Marine insurance market conditions remain generally favorable to buyers despite a succession of natural catastrophes and other significant losses since the beginning of 2011, according to a report published today by Marsh.
The Japan earthquake and tsunami, flooding in Thailand, the Costa Concordia loss, and Rena oil spill have resulted in significant cargo, hull, and liability claims, notes Marsh’s latest Marine Market Monitor. But despite poor claims experiences from these and other disasters, underwriting capacity for marine risks remains high and insurers have not sought significant premium increases.
“Despite some significant losses in the market, competition remains strong and there currently is no expectation that the availability of marine insurance will decline in the near future,” said Marcus Baker, Chairman of Marsh’s Marine Practice. “Insurance buyers that can demonstrate that they have strong risk management practices in place may continue to secure rate reductions at the time they renew their insurance policies, though not to the same degree that they have in recent years.”
Faced with greater competition, underwriters have sought out new areas in which to use their excess capacity, Marsh’s report said. For example, many cargo insurers are now seeking to underwrite stock throughput policies, which provide coverage for stock while it is in distribution or at manufacturing locations, such as warehouses and factories; traditional cargo insurance policies only provide coverage for goods and merchandise while in transit. A growing number of hull underwriters have also sought to diversify their underwriting portfolios by entering the builders’ risk market.
Meanwhile, piracy remains a significant threat to the marine industry, Marsh’s report noted. The vast majority of marine vessels are now armed, a significant shift from a year earlier, amid signs of greater collaboration among pirates and possible escalation of pirate activity in the Gulf of Guinea.