Guilherme Mattoso: In order to address this question there is a need to separate our marine sector in different areas. We can start with the offshore market where investment into pre-salt oil exploration has been increasing over the years and we expect more than a dozen new FPSOs to enter into production on the next 3 years. Demand for offshore support vessels is increasing and, although we are far from the old 4+4 contract offered in the past, longer contracts are being awarded. Local construction of offshore vessels was reduced to only a few shipyards with demand for units being fulfilled by internationally built tonnage either being bought by local companies or through flag changed to Brazilian. We expect demand of offshore vessels to continue increasing in the short and medium term, but unfortunately we are not seeing demand for local construction to follow suit.

The new Cabotage law, recently enacted by our government aims, among other things, to expand local fleet by loosening requirements for Brazilian companies to charter foreign flag vessels. Insurance wise vessels operating in cabotage under the new law will need to have Hull and Civil Liability insurance, and ship owners will now also be able to use the Additional Freight for the Renewing of the Merchant Marine to pay for Hull insurance. The law is still being regulated and the cabotage trade should not start being impacted until next year.

On the brown water side we expect river trade to continue to grow in the short and medium term, as Brazil increases its exports of commodities and large agribusiness corporations invest more in building their own fleets to carry grain in the northern region of Brazil. Servicing claims and providing security for convoys remain an issue in remote distances.

Guilherme Mattoso:I have particularly spent the past few years discussing Charterers liability insurance with many companies in Brazil and can say that many companies do not buy cover due to a lack of awareness of the risks they are undertaking during a sea voyage and/or lack of understanding of how Charterers cover can aggregate to their local operations in terms of service. We understand that the most avid buyers of this type of insurance are normally the shipping, trading and legal teams, not the usual insurance department. Nevertheless, once we manage to explain the potential exposures and help client to identify 'claims' normally misclassified as commercial/contractual disputes there is a fast interest shift towards buying cover.

One piece of advice I would give to clients, piegas (but effective) is, “better to spend a few cents per ton and be safe than sorry” - especially if you are trading in Brazil where charterers can be held directly and strictly liable for pollution incidents.