’s not all doom and gloom, though. Waru pointed out: “New Zealand exports have remained pretty strong, with some imports from certain countries being affected. I think NZ and Australia are probably in a better position than most countries and have managed this pretty well.
“In saying that, we still face logistical challenges, and it may never get back to normal. This might be the new norm – only time will tell.”
One silver lining, said Waru, is the improved strength in brokers’ relationships with underwriters.
The NM Insurance executive asserted: “On a positive note, with the current ‘new norms’, it has created stronger relationships with marine-focused brokers who want to work with us to assist their customers and themselves… This has also created new or updated training so we, as underwriters, can learn what these expectations are, of our customers and brokers, and be at the forefront of knowledge.”
