‘We have reached the end of the globalisation process’: IUMI president

Opening this week’s International Union of Marine Insurance (IUMI) annual conference in Berlin, president Frédéric Denèfle focused on how change was likely to impact on all lines of marine insurance business.

Denèfle highlighted the recent geopolitical tensions as one of the key drivers of change. War risks, sanctions and embargoes were increasing and this was impacting traditional shipping routes and international trade more generally. He raised concerns over vessel operators opting for the longer sea-routes around Africa to avoid high-risk areas and asked if vessels and their crews were prepared for the specific navigational challenges they would face. Financial costs and the environmental impact would also be a concern.

Denèfle also pinpointed changes due to the evolution of global markets, both technical and commercial, which would affect how vessels are operated and how cargo shipments and logistics chains would be organised in the future. Nearshoring would have a particular impact, he said.

Coupled with this, the steps being taken by the shipping community to reduce its impact on the environment were beginning to make themselves known. New fuels, new vessel designs, new operating practices and new regulations would all impact and would require a renewed focus. He specifically highlighted the EU’s Emissions Trading System that became law in January of this year.

More widely, change would be encouraged by the international economic situation and the relationship between countries and their appetite for global trade versus nationalism. More restrictions and regulations would inevitably lead to a reduction in marine cargoes. Conversely, many large countries were sitting on untapped commodities which would likely be exploited in coming years. This had the potential to unlock more cargo and new shipping routes, he said.

“There is much study and analysis being undertaken currently as we find ourselves in a position of real change being driven by so many factors”, said Denèfle. “I feel we have reached the end of the globalisation process that began post the second world war and accelerated with the GATT extension. The world is now starting to contract. In the past, as marine insurers we were free to write business across the world, and vessel and cargo owners were similarly free to place their insurance in almost any location they chose. This is no longer the case. Similarly, cargo trade restrictions are bound to lead to a reduction in shipping and, in turn, a reduction in global marine insurance premium.”

IUMI officials also presented their analysis of the latest marine insurance market trends at its 150th annual conference in Germany yesterday.

The global marine insurance premium base for 2023 was reported as $38.9bn representing an uplift of 5.9% from the previous year. Development was seen across all lines of business with the offshore energy sector enjoying a 4.6% increase, cargo insurance 6.2% increase and ocean hull 7.6% increase.