Supply Chain Management Risk in Martime Sector May Ramp Up

Speaking at the American Institute of Marine Underwriters (AIMU) biennial “Marine Insurance Issues” seminar in New York this week, IUMI President, Dieter Berg raised a number of concerns currently facing the marine insurance sector.

Chief among them was Cyber threats. Analysts note that there's a growing reliance on IT – within shipping companies, ports & logistics and offshore – and it is increasing the exposure to cyber risk. Underwriters need a better understanding of these risks and must tailor their products to meet client needs.

Another trend causing concern is the deployment of mega vessels. This, says IUMI, is affecting insurers due to the huge cargo values transported aboard; integrity of vessel structure and stability; and the ability of global salvors to respond to an incident. This increases exposure for insurers. In addition, recent incidents involving car carriers raises a question about accumulation issues in automotive policies.

Then, there's the increasing complexity offshore. More complex offshore installations, larger Floating Liquefied Natural Gas (FLNG) and Floating Production Storage and Offloading units (FPSO) operating in remote locations, including Arctic waters, inevitably increases risk. More complicated mooring systems and increased on-water traffic surrounding these installations is also causing concern, as is the current volatility in oil price.

Finally, note IUMI analysts, the rise of mega subsea construction projects in remote offshore areas pose huge challenges to insurers in determining risks, including the value of equipment and the likelihood of salvage.

“The marine insurance sector is undergoing a period of change,” says Berg. “We are experiencing a number of external challenges due to increasingly complex technologies and the impact from the financial environment.”

Berg adds that insurers are facing increased exposure from information technology, from the growth in offshore oil & gas exploration and from the never-ending search for economies of scale within the shipbuilding and operating sector.

Added to that, uncertainty over oil prices and the general economic picture is exposing marine underwriters to a level of risk we've not experienced before.

“We need to ensure we fully understand the risks our industry is facing and offer products that match these new trends and deliver adequate cover for our clients,” says Berg.

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