New technologies have meant that accidents are far lower in the marine transport industry than ever before. From innovative tracking to intelligent vessel designs, all of the improvements that have been made over the years have started to pay off at sea. Of course, this is a good thing if you have a business in the marine transport industry.
However, these new technologies do cause problems for insurance companies. With fewer accidents happening, they cannot learn from them and gather data. In other words, insurance companies are finding it increasingly difficult to analyze risk emerging threats in the marine transport industry. This means that they are not prepared or able to offer the right products. In particular, new sources of risk are emerging through technology, with cyber-attacks an increasingly worrying issue for owners of businesses.
The Response from Insurance Companies
Cyber-attacks are a very real risk for many businesses and one that is extremely worrying in the marine transport industry. Despite what you may think. For example, more vessels than ever before are relying on computer systems for their navigation. If there was a cyber-attack, the course of a ship could be altered. Not only is this dangerous but it is also costly and could result in huge losses for shipping companies.
Marine insurance has been around for a long time. The required insurance coverage usually revolves around three main risks. This includes physical property that is being transported, liability for the crew, and covering accidents and damage to third parties. Of course, there have been evolutions within those categories to suit the changes that have been introduced to the marine transport industry over the years.
Indeed, the emergence of new risks within the industry does mean that insurance companies are having to adapt. In particular, they are going to be releasing new products to respond to the changes as they occur. For example, this means coverage for computerized equipment and helping with cyber-attacks. Some progress has been made, including adjusting the Institute Cyber Attack Exclusion Clause CI.380. It is being made more concise and clearer, detailing what is and is not covered when it comes to losses that occur from computer systems and software.
There will be a time when vessels are unmanned and completely controlled by computers. They will become the driverless cars of the sea. Therefore, insurance companies will need to continue to adjust their coverage to suit this. Again, new products will emerge that are going to provide companies with peace of mind.
Another emerging risk in the marine transport industry is climate change. This can be seen in the Arctic as ice caps are melting and more activity is going to be in that region. Similar to cyber-attacks, insurance companies do not currently have a lot of information on emerging risks in the Arctic. Efforts will have to be made to obtain data on the activity and incidents that are going on. This is going to provide them with the knowledge to offer new products.