While global hull premium income declined by 2.3%, the sector’s general risk profile and trading conditions are showing signs of improvement, according to the International Union of Marine Insurance (IUMI).
During the organization’s annual conference in Cape Town, South Africa last week, Mark Edmondson chair of the Ocean Hull Committee, said that amid volatility and uncertainty in many sectors remaining a pressing concern, the international market is faring better this year.
“While the shipping industry in general is showing some positive trends and the claims climate remains relatively stable, particularly for total losses and major partial losses, there does not appear to be any direct correlation between that and overall underwriting performance,” he said.
“However, we estimate around US$100 million of capacity has been removed from the market over the past year due to very low start-up activity and the withdrawal of a number of high profile hull insurers. Facilitisation would appear to be under increasing pressure due to worsening performance and heightened regulatory scrutiny. Overall the deterioration of underwriting results, over what has been a considerable period, appears to have triggered a brake in the decline in market conditions.”
The IUMI said that the enhanced risk profile stemming from better quality tonnage and greater regulatory influence has encouraged a consistent improvement. However, the ocean hull market must still contend with lower asset values, reduced utilizations, year-on-year erosion of premiums, and ever-present volatility.
Other issues facing the sector include the potential impact of cyber exposure (both malicious and non-malicious); incoming environmental regulations and their impact on hardware and operations; autonomous vessels; bunker contamination; and the accumulation of risks that quickly build as container ships continue to grow – both in size and capacity.