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MARINE | Decarbonsation In association with IGI
Maritime insurance: How we can help ensure a green future? Marine insurance may be the oldest form of insurance in the world, but the sector is going through seismic changes as it transitions to an energy efficient economy. Mark Trevitt, Class Underwriter, Marine, at International General Insurance (IGI), explains that the insurance industry can do more than sit on the sidelines Instead, it can actively support green initiatives From the Poseidon Principles for marine insurance, to directives made by the insurance industry at COP26 and pledges from Lloyd’s of London to become greener, the marine insurance industry will have to embark on some of the most fundamental changes it has seen in three centuries to meet these environmentally friendly criteria. Risk managers, insurers, reinsurers and investors can and will all play a vital role in shaping how shipping, ports and cargo embark on the difficult journey to a net zero world. The insurance market needs to not just look at historical data to assess risk, but also use new technologies such as artificial intelligence (AI), the internet of things and big data to assess the current and future carbon emissions of everything from vessels to ports as well as gaging decarbonisation and measuring renewable energy sources.
TAKING THIS SERIOUSLY
The bottom line is that the insurance industry is taking this seriously. The Poseidon Principles for Marine Insurance (PPMI), voluntarily driven by leading players in the international marine insurance market and based on the IMO’s guidance, will establish a pioneering framework to quantitatively assess and disclose the climate alignment of marine insurers’ underwriting portfolios. Some marine insurers have already signed up to this initiative which is designed to bring more transparency and urgency to the industry’s decarbonisation efforts. The Marine Insurer | March 2022
PPMI makes marine insurance the first line of business to establish a sector-specific methodology to support the ambition of the Net-Zero Insurance Alliance (NZIA). NZIA members commit to transitioning their underwriting portfolios to net-zero GHG emissions by 2050, to contribute to the implementation of the COP21 Paris Agreement. There have been various initiatives aimed at reducing the damaging emissions from using carbon and fossil fuels. Until recently, the focus within the transportation sector has been on shipping, as vessels are seen to be the main contributor to toxic emissions. This has led to a search for alternative propulsion systems for vessels, including Liquefied Natural Gas (LNG), hydrogen, wind and solar power.
GREENING PORTS
Now the spotlight has fallen on ports, with green initiatives being implemented to address interaction with vessels calling at port facilities, and their own contribution to the efforts to reduce the number of pollutants they create. However, it should be remembered that ports are commercial enterprises, and this may mean these businesses may need to be either incentivised or forced to implement change. A port can act as both a landlord – the initiator and applier of regulatory controls (for example, creating incentives relating to port tariffs or penalties for non-compliance) and terminal operator – and this can create a conflict of interest. The Clydebank Declaration, announced last November during COP26, is an ambitious global initiative led by the UK Department for Transport, which will establish ‘green maritime corridors’. The aim is to maximise the use of optimum speeds
