Charting a strategic course through complex waters

Christopher Gray, global head of marine reinsurance at Axis Re, discusses navigating geopolitical tensions, the importance of a common understanding of risk, and forward-looking strategies in marine reinsurance.

How are current geopolitical tensions affecting the marine reinsurance industry?

The marine shipping market is an ever-changing landscape due to its international nature – and simply by virtue of the vessels trading and traversing the world. That said, the geopolitical environment is more turbulent than it has been for some time. We’re witnessing growing tensions worldwide, from international conflicts to economic uncertainty to supply chain disruptions. These have significantly escalated risks to global shipping. This environment is pushing clients to be more creative in how they provide coverage as the risks rapidly evolve.

At Axis Re, we’re at the forefront of understanding complex exposure patterns and accumulations, which is critical in such an uncertain geopolitical environment. We combine our team’s deep expertise with AI-based data analysis to offer efficient, tailored solutions to our clients. But beyond technology, the most important aspect is the open and constant dialogue we maintain with our clients. This dialogue ensures a common understanding of risks and clarity in coverage, which is essential to navigating these challenges together.

Can you elaborate on the importance of a common understanding of risk?

A big issue has been the potential for disconnect between the insurer and reinsurer regarding coverage. There must be complete alignment and wording clarity to avoid disputes when a claim arises.

The development of a common understanding comes from a deep knowledge of the risks involved. At Axis Re, we pride ourselves on having expert underwriters and claims handlers who ensure that both we and our clients are on the same page regarding coverage. This is crucial because, ultimately, it’s about ensuring that when a claim is made, everyone agrees on what is covered and there are no surprises – that’s how we build trusting client relationships.

What does being forward-looking in risk management mean for Axis Re?

Taking a forward-looking approach to risk means constantly considering what could happen, not just what has happened in the past. We engage in dialogue with our clients and brokers about their concerns and the potential risks on the horizon. This proactive approach allows us to develop innovative solutions and mitigate these risks.

As an example, we are more dependent than ever on the just-in-time delivery model, and yet supply chain disruption has become the new normal. We’re supporting our clients as they adapt to that change, providing the necessary reinsurance backing for new products that allow for an element of just-in-time with a contingency plan attached.

What emerging risks do you have your eye on?

One of the major risks on our radar is cyber, especially in terms of clarity of coverage. We’re also closely monitoring the accumulations of risk from geopolitical events such as the ongoing conflict between Russia and Ukraine and the rising tensions in the Middle East. Political violence, terrorism and attacks on shipping are becoming more frequent and severe (including the rapid technological rise of low-cost attack drones), requiring us to be extremely diligent in how we provide coverage.

Our focus is on understanding and mitigating these risks through clear communication and a strong emphasis on forward-thinking strategies, including aggregation management. We’re dedicated to staying ahead of these challenges whilst keeping a steady hand on the tiller as we navigate these turbulent seas with our clients.