Appropriately, the session was held at the downtown offices of the American Institute of Marine Underwriters (AIMU), a trade group representing the United States ocean marine insurance industry as an advocate, education and information center. Though AIMU was founded over 100 years ago, the maritime insurance business is going through a period of rapid changes-detailed by three speakers, from XL Catlin - a global insurance and reinsurance company providing property, casualty and specialty insurances, Water Quality Insurance Syndicate (WQIS) and Gard P&I Club.
XL Catlin’s Virginia Cameron, senior vice president for blue water and inland marine insurance, offered an insightful look at the rationale and challenges of company mergers. Indeed, XL’s early 2015 acquisition of Catlin, with a transaction value of $4.2 bn, is indicative of a larger trend.
In the news recently, she noted that one AIMU member, Chubb, is being acquired by Ace Insurance, also an AIMU member, in a $28bn transaction. Cameron told the audience that “more M & A activity is on the way” as company managements seek to deploy capital in the most advantageous ways possible, which might include scaling up in size. She identified integration of information systems, company cultures, and inconsistent appetites for different lines of insurance business as some of the challenges that come with this wave of M&A activity.
A different aspect of change was detailed in the remarks of Andrew Garger, senior vice president and general counsel of WQIS, who detailed a constantly changing set of laws and their interaction with court decisions. Garger’s bottom line to attendees was that underwriters of marine risks must remain vigilant for changes to the legal landscape so they can appropriately price risk.
Recent changes at WQIS, formed in 1971 to provide required guarantees on pollution coverage mainly for US inland, coastal and fishing vessels, include an entry into the business of offering COFRs for international shipping. As he concluded his presentation, peppered with war stories about various claims that had been handled, Garger noted that “new issues are constantly arising”.
A Gard claims executive, offering his own views, stressed that a scarcity of qualified seafarers was a major factor impacting the business likely leading to more accidents as mariners were overworked or not well trained for the rapidly changing maritime industry. He suggested seafarers will need more training, and that, going forward, mariners would need different skills sets.
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