The marine insurance industry is facing a bleak present as it seems to be unable to adapt to a changing business environment amid ongoing economic uncertainty, an international gathering of marine insurers was told.
In a keynote addressÃ‚ to the annual conference of the International Union of Marine Insurers (IUMI) in San Diego, IUMI president Ole Wikborg noted that some marine underwriting entities Ã¢â‚¬“ both old and new Ã¢â‚¬“ were facing downgrades, and even closures, as a result of prevailing economic uncertainty.
What continues to surprise me is that with one gone, new capacity quickly fills the vacant spot with a business model not very much different from the one that had to quit. In our practical day-to-day dealings, it may be argued that our business models are not very innovative.Ã¢â‚¬
This lack of innovation may be a result of marine insurersÃ¢â‚¬â„¢ inability to renew a business model that is out of touch with the needs and requirements of the client base, Wikborg said.
He went on to suggest that the marine insurance industry may be unable to build and maintain a sustainable business activity through continuous profitmaking and service delivery because underwriters are disobeying the undeniable truths of their past performance.
Wikborg also pointed to the short-term view of some investors in the marine insurance industry:
Maybe our industry is dominated by shareholders who have no basic knowledge of the marine insurance business and its volatility, – with a short term investment philosophy and no ability nor interest in staying put when times are tough.Ã¢â‚¬
New and stricter regulation was another concern for the industry: