Marine insurers express anxiety during IUMI conference, as premium income stagnates, By James Brewer in Hong Kong
Risk in shipping is mounting in scale and complexity, but premium paid to the global marine insurance market is failing to grow apace.
Particular concern centres on the growing size of certain ship types, and the sharp increase in value of offshore rigs and other units.
The grand total of premiums fell by 1.7%in 2013, dropping to $34.2bn from $34.8bn the previous year, according to statistics released by the International Union of Marine Insurance at its 2014 annual conference in Hong Kong.
Astrid Seltmann, vice-chairman of the IUMI facts and figures committee, told the conference that Europe had an overall marine premium market share of 52.6%, the Asia-Pacific region25.5%and Latin America 10.1%.
In the $18.2bn cargo market, Europe had a 43.8% market share, with the Asia-Pacific region contributing 29.2% of premiums. By country, China leads the way in cargo with a 9.3% market share, followed by Japan with 8.5%. Ms Seltmann said that part of the reason why China passed Japan in terms of dollar cargo premium was a result of yen/dollar fluctuations. The other two top cargo markets are in Europe: Lloyd’s with 7.6% and Germany with 7.2%.
Ms Seltmann said although global trade volume is increasing again, cargo premiums are stagnating and claims costs were unlikely to decrease.
The picture was similar for hull premiums, where the total changed little despite a continuing increase in the world fleet and of high-value vessels in particular.
Hull premiums for 2013 totalled $8.52bn, down 0.8% on 2012. Europe still provided most business with 52.6%, followed by Asia on 32.4%. Lloyd’s is the largest individual market with 16%, followed by China on 10.4%.
Although the loss ratio improved overall with large losses in particular declining, the hull market recorded its 18th consecutive loss-making year in 2013.
In the volatile offshore energy market premiums dropped 7.5% to $5.2bn. Frank Costa, chairman of the IUMI offshore energy committee, said of global insurance capacity: “It is the same old story. Worldwide capacity has reached a record level of in excess of $5bn. The industry is really being squeezed b an over-capacity which is putting pressure on rates in virtually every class. Rates are going in one direction and capacity in the other, which is a troubling sign.” Mr Costa said that the industry was healthy and it had been another benign year in terms of major losses, “but as we know, the construction class is one that has a significant tail.” While 2011 was a very active loss year, there were a few big losses in 2012, significantly fewer in 2013, and so far in 2014 only one market loss had been in excess of $100m.