According to the International Shipping Centre Development Index, Dubai has become one of the world’s top-five shipping centres. Behind only Singapore, Hong Kong, London and Shanghai, the relative newcomer has displaced even the mighty German port of Hamburg in terms of its perceived importance to the global shipping business.

 

Dubai’s rise reflects the rapid economic changes that have seen the Middle East become both a major destination and transit point for maritime trade. And, despite the flattening of growth post-recession, the region and its shipping industry is well set to exploit the expected influx of business from emerging markets such as Africa and India.

 

In turn, this offers a wide range of opportunities for insurers keen to do business with both shipowners and ship charterers in the protection and indemnity (P&I) space. Key however, is the ability of insurers and brokers to understand the regional challenges and to develop innovative P&I products that can meet the specific needs of their Middle Eastern clients.

 

At the heart of the Middle East’s shipping activities, Dubai offers an attractive level of economic and political stability from which to serve the region. It is a strong regional hub for new ventures and, for charterers’ liability in particular, there is a healthy market for traders operating in commodities such as coal, steel and grain. From the perspective of shipowners’ liability, a wide variety of shipping comes together in the UAE, ranging from container vessels and bulk carriers, to offshore vessels and super yachts which again, offers insurers a number of opportunities to develop products and serve a growing customer base.

 

There are of course specific regional challenges in the Middle East, not least the economic sanctions on Iran which the US has recently reimposed, making it difficult to deal with shipping from that region. Qatar is also witnessing sanctions imposed by other Gulf nations, which is why local knowledge is key when underwriting risks in the region. Marine P&I clients in the Middle East are looking for local solutions from insurers that understand the risks they face. That is hugely important. Insurers need to have a local office or representative (MS Amlin has an office in Dubai). And, relationships are absolutely key. It should be a close triangle between the insurer, client and the broker. All of MS Amlin’s business, for example, comes through local brokers and it is imperative to have close relationships with them so they can fully understand the products and quality of service the insurer offers in order to introduce the right risks.

 

Given the support for the offshore energy industry from Dubai is a particular focus in the Middle East, shipowners’ liability is a good example of why that client understanding is so important. Insurance products must be available to cater specifically for that market. For example, there are standard P&I policy wordings but these do not always offer the contractual extensions needed to take care of operations such as ships offering remotely operated vehicles. This is why MS Amlin has developed a bespoke policy wording for offshore vessels, and places a strong emphasis on working closely with the broker to deliver a tailor-made package for the client to reflect the risks they face.

 

From a rates perspective, the P&I market in the Middle East has finally reached its bottom having been a very soft market since – for shipowners’ P&I at least – 2009. One reason is the reduction in capacity for fixed premium P&I partly driven by Lloyd’s which, after having been confronted with significant marine losses in recent years, is pushing for significantly better underwriting results from its syndicates. That said, it is still a market – for those who can offer the right level of service and stability, and are willing to commit for the long term – which continues to offer good opportunities.

 

Clients value the expertise and stability that insurers like MS Amlin can offer (its P&I team having been in operation for over 25 years). Clients also want a focus on helping them to prevent claims – the protection element of P&I – in the first place, which demands that an insurer offers expertise in claims handling, but also in areas such as legal services and advice for help with contracts and technical advice if, for example, a special cargo is being transported. Knowledge sharing is critical, which is one reason why MS Amlin has established a Maritime Knowledge Centre to run regular courses for brokers and clients.

 

Looking ahead, the opportunities presented by new emerging markets for the Middle East shipping industry are likely to grow. Africa in particular, with a growing need for construction materials as it develops its industry and infrastructure, will look to the Middle East for its marine P&I needs given the geographic convenience of Dubai, as will other emerging countries such as India. The impact of technology is also going to be felt in the shape of autonomous shipping. The stable weather in the Middle East makes the region a good candidate to lead the introduction of autonomous ships, particularly in the servicing of offshore platforms and rigs, while the growth of renewable energy could also represent additional opportunities. However the industry progresses, the development of innovative P&I products to meet the changing liabilities of both shipowners and charterers will play an important role in helping to facilitate a thriving shipping business in the Middle East. M 

 

Mr Eugène van Steekelenburg is product group lead, charterers’ liability and Mr Dirk Pieter Kruijsifix is product group lead, ship owners’ P&I at MS Amlin.