By Liz Booth
The biggest challenge facing the marine insurance industry today is the lack of skills, according to one South African underwriter.
Adriaan Bester, manager: marine, Lion of Africa Insurance, warned: “There is a shortage of skilled marine staff entering and confining in the marine insurance industry which creates a cause for concern. This ‘inexperience’ not only increases competitive levels unnecessarily, but also forces down underwriting margins. Risks are written below premium rates with wider cover, which is not sustainable.”
He went on to add: “If an intermediary with no or very little marine experience has clients who require hull or cargo insurance, they would be best served by speaking directly to a knowledgeable marine insurance person. This will avoid the intermediary being exposed if wrong advice is given to their clients.”
Intermediaries need to gather as much information as possible regarding the marine insurance requirements before accepting such business, suggested Mr Bester. Most marine insurers are quite willing to guide and assist intermediaries through this information gathering process, which will also lead to accurate quotations being delivered to the insured.
Looking to the coming year, he added the potential for any real growth in marine business during 2017 is small. “A weak local economy with forecast GDP at under 1% as well as a serious drought both contribute to reduced foreign trade. With limited new opportunities there is restricted growth potential which leads to marine insurers churning existing accounts which will, in turn, give rise to under-pricing,” he feared.
Ocean vessels are exposed to the highest risk and need to be insured against the potential losses, he said, but natural disasters which can occur at sea pose a high risk to the cargo, as well as the vessels, where the loss can extend to the whole vessel being lost, or no chance of any salvage, which could lead to massive losses for insurers.
“As a result, the need to transfer risks extends across the entire logistical chain from loading, transporting, clearing and forwarding, stevedoring and warehousing which is also covered by marine insurance,” according to Mr Bester.
An important opportunity in the industry will arise through clients managing their risks in innovative ways, in addition to transferring the risk through insurance. For example, he suggested, placing anti-hijack devices and dash cams in cargo trucks will help to lower premiums.
From a cargo perspective, digitisation means that it can be monitored and tracked in real time using web-based apps. Using telematics and digitalisation reveals more about the risk involved and premiums can therefore be more accurately priced – to the ultimate benefit of the client.
“If insurance companies, brokers and clients can collaborate, they can grow their businesses together,” he concluded. – CRA Newsletter.