The International Union of Marine Insurance (IUMI) has warned that while marine premiums have bottomed out the level of major claims is still putting pressure on profitability.
The association has issued its second IUMI Stats report which presents statistical data that gives a snapshot of the state of the market.
“For many years, supply has outstripped demand and a sustained period of unprofitability has led to a reduction in capacity,” states the report. “The result is that, in general, the marine insurance markets appear to have bottomed-out and a modest uplift, albeit from a low base, is expected. However, in the short-term at least, profitability is likely to be pressured by the return of major losses as premiums will not be sufficient to cover these claims. In short, uncertainty prevails.”
Philip Graham, Chair of IUMI’s Facts & Figures Committee explained: “Understanding the changing market in which we operate is vital if we, as underwriters, are to continue to deliver high levels of service to our clients world-wide. Last year IUMI, as our global industry body, took the initiative to launch this annual statistical publication to help marine insurers gain a more complete picture of the maritime and insurance landscape. We include statistics from our partners as well as our own data and marry these with analysis and opinion. Taken together, we believe IUMI Stats presents a comprehensive, yet easily digestible insight into our market. We hope it will be widely read by marine insurers and others with an interest in our sector.”
The report revealed global marine insurance premiums totalled US$28.9 billion in 2018. “This 1% increase originates only from one marine line of business and is a reflection of growth in global trade. With many uncertainties impacting global trade including national policies, geopolitical tensions, oil price and more, the future of marine insurance market improvement remains equally uncertain.”
Global hull insurance premiums were $7 billion in 2018, a figure unchanged from 2017. Set alongside a growing global fleet and higher single risk exposure being driven by the trend for ever larger vessel sizes, the gap between income and risk covered continued to widen.
“This is a concern and is reflected in the technical results,” state the report. “While the market seems to have bottomed out in 2019, major losses are beginning to return. Therefore it is uncertain how and when this sector may return to a sustainable level.”
Premium income for global marine cargo underwriting reached $16.6 billion, a 2.5% increase on 2017.
“The growth is mainly attributable to the ongoing uptick in world trade and does not represent any real market growth,” added IUMI. “Macro- economic uncertainties have the potential to impact on this line of business as does the increasing likelihood of large event /accumulation losses.”