Deirdre Littlefield, President of the International Union of Marine Insurance, is forecasting a challenging time for marine insurers and their customers (see IUMI’s press release, Tough times ahead for marine insurers, pdf, or go to IUMI press release page).
She says that shipowners, cargo interests and offshore energy operators have been buoyed by insurance protection at bargain prices for years.
That was when global trade kept growing and the world fleet expanded with it. However, the shipping industry was storing up problems. As vessels and their crews were worked harder to keep pace with demand, claims have been on an upward curve.
“Even in boom times, this combination of escalating exposures, increased claims, and flat or decreasing premium rates has resulted in a technical loss for marine underwriting globally,” she said in a market briefing last week.
That was OK when strong investment returns could shore up results. Now, the industry has to rely on pure underwriting results to survive, she said.
“With less ability to control top-line growth, underwriters will be far more focused on the bottom line… This means more focus on risk selection, policy wordings, deductible levels and risk pricing,” she said.
Insurance costs are probably not yet showing on the shipping industry’s radar. They’re preoccupied with the slump in trade volumes and overcapacity. The smart ones, however, will find that if they align their interests with those of their insurers now, and stay focused on claims and loss control, they are more likely to stay afloat than their competitors.
Tags: IUMI
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