The International Union of Marine Insurance (IUMI), unveiling its annual statistical report on the marine insurance market at a conference held in Genoa, announced global underwriting premiums for 2015 of $29.9bn. This is a 10.5% reduction on the 2014 figure.
Vice chairman of IUMI’s Facts & Figures Committee, Astrid Seltmann explained: “Part of the reduction can be attributed to the strong US dollar as compared with other currencies but this is not the whole picture, particularly for hull and offshore energy where much of the original business is written in US dollar. All business lines suffered a real reduction in premium income due, in the main, to a sluggish global economy, low commodity prices and reduced activity, specifically in the offshore sector”.
The 2015 total comprised income from the following regions are: Europe 50.4%, Asia Pacific 27.1%, Latin America 9.8%, North America 5.9%, other 6.8%. As for the business lines statistics are: Global hull 25%, transport/cargo 52.9%, marine liability 7.1%, offshore/energy 15%.
A statement from IUMI explains that technical insurance results for the 2014 underwriting year deteriorated strongly for cargo, hull and energy sectors compared with last year’s reported data for the same period. Results always deteriorate over time due to the lag in registering and paying claims, but the deterioration in 2014 was above average. This was due to substantial, but not unexpected, increases in reported outstanding loss reserves for the 2014 underwriting year. There were a number of major claims occurring in 2015 which were attached to the 2014 underwriting year but actual amounts were not known when last year’s figures were published. These major claims included Tianjin (cargo); a series of major hull losses (representing an increase in costly hull losses compared with the relative benign previous year); and a high number of costly offshore energy related losses.
Looking into the future of the maritime insurance business, the 2016 market remains challenging for all lines of business. “Although claims reported during the first six months of 2016 appear to be relatively modest, in all marine lines the potential for a major claim resulting from the increased accumulations risk is always a possibility,” a press release stated.
Patrizia Kern-Ferretti, chairman of IUMI’s Facts & Figures Committee, said: “Commodity prices are weak and freight rates are low and these persistent soft market conditions are challenging for marine insurers. Uncertainty has also been driven by the increasing and unknown risk of accumulations and a growth in M&A activity across the globe. Although we are hopeful that the continuing global economic recovery will strengthen world trade and therefore lend greater support to our sector, marine insurers must adapt to this changing environment if they are to survive and remain effective in the future.”