The marine insurance sector is witnessing a rapid period of changes and it’s obvious that insurance companies have started to understand the risks the industry is facing to think “Out of the Box” and cope with the new trends. In the UAE, the maritime insurance sector has had a fair share of realignment to these new market dynamics and will have to continue being vigilant to stay profitable and resilient. There are few insurers currently capable of investing in product innovation given high margin pressure. Consequently, Vijay Ramachandran, Assistant Vice President Marine at Oman Insurance exclusively told Marasi News about the company’s new strategies to diversify its businesses and come up with new smart solutions.
By Effat Mostafa
1. What is Oman Insurance’s main value to the marine insurance market?
At Oman Insurance, we provide outstanding insurance solutions to help protect our client’s insurable risks and well-being. Marine insurance was one of our first protection solutions to be delivered in this market - an economy defined by its trade-friendly geographic location. It thus stands to reason that Marine Cargo insurance in particular is a very fast moving product and we position ourselves as a regional company with global capabilities. This enables us to offer international products with all the conveniences like accessibility, price and service, of a local company.
2. Can you please tell us more about Oman insurance current projects?
At OIC, we have a multitude of ongoing projects on the drawing board, some close to their implementation stage, while others are still under development. With respect to Marine insurance, we are investing in state of the art technology to improve operational efficiencies and enhance our business deliveries. Over the next few months, we will be implementing a new fully integrated system which will feature independent web services, including a payment gateway. We already have one of the best online service systems for marine cargo, but with the new system the capability will be expanded to encompass various other product lines like yachts, jet skis, property, liability, etc. The objective is to offer the client a one-stop solution for all their insurance needs.
3. To what extent Oman insurance services guarantee providing better insurance levels to the vessels?
Our 40 year of experience in the market has been reflected into strong brand reputation. A financially strong A rating from S&P and AM Best provides the necessary confidence to lenders which facilitates financial assistance required for ship owners. Further, we maintain high service standards and in terms of claim handling, we have internal KPIs assigned to track the settlement ratio, presently in excess of 95%. Barring the most complex claims, most marine claims are settled within a month once all documents are submitted.
4. Would you please tell us more about the various types of covers for Hull that is provided by Oman insurance?
In order to discuss the types of cover it’s important to understand the various values at risk for hull insurances. A typical hull policy will cover the physical damage to the ship due to natural and man-made accidents at sea. It also covers certain liabilities that the ship owner might be exposed to like wreck removal, collision liabilities etc. Further, we also protect the ship owner for the business losses when ship is docked and unable to sail due to ongoing repairs after some accidents.
Finally, similar to cargo insurance, we also provide additional covers for war, terrorism and piracy. Specialist covers available for kidnap and ransom, pollution liability, crew liability can also be offered through our partnerships in international markets.
5. How does Oman Insurance comply with all the international standard of the maritime sector?
The maritime industry is international by nature and the marine insurance industry rules and practices are pretty much uniform across most parts of the world. OIC has always followed international standards when it comes to type and nature of cover offered.
6. In light of the current challenges facing the maritime industry in the UAE and the world, what is Oman insurance strategy to face these challenges?
For market leaders, challenges in tough market conditions only serve to sharpen expertise and augment valuable experience, to emerge stronger and more resilient. We are working on two primary strategies starting with diversifying our business sources to various insurance markets. This reduces the potential imbalances created by a few non- performing markets. Internally, we have a robust risk management system which carefully studies various developing risks - from climate changes, to geo-political situations to risk accumulation - allowing us to make well-informed underwriting decisions. Accordingly, these tools also help us to assess the risk and prepare to mitigate or at least minimize potential exposure.
7. How can the insured benefit from the marine cargo insurance?
Marine Cargo Insurance is by far one of the most comprehensive protective mechanism developed by insurers. To begin with the cover provides protection against all natural perils like storm, rain, flood, etc. and protects against any negligence on the part of the freight forwarder and/ or transporting company. The policy understands that the insured is not in control of goods whilst it’s being transported and any form of accidents that damage the goods is covered. Special supplementary covers like War Strikes Riots Terrorism etc. can also be added to suit specific client requirements. The compensation provided under cargo insurance is based on full value of the goods + the cost of freight incurred + cost of Insurances. Over this the insured is also allowed a compensation for expected profit or overhead expenses they might incur following a loss. Generally this ranges around 10% - 20%. Finally, the cargo insurance is on agreed value which means the insurance company will not deduct any percentage for depreciation etc. as customers may have experience with other policies like motor insurance for instance.
8. What is the company’s expansion plans to benefit the UAE maritime sector?
As we work towards expanding our geographical footprint, we constantly look for opportunities to underwrite global risk. In the last couple of years, we have successfully written business from global markets, a good contrast to earlier times where we were providing GCC solutions only. This is a valuable delivery for our multinational clients seeking to protect their interest in multiple countries where they may have a presence. Until recently such solutions were only offered by international insurers based in advanced global insurance hubs like London. It is indeed remarkable that we can now offer customized solutions like Stock Throughput, War on Land in high risk zones like Iraq, Libya etc. to our marine clients from the UAE itself.
9. In today's highly complex marine business, how does Oman insurance excel in marine underwriting philosophy?
We are an insurance company and as it would be for any company in our trade, underwriting is the backbone of our business. At OIC we have a very strong and robust underwriting philosophy which is applied as per our underwriting guidelines, with clear demarcation of various type of risks, our risk appetite and a defined authority matrix.