Sean Dalton, head of marine underwriting at Munich Re North America, believes his department’s good health — at a time when other marine insurers are struggling — is simply down to good management.
He added there was no magic cure for the industry’s woes, which he attributed in part to the commoditisation of specialty lines, but that the industry needed to get back to good underwriting.
“There has been a feeling that one event could lift the business, but I don’t subscribe to that view anymore.
“Instead, you have to look at the business and return to the key fundamentals,” he said.
Munich Re has benefited from robust cyclical management and that has helped us come through various cycles and the strategy has worked well for the organisation.
Sean Dalton
Cyclical management
“Munich Re has benefited from robust cyclical management and that has helped us come through various cycles. The strategy has worked well for the organisation.”
He added that despite signs of recovery, rates would need to rise further if the market is to become profitable.
“Hull and cargo are great products and bring great value but they need to be priced at a sustainable level and, globally, the numbers do not look good and that is concerning,” he said.
Underwriters seeking to protect the bottom line should, for example, develop an understanding of local markets, he said.
“Looking at it geographically, some regions have done better than others and some companies have outperformed others,” he said.
“Local knowledge serves the underwriter well, as does understanding geographical limitations.”
Costly claims
Dalton also expressed concern that underwriters’ attempts to return to profitability could be hampered if 2019 turned out to be a costly claims year.
In his role as chairman of the International Union of Marine Insurance cargo committee he has been working to eradicate costly containership fires.
He noted that the ship operators’ initiatives, such as moves to fine shippers of misdeclared cargo and the adoption by carriers of the Cargo Incident Notification System, are helping.
But he conceded with major cargo losses running at a rate of one a month, and eight major container fires so far this year, more needs to be done.
“It has been a tough year with large losses and a lot of stakeholders are worried about that,” he said.
