The first Annual Disclosure Report for Poseidon Principles for Marine Insurance is a landmark step forward towards transparency in the maritime and insurance sectors. The data will act as a stepping-stone for the Signatories to engage their clients in a discussion about climate change, technology, and new risks.
“This level of transparency is a major milestone on our journey to decarbonise the maritime industry,” says Patrizia Kern, Chair of the Poseidon Principles for Marine Insurance initiative and Marine Strategy Advisor – CEO Office at Swiss Re Corporate Solutions. On average, the Signatories’ portfolios are 12.7% above being aligned with reaching the UN maritime-goal of at least 50% reductions of the annual greenhouse gas emissions from international shipping by 2050, compared with their level in 2008. The second trajectory the Signatories track takes is more ambitious and has a goal of zero CO2 emissions in the middle of this century. The simple average score of the 100% CO2 emission reduction track is 20.8%
above alignment. “It is evident that there is work to do, but hard data and transparency is a necessary first step,” Kern says.
“Transparency is our utmost priority in every aspect of our business activities. Our first climate alignment score indicates that we should work together with our clients to assist them in this transition. The knowledge acquired in the reporting process enabled us to analyze these results with the aim of fine-tuning our sustainability strategy. As mentioned in the report, our portfolio needs improvement with regard to IMO & 100% CO2 reduction trajectories. Following an open data policy, we are committed to share the data with our clients and launch an open dialogue on how to eliminate the climate related risks of our portfolio, providing a roadmap to our clients to meet climate efficiency of their fleet,” underlines Ilias Tsakiris, CEO of Hellenic Hull and Chairman of the Ocean Hull Committee of the International Union of Marine Insurance.
Gathering data on the portfolios is a complex task. First of all, readers should take note that the data covers 2021 – not 2022. Further, the numbers do not cover the Signatories’ entire hull and machinery portfolios, as not all clients reported their data back to the insurance providers. In addition, it is industry practice that each ship is insured by a primary insurer and several secondary insurers, because of the extraordinary value of modern ships, which adds another level of complexity to the data collection.
Many takeaways
Read the report for a full breakdown of methodology and individual responses here
2023 ambition
The Poseidon Principles were established in 2019 by the Global Maritime Forum and a number of financial institutions to create a global framework to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with climate goals. In addition to the annual report on Marine Insurance, the Poseidon Principles for Financial Institutions published their third annual disclosure report with 28 of them reporting in
December 2022. For 2023, the ambition of the Poseidon Principles for Marine Insurance is to get more members to join the principles, increase the contribution volume from the insurance clients and improve access to data.
Industry foundation is shifting
The very foundation of the maritime insurance sector is changing, according to the Signatories, because the maritime industry has begun its transition away from the monolithic oil-based combustion technology towards a future with a wide array of propulsion technologies and energy sources. Therefore, each company within the marine
insurance sector must understand what they will insure in the future and how new ship technology will work.
“The insurance companies are only one component in a complex ecosystem, but while engaging with our clients we can become levers of change,” Kern says.
Climate change is a ‘here and now challenge’ for the global insurance industry, and the marine insurers see their engagement with their clients as a way of contributing to the wider sector, given that international shipping emits 2-3 percent of global greenhouse gas emissions, transporting close to 80 percent of global trade by volume.
Reporting Signatories:
Fidelis MGU, Gard, Hellenic Hull Management, Navium, Norwegian Hull Club, SCOR, Swiss Re Corporate Solutions and Victor Insurance.
Affiliate members:
Cambiaso Risso Group, Cefor, Cosco Shipping Captive, CTX Special Risks, EF Marine, Gallagher, Lochain Patrick Insurance Brokers, Lockton Marine, WTW.
The Poseidon Principles for Marine Insurance Annual Disclosure Report 2022 is available for download here.
About the Poseidon Principles for Marine Insurance
The Poseidon Principles for Marine Insurance are a framework for measuring and reporting the alignment of insurers’ shipping portfolios with climate goals. Recognising insurers’ role in promoting responsible environmental stewardship throughout the maritime value chain, the Poseidon Principles for Marine Insurance provide them with tools to foster collaboration with clients, gain insight to enhance strategic decision-making, and address the impacts of climate change. The Annual Disclosure Report 2022 was produced by the Global Maritime Forum, which performs secretariat services for the Poseidon Principles for Marine Insurance, with expert support provided by UMAS and Swiss Re Institute. The Poseidon Principles for Marine Insurance are built on four principles – Assessment of climate alignment,
Accountability, Enforcement, and Transparency – which they share with the Poseidon Principles for Financial Institutions and the Sea Cargo Charter. Established under the auspices of the Global Maritime Forum, the three initiatives aim to increase the transparency of environmental impacts within global seaborne trade, promote
industry-wide change, and support a better future for the industry and society.
For more information, please visit www.poseidonprinciples.org/insurance
