Marine Insurance... a ship owner's perspective
I’m mindful of the traditional relationship between the ship owner or operator and their insurer, which is one aspect of the maritime industry that hasn’t changed much over many decades.
However, momentous change is coming to the industry as modern technologies are adopted. Industry participants are seeing many of the old commercial relationships change or become irrelevant. Just as a company’s board of directors need to bridge the gap between their strategy and the ‘shop floor’, so a ship owner needs an insurer that strives to bridge the gap between them.
The maritime sector, to a greater or lesser extent, continues to suffer a decline in standards of training and knowledge both at sea and within management’s offices ashore. The industry often seems to blame its woes, or costs, on the quality of seafarers while perhaps forgetting that management ashore is solely responsible for that. This situation, isn’t going to improve any time soon.
Insurers are still one of the few remaining repositories of industry experience, such as it is – and it’s in everyone’s interest if that experience is applied before, during and after a loss. At a time when we all struggle to juggle costs, insurers included, an insurer’s practical knowledge and experience is needed now, on deck, and more than ever.
The maritime sector would benefit enormously if insurers placed the assured, and not just the policy, at the centre of their client relationship. Today, few ship owners consider themselves a loyal customer of their insurance provider. If it wasn’t for the restrictive practices of the International Group’s P&I Clubs, for example, this indifference may be even more apparent. From an owner’s perspective, there is often little to choose between individual marine insurers.
Today and in the future, the relationship that insurers have with their assured should be much more customer-centric. This is a big challenge for marine insurers when so many have relatively little contact with their clients.
Some insurers clearly do try to communicate but it’s often not effective. Insurers usually aren’t good at communicating the unique and relevant value which they can and could bring to their clients.
Insurers’ communication is often generic, sometimes irrelevant and usually poorly timed. Insurers can do much more to help ship owners, and themselves, by cementing ‘value’ in the centre of their client relationship and collaborating in the management and reduction of cost.
Ship owners, or prudent ones at least, consider a range of factors when selecting their insurers. The key factors in choosing an insurer are: financial stability; premiums; claims handling efficiency AND service… but real service is often hard to find when the insurer is so remote.
Insurers could look much closer at identifying ‘bottlenecks’, or constraints, that exist in their relationship with their assured and which serve to drive up costs. Ship owners and operators would benefit enormously if insurers collaborated much more and really embedded their potential at the heart of maritime operations.
By way of example three common ‘bottlenecks’, and by no means the only ones, that drive up costs for both the ship owner and the insurer are: loss prevention, risk management and project management activities.
Some insurers already do much more than others to try and add value. Loss prevention initiatives, for example, are a terrific opportunity to communicate and add relevant value to a client – but this opportunity is often squandered. Loss prevention initiatives are regularly not communicated adequately. We often see Loss Prevention Bulletins simply posted on the insurer’s web site with little in the way of further announcement. It is then incumbent on a client to search out these bulletins and distribute them throughout their business – which may or may not be done.
The benefits of improving the flow of information and experience between the insurer and the assured, lie in that information being used in the right place and at the right time. Information is needed by the managers and officers, ashore and afloat, who are planning and managing specific operations – as well as the insurer. But the benefits are too easily forgotten or ignored, we know this because our claims record reflects our failures. If good practice isn’t communicated and used by the insurer and the assured at the right time, then it has been a waste of effort… and money.
We can argue that it isn’t the insurer’s job to ensure the loss prevention, risk or project management initiatives hit the right place at the right time - but it’s certainly in their interests if they do. If information is communicated effectively (a) more claims may be averted, (b) the cost of claims may be reduced, and (c) the insurer will have successfully exploited marketing opportunities to communicate ‘relevance’ to their clients.
Ship owners and operators aren’t notably loyal to insurance providers. The more engaged a customer is with a brand, then the more loyal they are. Marine insurance companies need to know their clients well. Providers that don’t know their clients can’t use insights to deliver value and they can’t extract cost from their relationship with clients.
This would ensure the insurer is, and is seen to be, a much more valued business partner.