Caution remains the watchword for global marine insurance, says IUMI

HULL CASUALTIES
The past three years has seen the frequency of total losses within the global fleet stabilise at 0.13% by number (0.05% by tonnage). This is largely attributable to an improved safety climate, improvements in naval architecture and marine engineering; and more effective regulation.

CARGO INSURANCE
The marine cargo insurance market is improving and stabilising but remains highly competitive with an abundance of capacity.

CARGO LOSSES
2017 saw the worst NAT CAT losses in history for the property and casualty (P&C) insurance sector – these were caused by hurricanes Harvey, Irma, Nate and Maria, the earthquake in Mexico, monsoons in Bangladesh, storms in Durban and wildfires in California. Since many marine insurers are part of larger P&C companies, they were also affected by these NAT CAT losses and now face increasing pressure to improve results. The losses come immediately after earlier, large outlier claims including the Amos 6 satellite, Tianjin port explosion and the insolvency of Hanjin.

OFFSHORE ENERGY
A 25% increase in the oil price has encouraged an upturn in offshore exploration activity which is starting to impact positively on the offshore energy insurance sector. Similarly, the oil price rally has increased the value of “loss of production” insurance purchased.

OFFSHORE LOSSES
Loss activity offshore remains low. Hurricane Harvey bypassed the heavily populated Gulf of Mexico and large losses, in general, were minimal. A worrying trend for construction sector losses involving buoyancy devices seems to be developing, however. Attritional losses continued to track at a low rate due to reduced activity and improved health and safety practices. But this might reverse as rigs are reactivated.

By Jake Frith