00:00So what are the biggest impacts that you're seeing in your insurance industry right now from what's happening around Iran?
00:10Well, so I believe that, I mean, this is not the first time that we've had sort of a global
00:15geopolitical situation impact marine insurance.
00:19We've seen the same thing with the pirates in Somalia years ago.
00:23We've seen the same thing in the Black Sea following the invasion of the Ukraine.
00:28We've seen it in the Red Sea over the last few years.
00:32But I think the big difference that we're seeing with the situation in the Strait of Hermos is that we're
00:38looking at a narrow strait which can be completely closed off.
00:45So when it came to previous situations, you could easily or at least you could make the choice to deviate.
00:52For example, with the Red Sea, you could decide you wanted to go the long route around the Cape of
00:58Good Hope and you could largely avoid the risk.
01:02With the Strait of Hermos, I mean, you're basically looking at ship owners having to choose between tolerating the risk,
01:10which is currently very high,
01:11or they are basically stuck either inside or outside of the straits.
01:18And this, of course, in turn impacts the global energy supply, given that 20 percent of the global oil supply
01:26comes through this very narrow strait.
01:28So I think that's the big difference that we've seen from similar situations.
01:32So what we're hearing right now is that despite the fact that rates remain high, that there is essentially cover
01:41still out there if the ship owners want to take them.
01:45Is that what you're seeing on the ground?
01:47And could these prices get prohibitively high at some point?
01:54Yeah, so I think that's reflecting what we're seeing on the ground.
01:57We still see clients asking for quotes.
02:01We're still giving quotes pretty much every day on transiting the Strait of Hermos.
02:07The pricing, obviously, as you mentioned earlier, has changed.
02:12It's already quite expensive if you want to make the transit.
02:17But there are definitely still owners out there that are contemplating to do so.
02:21I think it's important to note, though, that we are not looking at anywhere near, you know, the number of
02:27ships that were transiting previously.
02:29So I think the ships that are going through at this point at the rates that there are now, you
02:34know, it's a trickle.
02:36And it's probably not enough to sort of have any lasting impacts.
02:41I mean, I think ultimately the important thing is that the safety situation is such that most ship owners are,
02:49despite that it's possible to get cover, they are not comfortable putting their crew, their cargo, their ships at risk
02:56to risk the transit at this time.
03:00But when it comes to the prices themselves, and I want to go to the ship owners, how comfortable they
03:06are.
03:06But when it comes to the prices themselves, can you give us a sort of a view of how much
03:13higher, how much more expensive they are right now than before the war?
03:20I mean, they are exponentially higher.
03:22I cannot give you any specific rates here.
03:26But I will say is that the prices are reflective of the risk.
03:30This is how pricing of insurance works.
03:33So if there is a dramatic change of the risk situation, you will see a corresponding dramatic shift to the
03:40pricing of that risk.
03:41So in terms of whether it would get prohibitively expensive in the future, yes.
03:47I mean, I think if we continue to see vessels attacked at the rate that we have seen so far,
03:52obviously with each casualty, underwriters are going to be more concerned about the risk and the potential claims that may
03:59follow from ships transiting.
04:01So I think that's the situation today.
04:06So we're hearing that the U.S. could be considering a $20 billion reinsurance backstop.
04:16Would that help?
04:20I mean, it would put more capacity on the market.
04:24But I think what we are seeing at the moment is not necessarily that there is a capacity problem.
04:29It appears to be more a security problem where most ship owners are not transiting because they cannot get insurance
04:39cover.
04:39They are not transiting because they are not considering it safe to do so.
04:45So, yes, I mean, additional capacity will no doubt be helpful.
04:50But I mean, in terms of whether we can increase ships going through the strait, it's I mean, it comes
04:55back to making ship owners feel comfortable that it's a safe thing to do again.
05:02When you're talking to those ship owners, to the people looking for these coats, what are you hearing could be
05:08the conditions that they actually feel comfortable to send their vessels through the strait?
05:15Well, I mean, I think at the moment, it is not clear to anyone which vessels are being targeted, which
05:22vessels are being allowed to sail through the strait.
05:26So it's very unclear, you know, what their individual risk profile is.
05:32So if you would compare with the Red Sea situation, for example, after the incident was going on for a
05:40while, it was very clear from the Houthis side which vessels they were targeting.
05:45And so vessels that fell outside of that risk profile ultimately felt quite safe to continue transiting through the Red
05:52Sea.
05:52So, I mean, in the absence of a complete resolution of the war situation that's going on, I imagine that
06:00that would be the alternative that, you know, owners are finding a way to feel comforted that they are not
06:06on the target list.
06:11Do you expect this episode to have long term repercussions when it comes to marine and shipping insurance, the industry
06:19itself?
06:23Well, I mean, ultimately, this is what the marine insurance is supposed to do.
06:29It's why we have marine insurance and war insurance.
06:32So, I mean, in the short term, I think the market is reacting exactly as it normally does and as
06:38it should.
06:39But, I mean, it's safe to say, of course, that if this becomes a very prolonged conflict and, I mean,
06:45ultimately, if you see a large number of ships being targeted,
06:48that will affect the amount of capacity available in the market.
06:54But for the moment, I mean, I believe the situation is still such that it reflects what marine insurance is
06:59supposed to respond to.
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