Building strong relationships between clients and brokers leads to a deep, shared understanding of individual risks and key sector trends – which ultimately helps to achieve the best risk coverage possible.
Whereas in the past, the shipping industry operated on a set of well-established processes, the modern industry is without doubt one of the most complex and fast-changing sectors in the world.
To cope with this, clients need to be ready to handle whatever may be thrown at them – both now and in several years’ time. Even a relatively simple business will need to consider ways to protect its interests and assets around the world; incorporate multiple legal systems; rely on ever-increasing levels of automation and technology; and face aggressive competition across the board.
Understanding individual risks
The rapid changes in the industry mean that every company is under pressure to cut costs and make decisions faster. The temptation for many firms is to apply this approach when buying insurance, aiming to reduce what can be a painstaking process.
However, risk coverage that is not formed through a deep understanding of a client’s business is almost always the first to come unstuck. The insurance buying process should start with in-depth communication between clients and brokers – preferably face to face – when clients can outline what makes them and their business tick.
One of the reasons that these discussions are so useful is because, more often than not, the coverage that a client thinks they need is not what they actually need. Added to that, there are bewildering arrays of insurance options that can leave firms prey to excessive premiums and with little recourse when things go wrong.
Fix, avoid, achieve
While new technology has greatly changed the methods employed in the shipping sector, the approach to identifying contract exposures and creating solid insurance agreements remains the same – focused around the three key concepts of ‘fix, avoid, achieve’.
First of all, brokers should aim to develop an in-depth understanding of how a particular business works and help to fix any weaknesses or exposures. As independent consultants responsible to the insured, brokers can draw on years of experience of specific projects, as well as wide-ranging industry knowledge. This often allows a broker to challenge ingrained thinking at a client’s business and bring new perspectives.
Second, there is always the possibility that unforeseen risks may transpire – in which case, brokers can help clients to avoid these risks and ensure they are properly protected in future.
Third, brokers should help their clients to achieve greater productivity or release greater capital for reinvestment by aligning risks with their operations on the ground, allowing the business to navigate the changing industry landscape more effectively.
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For more information, please contact Andrew Webster, Partner, Marine on +44 (0)207 558 3428