2010 IUMI Convention: Marine Insurance - Meeting the Challenge of the New Decade

Roughly 90% of all transported goods are carried by ships. The rapid growth of world trade over the past decades could not have happened without the equally rapid development of the marine cargo industry. Through its risk transfer services, marine insurance has been a key partner of the marine industry for over 150 years.

Marine is the oldest insurance sector. Today, the world's fleet counts approximately 20,000 units. Marine transport has soared in step with globalization and the huge expansion of global trade. It has been essential in integrating emerging markets into the global trade streams.

Swiss Re is proud to be the main sponsor of the upcoming annual convention of the International Union of Marine Insurance (IUMI), to be held in Zurich 12-15 September 2010. Under the motto: "Marine Insurance - Meeting the Challenge of the New Decade", some 600 delegates from over 50 countries will convene to discuss a variety of topics.

Zurich may not be on the ocean, but Zurich, Switzerland is the third largest reinsurance location worldwide. And Switzerland's merchant fleet is certainly not the smallest, ranking 70th worldwide.

IUMI: global platform to discuss challenges to marine transport

The convention takes place at a time when the marine industry is undergoing substantial transformation. IUMI President Deirdre Littlefield said in the run-up to the convention: “For underwriters, statistically speaking, a much younger profile for the world fleet should signal fewer ship casualties and claims. At the same time, however, we can anticipate landslide changes in shipping over the next 10 years as vessels and ports expand in size and a whole new raft of technological advances fall into place, making ships increasingly more complex to operate".

IUMI also plays a key role in helping to achieve better data transparency. Marine insurers need to better understand the main drivers behind losses. This will help underwriters charge appropriate premiums for exposures insured. IUMI's "Claims Data Collection" project currently underway within the organisation's facts & figures committee tackles this challenge. This needs to be a global initiative as Marine is truly a global business. Swiss Re therefore hopes that all IUMI member companies can contribute to this exercise.

Swiss Re: expertise and products for marine (re)insurance

Given IUMI's important role in leading the discussion on improving the safety and security of marine transport, Swiss Re has been a long-time member and supporter. As one of the world's leading marine reinsurers Swiss Re contributes to IUMI committee work via own experts and through technical publications on marine-related risk transfer products.

In a new publication, Swiss Re tackles the challenge of losses associated with cargo risk concentration in ports: "Safe havens: measuring natural catastrophe exposure to cargo traded through ports" (see right) attempts to quantify the industry exposure to the volume of cargo in major ports. Swiss Re's Cargo Port pricing tool, CargoCatSim, provides a solution.

Swiss Re also pioneered the development of facultative excess of loss coverage for the marine insurance industry through its 2009 publication "Marine facultative excess of loss". It provides demonstrations and examples for both cargo and hull, thus enabling underwriters to determine to what extent facultative excess of loss is an appropriate reinsurance option.

Addressing the challenge of piracy, Swiss Re recently published a report on the costs of this threat to commercial marine transport. For shipping to flow between Asia Pacific and Europe, a route which accounts for 50% of global trade, ships must travel through the world's two most piracy-prone regions."Shipping threatened by piracy: Who picks up the bill?" looks at what can be done throughout the shipping industry and marine insurance value chains to manage these growing risks in the face of changing laws, inconsistent underwriting approaches and rising costs.

Published: 8 September 2010

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