Marine insurance premiums across all sectors increased by at least 10% this year, according to a survey conducted by broker Aon.
In its second quarter Global Market Insights report, Aon said it had identified tightening capacity in logistics, cruise, ports and terminals, and marine cargo.
The survey revealed premium increases of at least 10% across all of the sectors and Aon believes there is potential for further hikes.
Driving increases
The findings confirm anecdotal reports from underwriters and brokers that marine rates are responding to a profit drive at Lloyd’s of London.
Of the cruisemarket, Aon said “as capacity continues to tighten, pricing may increase further during the remainder of 2019”.
Marine cargo, which has been returning red figures for underwriters over several years, is also showing strong signs of improvement. Aon said this is partly driven by underwriters increasing rates in response to expensive claims linked to a series of costly containership fires.
Recent large and complex losses have led to an increased focus on book health but there is still strong appetite for attractive risks such as oil and gas
Aon
“Recent large and complex losses have led to an increased focus on book health but there is still strong appetite for attractive risks, such as oil and gas.
Falling capacity
"Stock throughput is becoming challenging in part due to these losses, and some Lloyd’s syndicates are withdrawing, but Aon’s cargo team is achieving excellent results in spite of these conditions,” Aon said.
Swiss Re is one of the Lloyd’s syndicates that recently announced it is to leave the marine cargo markets.
Shipowners' cover is an area where Aon said insurance capacity remains “ample”. This is despite Lloyd’s attempt to remove unprofitable business lines from the market, which has seen about a dozen insurers reduce or withdraw marine lines of business.
However, Aon said that underwriters were also tackling the depressed market by offering “more restrictive” terms and conditions.
“Lloyd’s capacity continues to tighten following their recent review, and some Asian markets are following suit. Some opportunistic underwriting remains. But in general underwriters are much more cautious due to the recent losses and under pricing,” Aon said.
With profits still under pressure Aon cautioned that underwriters are now analysing claims more closely before paying out.
Start renewal discussions as early as possible and assess limits and retentions
Aon
Insurer scrutiny
“More and more hull claims are coming under insurer scrutiny. Clients are responding by giving early notification of incidences to minimise scrutiny should a claim ultimately be filed,” Aon said.
Aon urged shipowners to act quickly to avoid the hardening market, and also to assess the limits of cover as these are also being changed by underwriters.
Aon said owners should try to “understand and communicate the hardening market conditions”.
“Start renewal discussions as early as possible and assess limits and retentions for appropriateness,” Aon urged.
The protection and indemnity market did not come under analysis by Aon in its global market insight report.
P&I renewal
However, its P&I team earlier reported that some clubs will likely come under pressure to increase rates at the February renewal.
“Most International Group P&I Clubs are indicating that the 2020 renewal will see a return to general increases,” Aon said.
