In a volatile marine market with increased claims due to old risks like fire, new ones like cyber and complexities like larger ships, misdeclared and dangerous cargo, higher general average costs and increased subrogation challenges, a good claims team has to play in perfect harmony, explains new marine claims “Chef d'orchestre,” Régis Broudin.
1. The marine insurance market is still soft and volatile. Does this volatility lead to more losses and notifications? What challenges you in these market conditions?
Régis Broudin: We cannot say there are more losses and notifications in the kind of market that we currently find in the marine sector. In general, we see the same causes of loss driving our claims portfolio, but it is clear that claims volatility is higher when premiums are not at their best. Our challenge is to positively contribute to the combined loss ratio while continuing to reduce costs and claims resolution time. Maintaining open dialogue with customers and taking proactive actions with stakeholders help us best minimize loss, although we must also strengthen efforts to increase recovery against liable third parties. We have strong claims teams working in close cooperation with underwriting colleagues who can best serve customers and drive the portfolio.
2. Are there loss trends that are particularly worrying? How can insurance best meet the challenges of these trends?
Régis Broudin: Large losses due to fires on vessels are alarming. Recent major general average (GA) events caused by fires on large container vessels such as Maersk Honam, Yantian Express, and APL Vancouver have highlighted the importance of fire losses from either physical damage or, in a majority of cases, from impacts by GA contribution. In both the Maersk Honam and Yantian Express cases, the size of the vessel combined with the complexity of the fire control operation significantly increased salvage and GA costs. Such large container vessels require specialist tugs and port of refuge capacities can be difficult due to their sheer size, which increases the salvage operation costs. It is also evident that the large size and capacity of container ships increases the risk of cargo misdeclaration and, therefore, the risk of loss. In the very near future, digital container tracking system tools could be a solution that addresses this problem.
3. What is the potential impact of increasing cyber activity on the marine insurance claims environment?
Régis Broudin: Although we have not seen claims specifically tied to cyber incidents, it is likely that cyber will become an increasing feature of marine physical damage claims in the future. Cyber risk is a concern for shipping, as more and more technological solutions are introduced. Recent cyber incidents – like with Maersk in 2017 – have made the industry realize that cyber security measures and continuity planning are vital. As more shipping systems require connectivity with the shore, more vessels will become vulnerable to hacking, and hence to grounding or collision.
4. As a new global head, what do you hope to accomplish? What are some key things that can move agcs marine claims to the next level?
Régis Broudin: I see my role as a kind of chef d'orchestre – we have the best “musicians” in the world and the “chef d’orchestre” tries to set the tempo, harmonize claims expertise across our global offices and focus the symphony. Global teamwork is essential to our success. Our strong claims expertise and experience allows us to be wherever the loss is anywhere in the world with adjusters, lawyers and other experts on the ground. As we have recently seen with the Golden Ray case – a cargo ship which capsized off the coast of Georgia in the US in September – even if the hull and machinery policy of the vessel is written in our South Korea office, if the loss happens in the Port of Brunswick, we have US staff locally to provide immediate help. This is a vital part of our service model and will help improve response times, share best practices, minimize loss and improve subrogation and salvage results. Another key area is to provide our underwriting colleagues with lessons learned and claims advice to maximize our profit potential. By identifying new talent, for example as the sponsor of our Marine Claims Academy, I can keep our team playing in unison, delivering the best service and contributing to AGCS’ marine profitability.
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This article is part of the our Global Risk Dialogue. Appearing twice a year, Global Risk Dialogue is the Allianz Global Corporate & Specialty magazine with news and expert insights from the world of corporate risk.