Greek firms forge closer links with insurers - 15/11/2007

At home and abroad, the profile of the Greek shipping market is higher than it has been at any time since the mid-1970s, and this has come about for a variety of economic and business reasons.

A new generation of shipowners are far more open and international in their outlook

At home and abroad, the profile of the Greek shipping market is higher than it has been at any time since the mid-1970s, and this has come about for a variety of economic and business reasons.

Just a brief look at the numbers is proof that the market is stronger than ever. This year’s survey by the Greek Shipping Cooperation Committee shows that the Greek-controlled fleet has increased by nearly 15% in tonnage in the 11 months to February. As the industry has grown and developed, so its need for insurances and what it requires from insurers has also changed substantially.

One of the trends that has triggered this change is the number of shipping companies that have turned to the capital markets for fund raising, creating a profound cultural shift from the private, traditional family ownership to the transparency and accountability of the stock markets. Since 2004, there have been no less than 20 Greek-driven initial public offerings, mainly in the US, and mergers and acquisitions of publicly-listed firms.

The size, rating and reputation of the insurer are key criteria for investors, especially with the increase in the fleet sizes and values — and therefore the amounts at risk. Further, as a result of global consolidation, Greeks are today increasingly entering into long-term agreements with the large trading houses or, as large bulk and tanker operators, are often involved with international pooling arrangements. Again, the financial strength and status of the insurance carrier is seen as a vital component.

There has also been a shift in their corporate culture, which is largely the result of the second generation of Greek shipowners taking the helm. They are far more open and international today and are looking to develop direct long-term relationships with their key suppliers, including insurers, who they term as important partners in the management of their business risks. Insurers that are investing in building such relationships are gaining ground in Greece.

There is also a growing trend for Greek owners to want to have a direct link with the claims adjusters handling their account and to have their insurers actively involved in casualty and claims management. Traditionally the approach has been very introverted, with owners organising everything themselves and then submitting it to the underwriters for “post factum” approval.

This change is even more apparent when it comes to large cases, and where the leading hull and machinery underwriters can assist with issues such as salvage and tendering with yards, when huge savings can be made on the bottom line of the claim.

The underwriters that are prepared to take on this proactive lead role and have the structure and experience to genuinely add value are seeing an increasing level of interest in the Greek market.

The growth in tonnage brings with it an associated rise in claims and, in the current environment, possibly also the severity. Shipowners need insurers with whom they can work to try to mitigate these losses. There have been a tremendous number of loss prevention initiatives provided by insurers and clubs to the Greek market over the past few years and it is increasingly being seen as an important and integral part of the insurance package.

Greece is today, more than ever, a market that appreciates the experience and knowledge-sharing that insurers can offer, and this will become even more important if owners are entering into specialised trades such as the LNG sector.

The Greek shipping industry will continue to evolve as the business drivers of the industry respond to changing economic conditions.

Insurers are vital long term partners for these businesses, partners who have come a long way in how they help mitigate and manage risk. However, the pace of change is unlikely to slow in the coming years so insurers will need to continue to plan for how their products and services can develop to meet new and emerging needs.

Christina Kalimbassieris is managing director of Kalimbassieris Maritime.