Lancashire Holdings has reported a significant increase in marine insurance income, adding to a growing body of evidence that the market is hardening due to a profits drive at Lloyd’s of London.
The Bermuda-based insurer reported a 38.3% increase in marine premiums to $20.6m for the first quarter of 2019, up from $14.9m for the same period a year earlier.
Marine was the second-largest growth sector in the Lancashire insurance portfolio, after aviation, and far outpaced an average 0.6% increase in premiums across the insurer's business.
Higher rates
Lancashire chief executive Alex Maloney said the upturn in income was down to marine insurance contracts being renewed at higher rates.
“The increase in the marine segment was driven primarily by multi-year contracts renewing in the marine hull and marine P&I classes.
"The rate momentum in Lancashire’s marine book was strong, benefiting from the renewal of certain loss affecting contracts in the first quarter of 2019,” he said.
Lancashire’s figures suggest that the profit drive undertaken at Lloyd’s is beginning to take effect.
About 10 Lloyd's syndicates have been forced to either cut back on providing loss-making marine cover or withdraw from the market, which has helped to both reduce capacity and raise rates.
Broker Lloyd & Partners recently commented that the cut backs were driving rate improvements at Lloyd’s and globally.
“There is a definite perceivable hardening of underwriting views," it said in a recent market commentary.
In another sign of the cutbacks in the sector, TradeWinds understands that Brit Insurance has parted ways with its chief marine underwriter, Robert Clarkson.
Signs of change
Meanwhile, the market does appear to be hardening. As TradeWinds reported last week, one of the largest marine insurance providers, Beazley, reported higher premiums in 2018 compared with 2017.
Recent figures from the Nordic Association of Marine Insurers show that Norwegian marine cover providers, including Gard and the Norwegian Hull Club, have also seen a significant increase in premium over the last year.
That Lloyd’s chief executive John Neil says he is ready to continue its profit drive and bring in new reforms to the 300-year-old insurance market is encouraging the view among brokers that rates will continue to harden.
Of Lancashire's results, broking sources add the insurer is also seeking to recover losses related to the Lurssen shipyard fire last September that destroyed a super-yacht newbuilding.
The $700m claim, which has been fully met by cover providers, was the largest hull loss claim ever and Lancashire had the biggest exposure holding of 6%.
