Press Article: Singapore War Risk Mutual seeks rapid growth in expanding market

The Singapore War Risks Mutual has seen a boom in business during the past year. The Standard Club-managed mutual, established with the support of the Singapore Shipping Association, has nearly doubled the number of ships on its books to 619 from 350 in just 12 months, according to data from Standard Asia.

Established with the support of the Singapore Shipping Association, the mutual has nearly doubled the number of ships on its books to 619 from 350 in just 12 months, according to data from Standard Asia.

Created to appease the local shipping industry’s desire for a national war pool, reducing dependence on London for such coverage, the mutual began underwriting in February 2015.

Owners with vessels committed to the pool have grown too – from 20 to 30, making up approximately 12m gross tonnage in total.

“That’s very healthy growth,” SWRM managing director David Roberts said, adding it took place in probably one of the worst war markets ever from an underwriter’s perspective.

The bulk of reinsurance for the mutual is now being done in Singapore. The majority of its reinsurance is either with Lloyd’s or the company markets based in Singapore, SWRM regional underwriting director Jack Marriott-Smalley said.

Cash reserves are currently being invested by parent company Charles Taylor’s investment management department.

“The bulk of the investments are in government bonds, fixed interest securities with a relatively small proportion in equities. That gives a great deal of security,” Mr Roberts said.

The long-term goal, however, is to spin off the mutual as an independent entity from the association.

In the meantime, the mutual will seek to provide the widest levels of coverage to possible to owners.

Insurance conditions
The groundwork for expanding SWRM coverage is being laid now via Singapore War Risks Insurance Conditions.

This “work in progress” will create an architecture and general provisions upon which complete risk conditions could be written in future, says SSA council member Gina Lee-Wan, who played a key role in the establishment of the SWRM.

“This is done with the consideration that at some point when we want to develop maybe hull and machinery [cover], there’s already this architecture. And because we started with the SWRM, it’s an easy segue into these conditions,” Ms Lee-Wan says.

SWRM currently writes business under the three globally recognised insurance conditions: the Nordic Marine Insurance Plan; British conditions, such as Institute Hull Clauses and Institute War and Strikes Clauses; and American conditions.

“We are hoping to now introduce our own conditions that are designed to provide more logical and wider cover than the other standard conditions on offer,” she says.

The SWRM conditions would also plug gaps in the three recognised conditions, such as when owners insure war cover under the Nordic plan and hull and machinery under the Institute Hull Clauses.

The conditions should also help Singapore retain control in safeguarding its strategic maritime interests.

SWRM is currently managed by the Bermuda office of the Standard Club Asia and is reliant on the three main insurance conditions to write business, which means the SSA, which owns the SWRM, does not control the development of this insurance cover.

“This has significant political impact on international maritime trade, which is considerably influenced by decisions taken on cover by the International Group of P&I clubs,” Ms Lee-Wan says.

The conditions could also allow Singapore to adapt to changing risks, such as reducing cover for standards that no longer reflect how a national shipping community wants to be perceived, and rewarding innovations in design and technology.

“Insurance conditions written by underwriters alone will not make these considerations and will seek to reduce rather than embrace new risks,” Ms Lee-Wan says, adding the emergence of cyber-attacks in recent years has led to the establishment of a global exclusion clause despite the very real risk posed by such incidents to shipowners.

For larger shipowners, the initiative aims make their insurance cover more seamless, while for the smaller owners, “at least the risk of their vessel being detained in certain jurisdictions will be minimised or at least they get a payout”.

The SSA has commissioned an expert in the field to design the clauses.

Ultimately, the plan is to offer Singapore conditions on the international market.

Next generation
SSA will introduce a hands-on training scheme to ensure the knowledge of drafting insurance clauses is retained. Trainees would be mentored by drafting experts.

“Drafting of a set of conditions is quite different from doing an essay or a critique on war insurance cover,” Ms Lee-Wan says.

Trainees would in turn, train the next generation of talent. A pipeline of talent would be built in this way.

The Singapore maritime industry is striving to think one step ahead in order to attract and retain talent, says Ms Lee-Wan.

“When we have our clauses, we can bring the business here,” she says.