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Frédéric Bécard, Global Product Leader Cargo APAC & Europe, and Peter Wullimann, Country Manager Nordic Region

In the latest in a series of joint interviews, Frédéric Bécard, Global Product Leader Cargo APAC & Europe, and Peter Wullimann, Country Manager Nordic Region, discuss current trends in the marine cargo market, why local presence and servicing is so important in the Nordic region, and the effect of the COVID-19 pandemic.

What are the current trends in marine cargo in the Nordic region?

Frédéric Bécard: Trends in the marine cargo insurance market in the Nordics currently broadly reflect global trends. After a prolonged period of soft market conditions, the marine cargo market has been hardening. This has been caused in part by a greater accumulation of ships and cargo in ports and by an increase in value of both commodities and finished products at risk, along with increased exposure to natural catastrophes.

Historically, marine cargo has tended not to be a volatile line of business, and typically has been characterised by attritional losses. But this dynamic is changing. The increased accumulation of higher value goods coupled with the greater frequency of natural catastrophes is contributing to a hardening of both rates and terms and conditions. Some capacity has withdrawn from the market leading to an increase in price. And terms and conditions have been tightening too to create more clarity around what is covered under physical loss.

Are new technologies likely to change the way marine cargo risks are managed and transferred?

Frédéric Bécard: Advances in technology are having a big effect on the way marine cargo risks are managed and underwritten. The use of sensors and the Internet of Things, for example, can give us better data about where goods are. This helps us to better monitor accumulations and it also benefits our clients by giving them greater knowledge about their risks and how to manage them. There is also nascent sensor technology that we are beginning to experiment with that can be placed into the holds of ships and provide data on the conditions that goods are being stored in – the humidity levels, for example. Once we are able to gather this type of data, we will be able to reduce losses, we believe, because we’ll have the ability to intervene before incidents become claims. This will also enable us to better price risk. It’s a win-win for the client and the underwriter.

Why is having a local presence so important for insurers to underwrite risks in the Nordic region?

Peter Wullimann: Having a local presence is critical, for several reasons. Firstly, the Nordic region is not homogenous – each market has many nuances that we have spent significant time ensuring we know and understand. One example is the substantial differences in the types of exports in which each country specialises – each is a leader in different core products. Sweden and Finland have some similarities and are major shippers of commodities such as steel and metal products, sawn timber, wood and paper, and machines and equipment for that industry. Sweden is also a major exporter of automotive – both cars and trucks. Denmark, as a big shipping nation, is a leader for transport of pharmaceutical and life-science goods. As for Norway, export is dominated by offshore – predominantly oil and gas – and shipping, mainly to support the offshore industry.

Another case in point in recent months has been the differing ways in which countries in the region responded to the COVID-19 pandemic. For example, while Sweden did not ever have a national lockdown, Denmark was one of the first European countries to impose one, along with Norway and Finland where restrictions on the movement of people were also introduced. These differing approaches, of course, translated into different risk challenges for our clients across the region.

Having a local presence helps us to acknowledge and understand the specificities of each market, and therefore to deliver great service to, and build strong relationships with, our Nordic clients. 

What effect has the pandemic had on risks faced by marine cargo clients in the Nordic region?

Frédéric Bécard: The pandemic has been, first and foremost, a human tragedy that has affected companies and individuals across the world.

There were some issues for shippers caused by the pandemic and the restrictions on the movement of people and goods that many governments put in place to try to limit the spread of COVID-19. There were some supply-chain issues as well as knock-on economic effects. Overall, however, there was no major uptick in marine cargo claims as a result of the pandemic because marine cargo insurance mainly covers physical losses. We did a global analysis of our exposures to see where there could be bottlenecks, but there were very few instances where business interruption resulted in physical loss.

Clients and insurers will certainly take lessons about supply-chain resilience from the experience of the past few months.

Peter Wullimann: Indeed, the region has been able to maintain a high level of production during the pandemic. As an example, the container port of Gothenburg – the largest port in the Nordic region and the gateway for consumer products into the entire territory – accounts for about 30% of Sweden’s total foreign trade. While many other ports have been seeing a reduction in revenue and flow of goods during the COVID-19 pandemic, Gothenburg achieved 0.5% growth during 2020. Of course, recent events such as the global container shortage crisis and the increase in costs for container shipments may have more pronounced and longer lasting effects on export, including a global shortage of semi-conductors which could have a substantial impact on the automotive industry especially.

More generally, while the effects of the pandemic varied across industries and types of clients, overall clients in the Nordic region have weathered the effects of the pandemic well. The insurance industry also showed it was able to adapt to new ways of working and we are pleased that we were able to continue to service our clients and brokers in the region effectively while working remotely.

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