Posted on: 17 September 2020
The marine hull market globally has been suffering from overcapacity for years, as has been well reported. The Joint Hull Committee (JHC), comprised of representatives of Lloyd’s and IUA company markets and representing the interests of those who write marine hull insurance business in the London market, explains the proactive steps the Lloyd’s market is taking to protect the class and ensure long term sustainable profit and growth in the following statement.
Marine hull business has suffered from world overcapacity and multiple loss years, so it will not be a surprise that London has taken the lead by pursuing the prudent path of remediation. This has resulted in some carriers withdrawing from the class and greater controls being imposed around levels of participation, but nonetheless the London market remains the biggest writer of hull business.
Clearly size is not everything, and an overdue return to sustainable rating levels is underway. Premium levels in hull insurance had fallen to such low levels that they barely covered the attritional losses that ship owners encounter during their everyday operations. To ensure there are strong insurers for when the inevitable major losses occur, premium levels will have to go through a period of major adjustment.
London continues to take the lead on the key issues, drafting clauses, issuing guidance and working with maritime experts as appropriate. The JHC has most recently addressed cyber, Covid-19 and reactivation issues and will be turning its attention to the problems around ship recycling. JHC members are, as ever, keen to make progress on behalf of the market on the technical issues they are elected to look after.
The statement followed the release of the analysis of the latest marine insurance market trends by the International Union of Marine Insurance (IUMI) at the Association’s annual conference on September 15, the highlights are below:
- Marine underwriting premiums for 2019 were estimated to be USD 28.7 billion which represents a 0.9% reduction from 2018;
- The USD 28.7 billion global income was split between these geographic regions: Europe 46.3%, Asia/Pacific 31.8%, Latin America 10.3%, North America 5.3%, Other 6.3%;
- 2019 saw Europe’s global share reduce slightly from 46.4% (2018) to 46.3% and Asia’s share increase modestly from 30.7% (2018) to 31.8%;
- For global marine premium by line of business, cargo continued to represent the largest share with 57.5% in 2019, hull 24.1%, offshore energy 11.7% and marine liability (excluding than IGP&I) 6.8%.