HULL UNDERWRITING, WHO HAS GOT IT RIGHT?

This was the title of a lecture held by John Wiik for the members of The Insurance Institute of London Thursday January 10th. John Wiik was the main speaker at this venue “Marine Lecture” arranged by Mr. Rolf Tolle of Lloyds and according to the rumours; it was very well received. From time to time the insurance Institute of London arranges these lectures and discussions with the purpose of creating a forum where experienced people from the industry can come together and exchange ideas and points of view. Below you will find a short summary of the headlines of this lecture:

The marine insurance market is cyclic; some conditions are repeated every so often, while other changes can be a result of a changed strategy. In the current situation we face particularly four challenges in the marine insurance industry:

  • Repair costs
  • Availability of repair facilities
  • The quality of new ships
  • The quality of Officers and Crew

In addition it is a challenge with the high speed in shipping; everything is supposed to and does happen at a tremendous pace which again can lead to more claims. In addition, the fact that we receive premiums in USD but have to pay repair costs in many different currencies also brings about extra costs. When the dollar is weak in relation to other countries’ currencies it is a factor that contributes to increase the repair costs for us.

The question for Norwegian Hull Club is how to relate to these challenges. Should we adopt an opportunistic attitude and withdraw when we are unable to get the desired premium rates?

By doing so we would partly loose contact with the marketand also not appear as a stable supplier. The alternative is to be stable and follow the customers in both good and bad times and at the same time endeavour to deliver “Added value”. In that case the question is whether we are competent enough to deliver the extra services the customers want and whether we are able to take advantage of our customer port folio in the best possible way so that we can make money on the extra services when the market for the main product is bad. The risk scenario is complex and complicated for everyone involved in the market - how can we contribute in cooperation with our customers so that they may take advantage of our knowledge and our experiences in order to attempt to estimate and limit the risk they are exposed to? And if so; is our contribution good enough?

What is sustainable development in marineinsurance? Do we, as participants in the shipping market, have an ethical responsibility to contribute so that the development always has main focus on zero tolerance for accidents and that we thereby contribute to maintain a continuous focus on security and limitation of accidents; or – can we sit on the sideline and just deliver capital when the accident has happened?

John Wiik concluded his lecture by saying that there are no easy conclusions as to what is the right thing to do as Hull Underwriter. There are pro’s and con’s to all solutions, and it has been Norwegian Hull Club’s policy to cooperate closely with those who have chosen us as their strategic partner and at the same time take an opportunistic stand towards less loyal customers.