Risk management, safety spending cuts may boost claims: IUMI panelist
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SAN DIEGO — Risk management and safety spending cuts at shipping companies may result in an increase in claims, a panelist said during the International Union of Marine Insurance's annual conference held this week in San Diego.
Marine insurance accounted for 1.2% of global property/casualty written premiums, said Urs Uhlmann, Toronto-based senior vice president of global corporate at Zurich Canada, a unit of Zurich Insurance Co. Ltd.
While the ongoing global financial and economic crisis has affected insurers, it also has caused shipping companies and vessel owners to do more with less, he said Tuesday during a workshop.
“Our clients have been pushed to increase their efficiency in risk management,” Mr. Uhlmann said. “Clients are looking at costs and are cutting down on staff and maintenance and that increases claims.”
Marine insurers were aware of the lack of risk management among its clients, but missed the opportunity to deal with it four years ago, he said, when they had knowledge of weakening risk management while initially underwriting the risks and did not appropriately adjust pricing.
“We are at the point where we are going to get the bill presented to us,” Mr. Uhlmann said. “Eventually, you'll see more losses.”
Mr. Ulhmann also pointed out that insureds buy low retentions on their marine insurance placements and often focus on cheap insurance solutions that don't necessarily fully cover the risk underwritten.
“I think there are two reasons: underwriting tools and underwriting discipline are not quite the same as we have in other lines of businesses,” he said. “That allows our customers and brokers to arbitrage a little bit.”
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