The results are in from the first annual Poseidon Principles survey of marine insurers’ portfolios — and there is work to be done on meeting climate change targets.
The Poseidon Principles for Marine Insurance initiative shows the group of eight major players are tracking an average of 12.7% above alignment with the United Nations’ goal of at least a 50% reduction in greenhouse gas emissions from shipping by 2050.
The initiative’s second trajectory is more ambitious — a goal of zero CO2 emissions in the middle of this century. The insurers’ fleets are 20.8% above alignment here.
The group described the report as a “landmark” step towards transparency in the maritime and insurance sectors.
The data will act as a stepping stone for the signatories to engage their clients in a discussion about climate change, technology and new risks, the insurers argued.
“This level of transparency is a major milestone on our journey to decarbonise the maritime industry,” said Patrizia Kern, who chairs the initiative and is marine strategy advisor at Swiss Re Corporate Solutions, one of the signatories.
“It is evident that there is work to do, but hard data and transparency is a necessary first step.”
The other reporting companies are Gard, Fidelis MGU, Hellenic Hull Management, Navium, Norwegian Hull Club, SCOR and Victor Insurance. A ninth, Axa, joined later.
Victor and SCOR leading the way
Gard was 8.3% above the target and Hellenic Hull Management 11.6% higher, while Navium came in 24.6% ahead, the worst figure on the list.
The best-performing groups were Victor at 1.9% above and SCOR at 4.2%. Swiss Re was 22.3% beyond the alignment.
As a new entrant into the marine hull market in 2021, Victor’s score is based on a relatively small vessel count, however.
Richard Turner, Victor’s international head of marine, said: “Our underwriting philosophy is to use and deploy data at the heart of our decision making.
“We foresee that climate alignment will become a much more relevant central underwriting factor in our portfolio decisions over time.
“We are encouraged by the progress being made in the shipping industry to play its part in global decarbonisation.”
Room for improvement
At the other end of the scale, Gard insures about 50% of the global merchant fleet.
Gard chief executive Rolf Thore Roppestad, who is vice chair of the initiative, said: “We know there is room for improvement, both in our climate alignment score and in the data collection process itself, but that is why we wanted to be part of the Poseidon Principles for Marine Insurance.
“This is a journey we are on to learn and improve, and together with our clients, I am confident we will make the necessary progress.”
The initiative said the data covers 2021, not 2022, and does not cover the signatories’ entire hull and machinery portfolios, as not all clients reported back.
In addition, it is industry practice that each ship is insured by a primary insurer and several secondary insurers, because of the extraordinary value of modern ships, which adds another level of complexity to the data collection.
The Poseidon Principles were established in 2019 by the Global Maritime Forum and a number of financial institutions to create a global framework to quantitatively assess and disclose whether banks’ lending portfolios are in line with climate goals.
The ambition of the insurance group is to sign up more companies in 2023, with the big UK protection and indemnity clubs so far conspicuous by their absence.
“The insurance companies are only one component in a complex ecosystem, but while engaging with our clients we can become levers of change,” Kern said.
Affiliate members are Cambiaso Risso Group, Cefor, Cosco Shipping Captive, CTX Special Risks, EF Marine, Gallagher, Lochain Patrick Insurance Brokers, Lockton Marine and WTW.