MARINE UN­DER­WRIT­ERS WARNED ABOUT CHAL­LENGES AHEAD

Source: in­sur­ance­news.com.au, 26 Novem­ber 2012

Insurance - - INDUSTRY UPDATES -

Ac­cord­ing to Amer­i­can In­sti­tute of Marine Un­der­writ­ers (AIMU) Chair­man Robert Gal­lagher, marine in­sur­ers will be hit by low in­ter­est rates and a weak global econ­omy. He said that marine in­sur­ers will be op­er­at­ing in a low­in­ter­est-rate en­vi­ron­ment for the fore­see­able fu­ture.

Un­der this cir­cum­stance, it means that in­sur­ers must place a greater re­liance on un­der­writ­ing success to pro­duce prof­its. Com­pa­nies must adopt an un­der­writ­ing-first prin­ci­ple rather than writ­ing for mar­ket share. Marine in­sur­ers must also im­prove their com­bined ra­tios to main­tain re­turns to share­hold­ers, even in a highly com­pet­i­tive mar­ket.

Gal­lagher said global eco­nomic per­for­mance af­fects marine in­sur­ers too. A flat­ten­ing of world trade pro­duces lit­tle ex­po­sure growth. The Panama Canal ex­pan­sion project, which will al­low more and larger ships to pass through, also poses a chal­lenge.

He added that although the risk of ca­su­alty on large con­tainer ves­sels may be lower, the sever­ity of ac­ci­dents will tend to be higher. He is con­cerned about the US drought as any re­duc­tion in agri­cul­tural pro­duc­tion would re­sult in less cargo to in­sure. As more off­shore wind farms are built, trans­port­ing tur­bines poses a chal­lenge to marine un­der­writ­ers.

AIMU re­ported a com­bined gross ra­tio for all marine lines of 90.3% last year – worse than the 82.3% recorded in 2010 but bet­ter than the catas­tro­phe-hit 2011 prop­erty/ca­su­alty re­sult of 106%.

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