Marine insurance broker Gallagher is predicting that the upcoming summer hull and machinery renewals will test underwriters' resolve to keep on pushing up rates.
There have already been three to four years of hardening hull and machinery premiums, due to reduced capacity and underwriters' determination to bring marine rates back to profitable levels.
Gallagher pointed out underwriters are also facing pressure to continue to increase rates in the face of growing claims inflation.
But shipowners, it said, are already suffering from double-digit insurance increases in their P&I renewal earlier in February.
“The next few months will be an interesting test of the resolve of the market,” Gallagher said in its market review. “Owners who have just faced a bruising P&I renewal now need to turn their attention to hull and machinery policies. Many of these policies may have already been subject to successive increases over the last three to four years,” it said.
It is predicting that the rate of increase is set to slow this year, partly down to some underwriters seeking to grow market share.
“Underwriters generally believe that technical rating is still short of where it needs to be. Yet it’s possible that the temptation and, in some cases, pressure to selectively grow portfolios may put the brakes on further premium increases,” Gallagher said.
But, it said that for shipping sectors with a recent poor claims record the market will continue to be hard.
“There is no doubt that certain types of tonnage still present unique risk management difficulties. As such, there’s no expectation of significant increase in appetite and capacity available for certain tonnage where claims experience across the class has been poor,” it explained.
The EU’s decision to ban insurance on seaborne Russian oil transportation, set to be followed by the UK, will almost certainly be another factor in this summer’s hull and machinery renewals.
Gallaher pointed out that potential insurance losses in the aviation market linked to the Ukraine conflict will also have an impact on the marine underwriters’ finances.
The broker said: “there’s the increasingly complicated sanctions environment that underwriters and brokers must navigate to comply with measures introduced against Russia in several major jurisdictions”.