Marine insurers meeting in Bruges this week for the International Union of Marine Insurance annual convention will have plenty to discuss over their moules frites.
OK, pirates are making the headlines but the sector’s main worry, according to IUMI president Deirdre Littlefield, is the global economy and how conditions in their clients’ business will affect marine insurers.
Littlefield says that trading conditions for the shipping industry are dire and the short-term prospects are bleak. “Every sector is in trouble despite one or two bright spots. A lot of companies have already folded or filed for bankruptcy, and more will follow,” she said in a press call on Sunday.
This is putting a lot of pressure on marine insurers who are trying to cope with greatly reduced ship and commodity values, and far fewer ships trading as more go into lay-up or lie idle.
The number of total losses has stabilised, but the future claims picture is very worrying Ms Littlefield says, because owners are deferring essential repairs and maintenance.
Yet marine insurance market capacity continues to be plentiful. The danger now is that many underwriters will be tempted to cut rates and make other concessions in order to maintain market share as the amount of new business available continues to dwindle.
“We have seen this cut-throat situation before, of course, but never at a time like this when the shipping industry is literally on its knees,” she told IUMI delegates.
While it is true that there is a downturn in the global economy, some regions are suffering more than others. Those differences are feeding through to insurers and, as one broker recently pointed out, marine insurance is becoming more regional in character.
In its recent outlook paper for the marine insurance sector, Aon points out that regional centres have a different take on pricing. US insurers are pressing for rate increases and seem to be losing business to London as a result. In mainland Europe, different countries such as the Netherlands have their own dynamics.
Norwegian underwriters likewise are said to be defending their business against ‘outside’ interests. Meanwhile, Singapore is growing as the marine insurance hub for Asia, albeit on the back of London companies moving in.
What an interesting evolution: at a time of globalisation the regional marine insurance markets are becoming more and more differentiated in terms of pricing. And yet the main beneficiary in terms of share and stability, according to Aon, seems to be London.
Tags: IUMI
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