Chair of IUMI’s Ocean Hull Committee highlights need for resilience and innovation amid supply chain threats and energy transition
A leading underwriter has called on marine insurers to adopt a dynamic, flexible and contingency-based approach to their business if they are to safely navigate a new, volatile landscape where disruption of supply chains is becoming a norm.
According to Ilias Tsakiris, Chair of the Ocean Hull Committee of the International Union of Marine Insurance (IUMI), the marine insurance sector needs to shore up its resilience and embrace innovation in the face of a host of new and developing risks.
Speaking at Marine Insurance London 2024, Mr Tsakiris cited the Covid-19 epidemic as a wake-up call for the business world to recognise the fragility of supply chains and the reality that “storms can come out of nowhere.” Since then, Russia’s invasion of Ukraine, the ensuing sanctions, and other geopolitical upheavals have only reinforced the lesson that for a transportation industry that has grown used to a just-in-time mind-set, it is now imperative to have “just-in-case” strategies.
“Our traditional trade routes are not safe anymore and the supply chains will face challenges bigger than the ones faced during the pandemic,” he told the conference. “The bottom line is that risks are abundant, and the transformation to the just-in-case model is the only option for companies, including insurers, seeking to operate in this environment.”
As trust and reliability gradually assume greater importance, supply chain management practices are already adapting with many major manufacturers friendly-shoring, near-shoring or re-shoring operations. Such strategies held significant implications for global seaborne transportation, Mr Tsakiris argued.
At the same time, it is essential for insurers to keep abreast of the shifts happening in the industry’s energy transition as shipping strives to meet the target of emitting zero greenhouse gases by 2050, said Mr Tsakiris. There is a need for innovative infrastructure and regulatory incentives to facilitate this transition that will have a significant impact on operational logistics and cost structures within the industry.
Mr Tsakiris identified a plethora of different risk areas facing insurers in the sector, with challenges ranging from increased idle time and route diversions to cybersecurity vulnerabilities and regulatory compliance complexities. Attention to digital solutions, sustainable initiatives and strategic diversification were all necessary to effectively mitigate the array of risks, he argued.
“The path forward” for marine underwriters was developing a holistic approach integrating technological adeptness, client-centric innovation, a proactive policy towards emerging needs and a commitment to sustainability. According to Mr Tsakiris, the value of continuous learning, adaptability and cooperation cannot be overstated. “In a world where established assumptions are being continuously challenged and new technological advances promise to revolutionise industries, standing still is not an option,” he said.
