Lloyd’s market needs to keep pace with changes in the marine sector as it moves towards greater transparency, says leading shipping underwriter
As the global container shipping industry moves towards greater transparency and stronger corporate governance, the London insurance market must also re-plan its approach in this sector in order to remain competitive.
Structural changes of the type that were predicted by Maersk Line CEO Eivind Kolding earlier this year have started to influence the way marine insurance is being written, says Simon Stonehouse, a leading Lloyd’s underwriter at Brit Insurance.
“Within the container shipping industry there’s a paradigm shift taking place where the commercial focus is moving from price towards delivering higher levels of service and reliability to customers” observes Stonehouse.
“These changes have been predicted for sometime given that the industry appeared to have become stuck in its old ways. Increasing demands made by customers for better service and reliability has meant that processes for booking cargo, for example, have had to be streamlined in order to meet these expectations,” says Stonehouse.
The future for the container shipping industry lies in making the process as easy as booking an airline ticket as well as settling claims with the same degree of simplicity.
The global marine insurance market is estimated to be worth over USD 23 billion and hull premiums account for about USD 6 billion.
In London, the new claims transformation process has given leading underwriters more control in order to settle claims, but more still needs to be done.
With around 90 percent of goods transported globally being carried by ship coupled with the sheer number of vessels and ship owners involved has led to severe fragmentation and lack of structure in this important part of the global supply chain.
However on a more positive note, many charterers have started to adopt new corporate structures in response to the changing dynamics of the global market.
“Our view is that the London insurance market also needs to evolve in parallel if it’s to remain competitive or risk being left behind. It’s here that there are opportunities to learn from other insurers that deliver a totally different type of service that’s more in tune with the changes that are occurring within this sector,” argues Stonehouse.
At the root of this thinking is the investigative rather than adversarial approach taken by a select few in London with respect to insurance claims.
For the past four years the Dublin Claims Conference, which is attended by claims practitioners and marine lawyers, has been investigating a new Hull Claims Protocol which again is on the agenda this year.
Stonehouse adds:“Lloyd’s needs to move away from settling claims by paying out for repairs once they are completed and then arguing over the details as to what’s a valid claim under the policy. By then, the money’s been spent and it’s too late. For example, distinguishing between repairs carried out for the insurer’s account and those for the owner’s account can be a grey area. Identifying the costs from the outset would save time, expense and heartache.”
Brit Insurance has been in the vanguard of underwriters advocating a more proactive approach. By getting claims professionals on the ground immediately – regardless of distances involved – incidents within the marine sector can be managed more efficiently and claims issues can be addressed as they arise.
Stonehouse concludes: “The marine hull sector is changing and streamlining its business. By embracing these changes and reforming the way the market operates, we can be confident of remaining the world’s leading marine insurance market well into the future.”
About Brit Insurance
Brit Insurance is an international general insurance and reinsurance group specialising in commercial insurance. The Group writes a diverse portfolio of insurance and reinsurance, offering worldwide protection. The scope is wide-ranging: from small and medium sized traders to the largest multinational corporations. Our distribution model is centred on brokers and intermediaries. Reflecting where our customers trade, we are organized into three strategic business units – Global Markets, UK and Reinsurance – which have access to our underwriting platforms including Brit Insurance Limited and our Lloyd’s syndicate, Brit Syndicate 2987.