Large incidents within the offshore segment were one of the main drivers behind the red numbers on Skuld’s bottom line last year. However, it is most likely very coincidental, CEO Ståle Hansen says. World’s largest P&I club, Gard, does not share the experience.
Costly accidents in the offshore segment were one of the key reasons as to why the Norwegian marine insurer Skuld delivered a deficit last year, CEO Ståle Hansen says in an interview with WPO.
”It was mainly larger incidents that pulled us down last year and we were especially hit in the offshore segment. We saw bigger damages than we normally see in a normal year,” Ståle Hansen says.
Why it happened now, he cannot pinpoint an exact reason for.
”We regard this as a bit random and a coincidence, and we do not see that this correlates to a trend emerging,” Hansen explains during a meeting in Oslo, adding:
”2021 was offshore’s year and they saw larger casualities, but that comes after a period of about 16 years with very good results.”
Hansen says that the claims were larger, and not necessarily more in quantity, in 2021 than in any other ”normal” year and that the accident, therefore, costed the insurer more than they normally do.
Despite not seeing it as a peek at an incoming trend, Hansen says that they are seeing some connection to weather-related issues and that, of course, offshore is more exposed to weather-related claims than a container or dry bulk vessel that can be maneuvered away from extreme weather to avoid accidents.
Gard: Has not experienced the same
Maybe Ståle Hansen’s remark about the offshore accidents happening last year being entirely random and not a trend-induced sign is the reason why the largest P&I club, Norwegian Gard, has not been experiencing the same.
In a comment to WPO Gard’s Group Chief Underwriting Officer, Bjørnar Andresen, says that Gard has not seen any evolvement of more or larger damages in the offshore segment.
”On the contrary, the last period has been relatively calm, due to reduced activity and less start-up of new projects. This can of course change as the activity now picks up again, but so far this [large accidents, -ed.] has not been an issue for us,” he says.
The extreme weather
In general, Skuld’s CEO says that the increasingly more significant climate factors are also making an entry into the general claim picture, and that the insurer is noticing its involvement in accidents is becoming more frequent.
”We see that the climate factor is part of the cause behind the claims more often. A lot of the harsh weather and windstorms that have been in recent years have caused greater damage and to a greater extent when it happens, and especially so in the offshore sector. Some installations are more static than a ship and thus more exposed to the weather,” Ståle Hansen explains to WPO.
The combination of large claims and losses on investments yielded a deficit of USD 15m for Skuld in the financial year /2022, which ended on Feb. 20.
On the contrary, in Gard’s experience, the weather has not yet made an impact on the damage situation.
Gard’s Group Chief Underwriting Officer, Bjørnar Andresen. | Photo: Gard
”So far, we have not seen that climate factors and extreme weather have affected the damage situation within offshore. This is also an industry that has a long tradition of thinking about safety, and the installations should in principle be built to withstand a lot of extreme weather,” says Andresen, adding:
”That said, climate risk is something Gard closely and continuously monitors.”
Careful considerations
Andresen says that the offshore segment is first and foremost a segment with large volatility, but that the accident does not, luckily, happen too often but that when they do the consequences are often large.
Currently, the world’s largest marine insurer is making careful considerations within the offshore segment as there are certain elements that are affecting the segment.
”As the situation is now, we know that some offshore installations are beginning to drag on and that some of them are nearing the end of their life. At the same time, there have also been relatively few new investments in the period we have now left behind,” he says, adding:
”Together, this of course contributes to increasing the risk of injury. Therefore, it has been extra important for Gard to be careful and thorough in the risk selection we make within offshore.”
