MARINE INSURANCE is a key feature in the modern insurance landscape. James Butchart, commercial manager of marine at Zurich, has spent the past eight years helping to develop products and best practices within the insurer’s marine division, and this has given him a variety of unique insights into the partnership between insurers, brokers and customers in the marine space.
“When brokers are looking for a marine insurance partner to work with, the key attributes they should be looking for are service and expertise,” Butchart says. “A lot of the time, an out-of-the-box insurance solution will suffice. But given the complexity that often exists in the marine insurance sector, it’s important an insurer can be flexible and tailor their offering to suit the customer’s needs.”
One of the unique challenges that clients and brokers alike tend to face when insuring cargo is getting their heads around a solid understanding of everything that can impact goods when they move from point A to point B. There are often several links in the chain of responsibility, and the cargo owner, their broker and insurer must have a good understanding of what recovery path they might be able to take.
“Responsibility for the goods can change hands several times during a transit,” Butchart explains. “A freight forwarder may have arranged the movement, so in the event of a claim, and if liable for the loss, the freight forwarder’s liability policy may respond. Likewise, if the movement of the goods was undertaken by a logistics operator, then the logistics operator’s policy may respond.”
“Given the complexity that often exists in the marine insurance sector, it’s important an insurer can be flexible and tailor their offering to suit the customer’s needs” James Butchart, Zurich Australia
But this is just one of the potential challenges that can arise – and that’s why Butchart is heavily committed to educating brokers so they have all the tools they need to discuss their clients’ specific situation and ensure they have the most suitable marine coverage in place.
“We understand that for most brokers, marine makes up only a small proportion of their overall portfolio, so isn’t always front of mind,” Butchart says. “But most of our marine team have more than 20 years of experience in the industry and love spending time with brokers.”
Butchart also points to the company’s risk engineering service as an additional value-add for both brokers and clients.
“Whether it’s desk assessments or site visits, Zurich’s dedicated team of risk engineers will actively work with both the broker and their customers to identify areas of the customer’s business that can be strengthened,” he says. “This helps to build strong, long-term partnerships between us, the brokers and their customers, based on a common understanding of the risk the customer faces and their marine coverage requirements.”
Shifting with the tides
Given the influx of new entrants to the field and the continually changing state of the insurance market, Zurich continually reviews its marine lineup to ensure it’s offering the most relevant products.
“We’re committed to underwriting through the market cycle,” Butchart says. “This allows our customers to plan effectively for their own insurance costs, which is essential for the small business sector.”
In practical terms, this means Zurich works to remain consistent in its approach to pricing. Additionally, Butchart points to the organisation’s keen understanding of the importance of an effective claims service.
“A significant amount of Australian marine business is placed in the London market, and we’ve recently seen this return onshore. This is good news for the local marine market” James Butchart, Zurich Australia
“We were recently recognised at the Insurance Business Australia Awards as the General Insurer Claims Team of the Year,” he says, “so we understand the importance of an effective, experienced and service-focused claims team to assist our marine customers when they need it most.”
Sailing into the future
Butchart sees a variety of changes ahead for the marine insurance industry; some are reflective of social change, while others are simply challenges inherent to the industry.
One example in the former category is coal. Despite the capacity in the Australian market, many insurers are now taking a strong stance on the use of thermal or ‘dirty’ coal, applying enhanced risk screening on new or existing clients to decide whether they will offer insurance to companies with exposure to these industries. Zurich has been an industry leader in this space.
“We’re seeing a shift towards renewable energy sources, and the marine market is evolving to offer cargo solutions to renewable energy projects, such as wind and solar farms,” Butchart says.
In terms of upcoming challenges, Butchart also believes that the tightening general property market will have an influence on the marine space in the next 12 to 18 months.
“We’ll experience the movement of harder-to-place components, such as stock throughput and static risks, into the marine market,” he predicts.
Additionally, the London market has been contracting over the last year and a half, and a number of Lloyd’s syndicates have withdrawn from the marine market altogether.
“A significant amount of Australian bymarine business is placed in the London market, and we’ve recently seen this return onshore,” Butchart says. “This is good news for the local marine market, as it shows we have the capability and capacity to successfully underwrite such risks here in Australia.”
However, he also notes that marine underwriters shouldn’t simply strive to be seen as a cheaper alternative to the property market. The increase in the number of underwriting agencies, coupled with international insurers trying to get a foothold in the local marine market, means that brokers have plenty of options to place their marine risks.
“The challenge this presents is that underwriters need to remain disciplined in their approach to risk assessment, coverage and pricing to ensure the market remains sustainable, consistent and profitable for the long term,” Butchart says.
Doing otherwise is a short-sighted approach that could potentially undervalue the importance of marine expertise – a threat to the future of the industry.
“One risk in the industry is the potential loss of marine expertise in both broking and underwriting,” Butchart says. “Given that marine insurance plays an integral role in the overall transport and logistics industry, it is critical that we continue to educate and develop talent to ensure we don’t create a knowledge gap – and that we keep pace with the ever-evolving insurance industry.”