Insurance broker Lloyd & Partners is warning that shipowners should prepare for hardening premiums in hull and other marine insurance lines.
The London-based division of JLT Group predicts that marine capacity withdrawals from the Lloyd’s of London market, and continued efforts by the Jon Hancock-led Lloyd’s Performance Board to improve profitability of syndicates, will have an impact on marine rates around the world.
In its Energy Review, the broker said: “In other words Lloyd’s is not relaxing and will continue to drive for better underwriting results throughout the year, especially in those classes which were seen to be loss-making, hull and cargo amongst them.
“What is also becoming clear is that the overseas markets are now reacting to the situation, whether driven by marine insurance losses that are now readily manifesting in their results or the simple opportunity driven by market forces to raise rates on several classes, there is a definite perceivable hardening of underwriting views."
About 10 syndicates have either reduced capacity in the marine market or have totally withdrawn, leaving many high-profile underwriters looking for work.
Lloyd & Partners pointed out the “number of high-profile, out-of-work underwriters seeking posts has stubbornly persisted as consolidation continues”, which it sees as an indication that the marine market remains in contraction.
It also cited the withdrawal of Skuld and the Standard Club from Lloyd’s as the result of pressure from the Lloyd’s Performance Board on loss-making marine syndicates.
“We very much continue to recommend insureds buy longer-term period policies wherever possible. The book remains fragile,” the broker said.
Looking for signs of a hardening market outside London, Lloyd & Partners said capacity withdrawals from the market in the Middle East and Singapore were a result of tightening underwriting discipline.
It described the Scandinavian market as “stable” but said there is still an intent to “squeeze” underperforming accounts.
However, it also pointed to pockets of “soft” markets such as South America.
