Technical Insurance Results For The 2014 Underwriting Year Deteriorated Strongly For Cargo, Hull And Energy Sectors Compared With Last Year’s Reported Data For The Same Period, IUMI SaidThere Were A Number Of Major Claims Occurring In 2015 Which Were Attached To The 2014 Underwriting Year But Actual Amounts Were Not Known When Last Year’s Figures Were Published. These Major Claims Included Tianjin, A Series Of Major Hull Losses, Representing An Increase In Costly Hull Losses Compared With The Relative Benign Previous Year; And A High Number Of Costly Offshore Energy Related Losses, According To IUMI. A Proportion Of These Losses Were Attributed To The 2014 Underwriting Year Whilst The Remainder Fell Within The 2015 Underwriting Year.
Premium Income In The Cargo Sector Reached USD 15.8 Bn For 2014 Which Is A 9.1% Reduction On The 2014 Figure. However, The Strong US Dollar Masked The Real Income Number Which Made It Difficult To Identify Any Real Market Development, IUMI Said.
The Tianjin Disaster Is The Largest Cargo Loss Ever Recorded And Its Full Effects On The 2014 And 2015 Underwriting Years Are Still Unclear. The Risks Of Costly Cargo Claims Are Expected To Increase In The Future With The Increasing Accumulation Of Values In Ports And On Single Vessels, And A Higher Probability For Claims Caused By Natural Catastrophes.
The 2015 Underwriting Year Began With A Cargo Loss Ratio That Was Higher Than In 2014.
IUMI Expects The Chinese Economic Slowdown, Coupled With A Slide In Commodity Prices, To Continue To Impact Negatively On World Trade And, Consequently, Cargo Insurance Premiums.
These Uncertainties Make It Difficult To Predict Future Earnings But 2016 Has The Potential For Large Claims Connected With Hanjin Shipping’s Current Difficulties And The Loss Of The Amos 6 Satellite.
The Hull Sector Achieved A Premium Income Of USD 7.5 Bn For 2014 Which Was A 8.4% Reduction On The 2014 Figure. Exchange Rates Are Likely To Have Impacted This Number But To A Lesser Degree Than For Cargo, Due To The Global Nature Of The Portfolio. Although The World Fleet Continues To Grow, The Average Insured Vessel Value Has Been Reducing Which Has Had A Correspondingly Negative Effect On Premium Income, According To IUMI.
Claims Frequency Continues A Downward Trend As Does Total Loss Frequency Despite A Minor Uptick In 2015. Repair Costs Are Stable Or Slightly Reducing Which Is Likely To Be A Result Of A Strong US Dollar – Premiums Are Collected In US Dollars Whereas Repair Costs Are Paid-out In Local Currencies.
2014 Saw An Exceptionally Low Number Of Major Losses But That Number Returned To Normal Levels Last Year. So Far The Losses This Year Have Been Low But Past Performance Is Not A Reliable Indicator Of Future Results, Therefore The Remainder Of This Year And Into 2017 Is Not Easy To Predict, IUMI Said.
The 2016 Market Remains Challenging For All Lines Of Business. Although Claims Reported During The First Six Months Of 2016 Appear To Be Relatively Modest, In All Marine Lines The Potential For A Major Claim Resulting From The Increased Accumulations Risk Is Always A Possibility.
“Commodity Prices Are Weak And Freight Rates Are Low And These Persistent Soft Market Conditions Are Challenging For Marine Insurers. Uncertainty Has Also Been Driven By The Increasing And Unknown Risk Of Accumulations And A Growth In M&A Activity Across The Globe. Although We Are Hopeful That The Continuing Global Economic Recovery Will Strengthen World Trade And Therefore Lend Greater Support To Our Sector, Marine Insurers Must Adapt To This Changing Environment If They Are To Survive And Remain Effective In The Future”
