- Premiums for marine insurance are increasing after a surge in catastrophe losses in the past two years.
- Global marine insurance premiums totalled $28.5 billion in 2017 and Asia Pacific and North American insurers have won business in marine cargo, against this backdrop.
- Insurance dipping to 7% at Lloyd’s in 2018 down from 8% a decade ago, is still bigger than energy, motor or aviation.
- Lloyd’s, marine insurance and reinsurance gross written premiums totalled 3.8 billion pounds ($4.85 billion) in 2017.
Rivals to Lloyd’s of London are riding a rising tide of marine insurance rates, leaving the 330-year-old market behind after it abandoned sections of its oldest line of business last year, says an article published in Arab News.
Marine insurance peaks after 2018
Up until 2018, the marine insurance premiums had been down due to rising competition and lower claims. However in the past two years, they are increasing after a surge in catastrophe losses and growing geopolitical tensions.
Lloyd’s is still reeling from its past losses due to the heavy claims from natural disasters. Chief Executive John Neal said, it will take at least a period of 12-24 months before the segment returns to profit.
Fixing right prices for calamities
Neal added that the sector had performed better in the first quarter. The right price had to be fixed for the risks and decision had to be made whether all types of marine business were insurable after Lloyd’s told its 99 members to cut the worst 10% of their business last year.
Broker Gallagher said that 10 Lloyd’s syndicates have withdrawn or reduced their marine business, in a February report. This has proven beneficial to the smaller London company market, which operates separately in the City.
Blooming business from Lloyd’s
A senior London company market insurer claimed that they see business blooming for them through Lloyd’s.
Miles Taffs, head of marine and aviation at Lloyd’s for MS Amlin, said that marine cargo rates are up 12-14% this year.
Flexibility in approach by the London Market
In spite of various sources claiming yacht rates have risen by at least 20%, and by triple digits in some locations, the (London) company market has demonstrated greater flexibility in its approach, as have other European markets, particularly France and Scandinavia, said Alexander Mott, marine director at broker AFL.
The Standard Syndicate at Lloyd’s no longer writes new business. Norwegian marine insurer Skuld said the syndicate with Lloyd’s will be terminated in July, switching the business to Oslo and the London company market.
Lloyd’s insurance dip against motor or aviation
A spokeswoman for the International Union of Marine Insurance said that global marine insurance premiums totalled $28.5 billion in 2017. Asia Pacific and North American insurers have won business in marine cargo, against this backdrop.
Carl Day, vice president, property, marine and energy at CNA Hardy, said US and Scandinavia have also gained from the move away from Lloyd’s. CNA Hardy was pulled out of marine hull insurance last year.
Even with the insurance dipping to 7% at Lloyd’s in 2018 (down from 8% a decade ago), it still remains bigger than energy, motor or aviation.
American Revolution and Napoleonic Wars
Lloyd’s, which insured ships during the American Revolution and the Napoleonic Wars, has a huge chunk of that market. Its marine insurance and reinsurance gross written premiums totalled 3.8 billion pounds ($4.85 billion) in 2017.
The International Underwriting Association commented that this was nearly double comparable business in London company market.
Need for adaptability and improvisation
According to a spokesman, the IUA is compiling premiums data for the London company market for 2018 and has so far seen a rise in business, including in marine.
AFL’s Mott said that Lloyd’s market happens to be the most important marine hub in the world. Mott also added that it needs to improvise, rather than hoping for business to be back on its own.
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Source: ArabNews
