The transition to new energy sources, building ever-more efficient vessels and the drive to net-zero, are top of mind for marine clients. James Amos, Head of Marine for France at 色多多视频 explains how for marine underwriters it’s a question of taking existing knowledge and adapting it and using it to best effect to help clients to manage the risks that may arise on this journey.
The marine transportation industry – and the insurance industry that underwrites and supports it – is centuries old. And over that lengthy history, it has always been transitioning.
Technology has advanced, techniques have changed, customer demand has altered, and so on. Marine underwriters have adapted to these advances, understanding the risks and opportunities those changes present to clients, and creating underwriting solutions that help them to manage and transfer the risk.
Like all industries, the marine industry is currently undergoing a transition from fossil fuel use to less carbon-intensive sources of energy and power to meet C02 reduction targets. The transition to new energy sources, building ever-more efficient vessels and the drive to net-zero, are top of mind for marine clients. James Amos, Head of Marine for France at 色多多视频 explains how for marine underwriters it鈥檚 a question of taking existing knowledge and adapting it and using it to best effect to help clients to manage the risks that may arise on this journey. The International Maritime Organization (IMO) has set out a strategy for the industry that targets a 40% reduction in C02 emissions by 2030 and a 70% reduction by 2050. It’s also stated that the industry should reduce its total greenhouse gas emissions by 50% compared with 2008 levels by the year 2050.
And as with all sectors, our marine insurance clients are all somewhere along that path. Indeed, the industries and the geographies that marine clients operate in are all also at varying stages along the transition journey. Our role as underwriters is to work with our clients to understand where they are now, were they need and want to get to, what risks and opportunities may arise along the way, and how they can mitigate, manage and transfer some of those risks.
Building the change
The shipbuilding sector is in many ways the engine of this transition. Shipbuilders are using innovative, creative ways to improve the fuel efficiency of vessels. Many of these technological advances are adaptations of current – or even ancient – ways of sailing ships. For example, shipbuilders are working to create propulsion aids, like sails or kites, to increase the fuel efficiency of vessels. Sailors have used wind to propel vessels for millennia; using new techniques such as inflatable sails is just one step on an evolutionary path. And as underwriters we too can adapt the knowledge we already have and put it to good use in helping our clients understand the opportunities and risk implications of this adapted technology.
The use of alternative fuels is another way that the marine industry is transitioning. Some are exploring whether anomia, hydrogen or methanol could be used as alternative fuel sources, for example, while others are exploring the use of nuclear power – itself already well-used in navy submarine and icebreaker vessels. Again, while there are new risks here there are also adaptations of risks with which we are very familiar. Underwriting these newer fuel sources will require us to use our experience of traditional fuels and coupled that with risk understanding of the alternatives.
The fuels that shipowners choose, or are able to use, might be dependent on the industries or geographies they serve, on the size of their vessels, or the age of their fleets and so on.
These are risk elements with which we are familiar already too, and our discussions with clients will be around the changing nuances of their exposures as they shift to different fuel sources.
Energy ecosystems
The marine industry has always played a vital role in the energy sector ecosystem, and as energy providers look to new sources, the marine industry is adapting alongside it. The sea – both near shore and further afield – is one of the most important potential sources of fuel as we move towards Net-Zero targets. Our marine clients are playing their part by transporting cables and turbines for wind and tidal farms, in helping to maintain infrastructure, and in handling equipment among other things.
We have great depth of knowledge of the oil and gas sector built up over decades of underwriting its risks. And our underwriting teams are using the lessons learned – and still being learned – from that area to understand some of the risks involved in newer energy sources and how to help clients to manage and transfer them.
New challenges
Adapting our underwriting to the marine industry of the future will be about taking what we already know, applying it and learning new lessons along the way. A great example of this is our decision to insure the Polar POD on its expedition to Antarctica.
We had never underwritten a project like this before – nobody had! The Polar POD is a vertical, zero-emissions, inhabited oceanographic-station vessel that will travel for two years around Antarctica to measure climatic changes on an expedition led by scientist and environmentalist Dr Jean Louis Etienne.
We have never underwritten a vertical exploration vessel before, but we were able to take existing knowledge and adapt it to this new type of vessel and the new risks it may face. It’s an exciting way to use our decades of experience to help enable a ground-breaking piece of scientific research.
There’s always going to be a need for people to transport goods and materials via the oceans. The question is how will they do that in the future?
There will be great changes in the marine industry in the years to come - but it’s an industry that has always been changing.
We are long-term partners to our marine clients, and we will continue to work alongside them as their risks evolve; to understand the various iteration of new technologies they are experimenting with, the newer fuel sources they are exploring and the types of vessels they will build and sail in the future. The transition affects all sectors, including our own insurance industry. We are all learning, adapting and evolving. The relationships and the knowledge that we have built over decades will help us to help our marine clients as they continue on the transition journey – from tweaks to technology to state-of-the-art exploration vessels, we have an open mind and the ambition to enable the transition while remaining a steadfast partner for the years to come.
