Posted on: 22 March 2023
As businesses started to look towards a post-COVID-19 recovery, the war in Ukraine threw global supply chain resilience back into the spotlight, says in an announcement international legal firm Kennedys, which published its Marine and Logistics Report 2023. This, along with ongoing technological change, environmental, social and governance (ESG) related risks and a fragile economic environment, makes it increasingly important for insurers to consider those key trends driving claims activity.
The pandemic and extreme weather events of 2021 and 2022 led to a sharp spike in claims. Across the globe, transport infrastructure and routes were affected by flooding, wildfires, extreme cold and extreme highs in temperatures.
The war in Ukraine added additional challenges to global supply chains, and while these are hopefully easing, the volatile geopolitical landscape means that trade wars and civil protests are likely to continue to impact the marine and logistics sectors and their insurers as a result of supply chain disruption.
We have also seen efficiencies made by embracing technological advancements cancelled out by an inability to trade as a result of a cyber attack, and pandemic outbreaks resulting in manufacturing shutdowns, port closures and labour shortages.
In addition to global events, the domestic legislative and regulatory environment is continuing to shift in order to respond to the growing use of technology and the need to innovate towards greener modes of transportation.
The report examines the risks related to these key trends, including the relevant regulatory and legislative developments to watch.
Environmental, social and governance (ESG)
2023 is likely to produce more global regulatory intervention in the ESG space as the drive for transparency, clarity and consistency gathers pace. As well as climate related activity, we anticipate seeing an escalating focus on social issues such as diversity, equity and inclusion (DEI), human rights, and modern slavery.
We also look at key regulatory and legislative developments in this area, including the UN’s agreement concerning the International Carriage of Dangerous Goods by Road and the Energy Efficiency Existing Ship Index and Carbon Intensity Indicator requirements from the IMO.
Geopolitical risks
The impact of geopolitical risks – those risks associated with conflict or tension between countries or states – can be felt across all marine lines. There is also a clear interrelation between the geopolitical landscape and other priority topics for marine insurers, including rising inflation, ESG considerations and reputational risk.
In this report, we focus on the the impact of the war in Ukraine, government policies and rising costs, and supply chain disruptions. We also provide a spotlight on recent instability in the Latin American region.
Technology
Innovation through the use of technology is poised to continue transforming the marine insurance industry and its associated businesses, facilitating growth and furthering resilience. This transformation requires long-established practices and supporting legislation and regulation to evolve in order to fully embrace the benefits, and respond to additional challenges.
In this report, we discuss the use of autonomous and self-driving vehicles, and the increased use of warehouse management systems.
Claims inflation
Rising inflation is a topic of continuing global concern. Similarly, excess claims inflation – that is, changes in the cost of claims beyond ordinary economic inflation – remains a priority for the entire insurance industry, requiring careful consideration to ensure business resilience and adequate claims management.
Supply chain disruption and the impact of group actions are two key areas we discuss in relation to claims inflation in this report.
Download the full report here.
