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AHHIC pioneers in sustainable underwriting

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World’s insurers and UN Environment Programme launched the first global insurance industry guide to tackle sustainability risks, co-led by United Nations Environment Programme (UNEP) and Allianz and involved other leading insurers, insurance associations, and academic institutions from across the globe. The members of the Principles for Sustainable Insurance project team that developed the guide include American Hellenic Hull Insurance Company, American Property Casualty Insurance Association, AXA, Generali, MAPFRE, Munich Re, QBE, RSA, Santam, Swiss Re, Temple University’s Fox School of Business, University of Technology Sydney, West Chester University, and Zurich.

“AHHIC is the exclusive marine insurance company, among world’s insurers and institutions, participating in the development of the first global guide, which provides the framework for the insurance industry to manage Environmental, Social and Governance issues”, underlined Mr. Ilias Tsakiris, CEO of AHHIC.

Following a comprehensive global consultation process, leading insurers from around the world and the UN Environment Programme (UNEP) launched the first global insurance industry guide to tackle a wide range of sustainability risks—from climate change, ecosystem degradation, pollution and animal welfare and testing; to child labour, controversial weapons, and bribery and corruption.

The guide, Managing environmental, social and governance (ESG) risks in non-life insurance business, outlines 8 areas comprising possible actions for insurers to manage ESG risks—also known as sustainability risks—in non-life insurance transactions, focussing on risk assessment and insurance underwriting. These areas include developing a company’s ESG approach and risk appetite, integrating ESG issues into the organisation, establishing roles and responsibilities for ESG issues, escalating ESG risks to decision-makers, detecting and analysing ESG risks, and decision-making and reporting on ESG risks.

“We are proud to be the exclusive marine insurance company to sign the United Nations agenda, supporting the United Nations Environment Programme Finance initiative, Principles for Sustainable insurance since June 2019. As members of the global community of banks, investors and insurers of UN Environment Programme Finance Initiative, we encourage the insurance industry to endorse ESG issues in underwriting, risk assessment and investments, and support the United Nations initiative. It’s time for action and as underwriters we need to fully embrace sustainability in all aspects of our business activity.”, stressed Mr. Ilias Tsakiris.

 

AHHIC’s 2019 Sustainability Report

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As a marine insurer, American Hellenic Hull Insurance Company (AHHIC) provides hull and machinery services to the international shipping industry that is currently called upon to adapt to a wide range of challenges. Not least among these are new requirements deriving from the International Maritime Organization ’s regulations aimed at reducing industry’s impact on the environment and new risks related to sustainability.

Since June 2019, American Hellenic Hull supports the United Nations Environment Programme Finance Initiative, Principles for Sustainable Insurance (UNEPFI – PSI), being among the leading signatory companies of the initiative and a member of the global community of banks, investors and insurers of UN Environment Programme Finance Initiative.

As the exclusive marine insurance company to sign the United Nations agenda, American Hellenic Hull, adopts all four of the Principles for Sustainable Insurance, as mentioned in the company’s “2019 Sustainability Report” which provides an overview on the key facts and figures.

“Looking ahead, the coming decade is the decade of sustainability and as a maritime community we should all do our utmost to successfully confront the challenges involved”, commented Mr. Ilias Tsakiris, CEO of AHHIC.

See the 2019 AHHIC’s Sustainability Report: AHHIC_Progress Report 2019

 

Reinventing the maritime business for a sustainable future

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Sustainability is not different than reinventing the wheel, as we are asked to do the same things in a different way. So, we need to re-use, re-evaluate, re-assess the impact, re-act in a responsible way. However, how responsible are we at the end of the day?

How committed are we to meet the needs of the present without comprising the ability of future generations to meet their own needs?

In other words, how do we embrace sustainability in economy, society, environment and Re-jig our maritime industries to align them with these goals?

The International Maritime Organization (IMO), as part of the United Nations (UN) family has adopted the Sustainability Strategy and is actively working towards the 2030 target. The IMO has made the World Maritime theme for 2020 “Sustainable shipping for a sustainable planet“.

Shipping plays a pivotal role in the global economy as 90% of world trade is carried by sea. We cannot consider a sustainable future without a sustainable maritime industry.

Supporting the maritime adventure as a whole is a wider maritime cluster in which every participant, from shipowners to marine insurers, has responsibility for its continuity.

All decisions made by UN bodies affect member states, but the IMO is the only organization that through its guidelines and regulations has a direct effect on the shipping industry.

We all embrace the sustainability.  However, the IMO should seek closer dialogue with the global shipping community, as regulations should be decided and implemented on a more realistic basis aiming to protect the marine environment and contribute to the battle against climate change.

How do the IMO’s regulations and guidelines affect the marine insurance industry?

Low Sulphur Cap Limit – IMO 2020

IMO 2020 is old news for the sustainable planning of the IMO, but uncharted waters for the marine insurance industry.

We have seen many claims arising out of the IMO 2020, which are related to scrubbers and non-compliant fuels.

Already two months since IMO 2020 came into force and we do face a wide variety of problems in terms of delays in bunkering and cases of possible engine damages due to low quality of compliant fuel.

The marine insurance industry relies on Classification Societies. What happens if the vessel breaches its warranty due to non-compliance with Low Sulphur Fossil Oil fuels? Most probably the shipowners in its effort to comply will be rendered uninsured.

Reduction of Green House Gas Emissions by 50% by 2050

The next big challenge for the shipping industry is halving GHG emissions by 2050.

Until now, we have no clear path as to how this will be achieved. LNG technology can make a major contribution to the energy system of the future and to play a key role in seaborne transportation, but still this is not enough.

We may agree to introduce alternatives to fossil fuels, such as biofuels, biogas and other renewables such as electricity, as well as

cold-ironing.

As marine insurers, however, we are not able to insure vessels using fuels that have not been tested. We do not insure certainties. Engine damages arising from non-tested fuels are risks that we cannot undertake.

Another question is: How responsible and sustainable shall we be if we choose to use biofuels that consume more energy to produce than the fossil fuels they will replace? Who are we to decide to sacrifice sustainable practices ashore in the cause of sustainability at sea?

A truly sustainable culture is based on a holistic approach spanning environment, society and economy.

We believe in a strategic Re-approach where all activities in the insurance value chain, including interactions with stakeholders, are carried out in a responsible and forward-looking way by identifying, assessing, managing and monitoring risks and opportunities, associated with environmental, social and governance issues.

It is time for action

Building a resilient future for all should not only be focused on implementation of regulations developed by international or national organizations.

We need to fully embrace sustainability and this will occur only if all stakeholders related to the maritime adventure – the Organizations and Regulators, the shipping industry, and the services related to the maritime industry such as the marine insurance community – all sit at the same table and enhance the dialogue that will lead to regulations, targets and best practices that can actually be implemented by the industry.

Looking ahead, the coming decade is the decade of sustainability and as a maritime community we should all do our utmost to successfully confront the challenges involved.