A changing climate could create new risks for the marine insurance industry. This may affect the role that insurers play in covering marine businesses.
In this post we will examine the possible impact of climate change on marine insurance. We will also outline how you can ensure you continue to get the dedicated cover you need, no matter what the future may hold.
The Possible Impacts of Climate Change on Global Shipping
Some believe that a changing climate may:
- Increase the frequency of severe weather at sea. Storm surges could also lead to coastal flooding, which could lead to disruption at ports.
- Increase sea temperatures which could affect the speed of some currents. This could disrupt certain routes, while making others less reliable, or even more hazardous.
- Melting Arctic ice has the potential to open new routes. Yet these routes could be hazardous and unreliable, as vessels would have to navigate around treacherous ice floes.
Any of these situations would create new risks for marine businesses, while also carrying a number of implications for the marine insurance industry.
How Could Climate Change Affect Marine Insurance?
Greater risks could lead to more claims. Insurers would have to contend with higher payouts, which would result in higher premiums for all.
To manage these risks, marine insurance companies could impose stricter coverage terms. They may turn to climate models to forecast possible extreme weather events, and to reassess the risks of certain routes. They may refuse to cover certain sea lanes and coastal areas if they become too unstable, or else charge a significant premium to cover the extreme risks.
On top of this, insurers may also start to specify climate-related exclusions in their policy. Or they may impose new risk management measures for policyholders. For example, there may be strict limits to the cover during any period with a high risk of extreme weather.
How to Keep Shipping Vessels Safe In A Changing World
There are a number of ways you can help to manage risks and continue to receive reliable cover, no matter what the future brings:
- Stay on top of your maintenance routines, so that you will be able to depend on your vessels at all times.
- Invest in crew training to help them deal with severe weather events, and other unpredictable situations.
- Review your vessels’ navigation and safety equipment, and upgrade wherever necessary.
- Use weather forecasting tools and other advanced apps to review your routes, and replan accordingly.
It will also help to notify your insurers of any changes you make to any of your vessels, and your operations. If you can evidence your risk management procedures, it may help to keep your marine insurance affordable in the face of rising premiums.
Get The Specialist Marine Insurance You Need From James Hallam
Everard Insurance Broker is the specialist marine division of accredited Lloyd’s broker James Hallam Limited.
If you are worried about how climate change may impact your operations, we are here to help. With our expert risk management support, we can show you how to manage your exposure. We can also help you access the specialist marine insurance you need to cover you for all risks, including any new or emerging risks linked to a changing climate.
Learn more about our dedicated marine insurance services.