We have conducted extensive research into the maritime sector to understand price volatility and other key factors impacting marine fuels.
Our detailed analysis over the past 10 years, has identified the lagged correlation of freight to fuel prices and the effect of Paratus insurance on stabilising cashflow and improving earnings.
We have analysed the historical relationship between fuel price and capesize freight to evaluate the correlation and more recently, the anti-correlation.
We have modelled the effect of bunker fuel price movements across 34 years on unhedged shipping industry participants and the efficacy of traditional hedging products.
Fuel price volatility is a critical risk to the maritime industry. Our maritime insurance policy reduces the adverse impact of price movements to stabilise the balance sheet and improve earnings. The insured is protected from price increases whilst benefiting when bunker fuel prices decline in their favour.
The shipowner or charterer is protected from adverse upward price increases, and also benefits when physical fuel prices decline in their favour.
Our policies are priced transparently, in a simple to understand format. The insurance premium is fixed and paid at the start of the policy. Verified claims are paid automatically. There are no margin calls, credit charges or additional costs.
The policy is accessible to all. The onboarding process is straightforward, with an easy to understand Master Policy document. There is no credit bias.
The policy is simple and scalable across a fleet. The shipowner or charterer does not require additional operational resources to manage the policies.
The policy enables the shipping industry to reduce costs and thereby allocate more capital to lower emission fuels in order to meet regulatory requirements and sustainability goals.
Subject to the tax jurisdiction, the premium may be a tax deductible expense.
The marine fuel market faces ongoing volatility driven by geopolitical risks, natural disasters, and regulatory pressures, all of which significantly impact fuel production and prices. With marine fuel costs accounting for up to 60% of operating expenses, shipowners are exposed to substantial financial risk. While hedging tools like forward contracts and swaps exist, they are complex and can lead to cash flow issues. As the industry shifts toward low-carbon fuels and stricter emissions regulations, the need for a simpler, long-term strategy to manage fuel price risk is crucial to maintaining profitability and operational stability.
