ESG, Talent and the Marine Industry: What IUMI’s New President Will Focus On

Newly elected IUMI president Frédéric Denèfle shares his thoughts on marine insurance looking into the next few years.

Frédéric Denèfle, managing director of French marine war risks specialist Garex, was elected the new president of the International Union of Marine Insurance (IUMI) at that organization’s annual meeting September 18-21 in Chicago.

The previous president, Richard Turner, completed his four-year term.

Denèfle has 34 years of insurance industry experience. He started in legal claim handling, first with Paris-based Reunion Européenne and then with the French market organization CESAM. He joined AGF MAT/Allianz Group in 1998 and worked there until 2012. He started at Garex in 2013.

Denèfle’s history with IUMI is extensive, having served on the executive committee since 2018. Before then, he was chair of the legal and liability technical committee from 2015. IUMI is an association of associations, representing 44 national and marine market insurance and reinsurance trade groups.

“The past four years have been extremely active,” said Denèfle, crediting his immediate predecessor with keeping several important initiatives active despite pandemic upheavals and dislocations.

“Some of those initiatives have not been easy, such as the environmental, social and governance [ESG] efforts, as well as data analytics,” Denèfle said.

“The past few years were a particularly difficult time to have any new targets or goals because of COVID. On top of that, the usual IUMI topics were advanced. And a new claims database was developed. That was remarkable in getting member organizations to share information.”

Given all of that, Denèfle said with a smile, “this is no time to say ‘I’m coming in with all new targets and new directions.’ My priority will be on continuity. That means showing more results for the existing initiatives, providing clearer direction on ESG, and supporting more robust data gathering and analytics.”

Looking to the Future

Just as with steering a ship, steady-on does not mean any less effort or focus.

“IUMI cannot sit on its hands,” said Denèfle.

“We have to be more efficient, and there are so many new subjects to be addressed. We have to evaluate if we can drive them or can we merge them with things we are already doing. There are so many new questions marine underwriters and their insureds have about logistics. We have to keep up with those.”

Within that, Denèfle did give a nod to a modest new effort: “We would like to have a better exchange with the P&I [protection and indemnity] clubs. They have data and experience with claims that would be of benefit to all.”

Broadening his focus to the marine insurance sector, Denèfle noted, “We need to reinvigorate and adapt the way we do business. We need to attract new talent and make sure that they will with marine insurance. We also need to be sure all the new people understand what IUMI is, what we do, what they can do, and how to benefit.”

A Focus on Talent

Marine insurers and organizations have to understand those coming into the business as well, Denèfle stressed.

“We have had a lot of retirements and consolidation within the industry, and there are lots of new people coming in and coming up. We have a very attractive business, and what we do is interesting. All the new people will change how we work.”

The newcomers bring new tools and ways of thinking and working, Denèfle explained.

“Many of them are comfortable with paperless and remote work. That is part of the deal now, and we can’t go back to the old ways. It’s just not sustainable.”

Denèfle’s approach was underscored by no less an authority than Pat Ryan — founder and former chairman and chief executive officer of Aon and now founder, chairman and CEO of Ryan Specialty — in his keynote address to the plenary opening session of the IUMI annual meeting.

He said, “The smartest person in the room often gets tripped by what they don’t know. You have to have the courage to get out of your comfort zone and get ahead of where you think change is going.”

To underscore his own point, Ryan quoted hockey legend Wayne Gretzky, the top scorer of all time: “I skate to where the puck is going, not where it is.”

As part of its own evolution, IUMI has added the position of vice president. Kosuke Hashimoto, recently vice chair of IUMI’s executive committee and general manager of marine underwriting at Tokio Marine & Nichido Fire Insurance, has elected to take that new role.

“That is someone to act as a lieutenant, share the work and to ensure continuity,” Denèfle explained. “It is not an automatic succession. It is that we have so much more activity as an organization that it makes sense to spread the load.”

ESG in All We Do

One continuing theme of IUMI work has been advancing and supporting high ESG standards, a challenge for any multi-national industry.

Several speakers throughout the conference noted the complexity of constantly shifting regulatory and legal requirements, especially sanctions. Insurers and financial institutions were lauded for going beyond the minimum legal obligations, especially in ending dealings with Russia after the invasion of Ukraine.

That theme was echoed by Rear Admiral Wayne R. Arguin Jr., of the U.S. Coast Guard. He is assistant commandant for prevention policy, and is responsible for the development of national policy, standards and programs promoting marine safety, security and environmental stewardship.

Proudly noting that the Coast Guard had just named Admiral Linda L. Fagan as commandant, the first female service chief in the U.S., Arguin stressed that the Coast Guard would be enforcing workplace and safety standards energetically.

“Mariner physical mental health and wellbeing are essential to safety,” said Arguin. “That absolutely includes working conditions and potential for harassment and discrimination. A mariner cannot be focused on the safety and security of operations if she or he is focused on other concerns.”

More broadly Arguin added, “Standards provide the floor, not the ceiling. Anyone who says that their organization is meeting the minimum international standards is missing the point. If you are only willing to accept the minimum standard then you are also accepting the minimum level of risk management.” &

Gregory DL Morris is an independent business journalist currently based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.