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SPOTCHECKINSURANCE


Project cover steady as general cargo insurance continues to struggle


The outlook for project cargo insurers is firming up as major projects get under way, reportsGregory DL Morris.


terms and conditions are liberal. With all the drama in general marine


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insurance during 2018 –with Lloyd’s of London putting several syndicates under review and major names revising their exposure to the marine cargo segment – it is important to differentiate project cargo coverage from broader hull and machinery, or cargo lines of insurance. Of course, project cargo insurance is not


immune to the macroeconomic issues of overcapacity. But, those broad trends are mitigated by a worldwide increase in the need for this specialised insurance. That is due to several factors, including stricter regulations governing plant efficiencies and air quality, rising demand for alternative energy sources, improvements to the quality of life in developing countries, as well as industrialised nations renewing their ageing infrastructure.


Outlook The outlook for project cargo insurers is at least steady, if not firming somewhat, splitting the difference between the softness of the broader marine markets with increasing demand for coverage for large capital projects. However, underwriters remain under


margin pressure and without current leverage to raise rates significantly, they are turning to operational efficiencies and enhanced offerings. A prime example came in May 2018


when Allianz formed an internal consortium between its specialist insurer Allianz Global Corporate & Specialty (AGCS) and its engineering division. Explaining the


www.heavyliftpfi.com


s reported by HLPFI for some time, all marine markets are under pressure. There is ample capacity and no shortage of new entrants. Insurance premiums are low;


rationale behind the new arrangement, the company cited the trends of increased demand for large-scale production facility and infrastructure projects worldwide. Looking ahead, Sean Dalton, the


International Union of Marine Insurance (IUMI) Cargo Committee chair, said that growth in global merchandise trade is expected to remain strong in 2018 and 2019. Speaking at IUMI’s annual conference in September 2018, he noted that there were still some serious concerns, namely the number of countries restricting or restraining international trade. In its latest Global Trade Report, Allianz


also pointed to protectionism as something to be wary of in the coming months. “With governments intervening more and more in trade and business, sanctions and regulatory


The outlook for project cargo insurers is at least steady, if not firming somewhat, splitting the difference between the softness of the broader marine markets with the increasing demand for large capital projects.


action on important sectors could encourage protectionism.” As for concerns over a full-scale trade


war, however, Allianz is less anxious. Its latest report said: “There are three reasons to believe a trade war can be avoided. First, pragmatism in America. Second, the Chinese trade safety net plays a role. Third, protectionism fatigue might kick in.”


Geopolitical tensions According to Marsh’s Global Maritime Issues Monitor 2018, geopolitical tensions ranked fifth out of a list of 17 challenges most likely to have an impact on seaborne trade over the next ten years. The top concern among respondents to the annual Marsh survey, however, was global economic crisis, followed by energy price fluctuations and then cyber attacks/data theft. Besides these geopolitical and economic


risks, another factor affecting marine insurance is the increasing requirement for compliance with environmental regulations and standards. In November 2018, Ironshore Environmental enhanced its Contractors’ Environmental Legal Liability (CELL) package. This concerns damages resulting from pollution incidents caused by contractors’ work during transportation and at non-owned sites, including staging areas. HLPFI


January/February 2019 125


SAL Heavy Lift


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