testata inforMARE
06 December 2023 - Year XXVII
Independent journal on economy and transport policy
11:20 GMT+1
FORUM of Shipping
and Logistics

The marine insurance market in 2006

Everything is all right!?

THE 2005 HURRICANE SEASON WAS THE WORST ON RECORD, with 14 hurricanes causing billions of dollars in insured losses and around three million claims, all record highs.

The total loss of the Bombay High platform, though not related to hurricane, was a notable major loss to the industry in 2005. July 27, 2005, in one of the worst disasters in the history of India's petroleum industry, the Bombay High North oil drilling platform owned by the Oil and Natural Gas Corporation was totally destroyed following a collision with a mobile offshore unit. It claimed 11 lives and 12 people are missing. Insured losses amounted to about $350 million (of which $195 million for the platform alone).

Katrina came at a time when overall marine insurance rates started to decrease. Catastrophe modeller Risk Management Solutions said insured losses from hurricane Katrina could range from $40 to $60 billion. This hurricane is the most expensive event in the history of insurance and its impact on the insurance industry: bigger than anticipated.

Re-insurers that sustained a significant reduction in their margins through large hurricane losses in both property and marine departments have opted to withdraw from any marine business that includes exposure to the US Gulf coast. Although a few insurers have maintained substantial exposure for the remainder of the year, their appetite in terms of line size and capacity has been reduced.

Lloyd's List reported on January 4, 2006 that in the North Sea, Middle East and elsewhere, energy premium rises are averaging about 20 %. Oil installations in the storm-bedevilled Gulf of Mexico have paid premiums 200 % to 300 % higher in the current round.

So what about the marine insurance market in 2005?


All these catastrophes have fuelled discussions concerning the possible increase in rates so eagerly awaited by hull insurers. At the beginning of 2005, the market was trading at a discount, creating concerns amongst insurers who, since the period of 1997-1998, have not been achieving satisfactory results.

Due to the aforementioned disasters, as well as notably the concern over the effects that they may have on the reinsurance costs put forward for maritime insurers for the 1st January 2006, general increases began to appear around October. However, this tension was quick to subside and the market stabilised towards the end of the year. Despite this, hull insurers looked for ways of implementing increases of between 2.5 and 10 % on renewals demonstrating satisfactory technical results, but in the end, many reinstated their reported unchanged premiums of 2004.

It is, however, important to note the significant increase in navigational accidents (strandings, collisions, etc.) often blamed on new ships (containerships, tankers) belonging to owners who have benefited from excellent freight rates in order to substantially expand their fleets, without necessarily having the adequate human resources. These events are creating increasingly expensive damages, for which the level of the average premium noted on the market does not allow insurers to balance their risk exposure.

Significant rises in premiums have been reported for shipowners having undergone such events (along with indemnities maturing from $ 2 to 30 million). Increases of 20 % have frequently been noted as well as some major clients boasting increases of more than 100 %.

However, the responses of the Hull and Machinery markets differ according to the region.

Scandinavian insurers (members of CEFOR) seem to have been amongst the most competitive, and over the past 2 to 3 years have significantly raised their market share. The reasons for this success seem to rest upon:

  • the willingness that came in the early years of the new millennium to expand their market share from the present until 2010, in accordance with the principle: 'twenty five in twenty ten' (having a market share of 25 % by 2010!),
  • the fact of having succeeded in expanding significantly their 'Loss of hire' (LOH) and ''Increased values' (IV) portfolios, which over the past 2 or 3 years have proven to be very profitable, UK insurers having lost very significant market shares, while other markets have not demonstrated any real ambition to subscribe to these types of risks,
  • the arrival or evolution of companies such as Bluewater or NEMI, has certainly contributed to an increase in competition.

  • However, the technical results of the CEFOR members are fragile:
    they are often very dependent on reinsurers, small sized and, for many, dependent on the maritime insurance sector only, which can contribute to a certain level of instability.

    Insurance companies from Japan (primarily Mitsui-Sumitomo and Tokyo-Marine) or Korea (Samsung) have equally contributed greatly to the heightened ferocity of international competition. They have proven themselves to be extremely competitive in pre-selected business, also helping to limit any possibilities of increases sought after by UK, American or occasionally French insurers.

    It would seem, however, that the technical results of the international business of these companies, who all exhibit excellent financial stability, are not particularly impressive, which will probably push them into showing less aggressiveness in 2006.

    The French market has globally preserved its market share and the dominant leaders, namely AXA Corporate Solutions, Groupama Transport, Allianz Marine & Aviation and Generali France, maintain an important role, either as leaders or as 'followers'. The companies of this market offer an important underwriting capacity, first-class security, a very well appreciated service, therefore enabling them to compete internationally especially for business involving technical criteria of the highest standards!

    The UK market had begun 2005 with a record capacity, leading one to believe that Lloyds was on the verge of regaining the market share they had lost in recent years. Natural disasters and other major events that occurred in 2005 particularly disrupted the market, with investors now preferably investing in the areas showing better potential for profit. Even if the number of insurers has reduced on a global scale, the UK market still remains the world's biggest market, notably due to its flexibility and the power of its network of brokers.


    Transport ' cargo insurance: as revealed by analysts at the IUMI conference in Amsterdam this year, underwriters have secured a fair level of profitability, and the capacity available has increased substantially.
    If the market is still orientated on 'as expiring' conditions, for specific targets, with excellent loss records, significant decreases may be obtained, pushing the overall market premium down. Overall, the reliable average figure is minus 5 %.

    Due to the number of players involved, we do not anticipate another hardening of the market in the coming months as a result of Katrina, even if some insurers and reinsurers have been substantially affected. The increase of reinsurance costs, if any, may have a very limited impact on the direct market in the near future.


    The Joint War Committee, which represents the London marine insurance industry and includes members of both the Lloyd's Market Association and the International Underwriting Association, issued a new list of risky areas for navigation around the world in June 2005. The main changes were to remove a dozen countries from the list, mainly from the Middle East and West Africa, and to add the Straits of Malacca, the southern Gulf of Thailand and parts of southern Philippines.

    The Aegis report stated that there had been intensification in the weaponry and that techniques used by the pirates in the Straits are now largely indistinguishable from terrorists'.

    Regarding the specific question of the inclusion of the Malacca Straits on the list, the JWC affirmed that this area would remain on the list until it was clear that the measures planned by the government and other agencies in the area had been implemented and were effective.

    Shipowners seem to have had some objections to the higher premiums they had to pay resulting from the labelling of some areas as 'war risk areas'. Singapore, Malaysia and Indonesia asked the JWC to reconsider its decision, while the Singapore Shipping Association said the risk assessment was based on a 'fundamental misunderstanding' of piracy and terrorism threats in the Malacca Straits.


    P&I Clubs

    As far as the results of the 2004/2005 financial year are concerned the most significant factor was probably the continuing increase in paid claims levels throughout the year. The upward trend in claims is seen at both financial year and policy year levels: 2004/2005 policy year claims being 14.5 % higher than the equivalent in 2003/2004 claims. Even allowing for a 5 % increase in entered tonnage, this supports the contention that freight rate booms generate increased P&I claims.

    Premiums rose by a slightly greater margin than paid claims, which in turn improved the operating result for the market. The operating deficit was still not eliminated, but it was reduced to less than $ 23 million.

    Albeit marginal, 2004/05 represents the tenth consecutive year of overall 'net' operating deficits for the market. The main changes occurred in 2005 in the International Group are the following:

    Programme Structure

  • Individual Club retention increased from $ 5 million to $ 6 million.
  • Charterers' liability limit reached a $ 350 million combined single limit.

  • War risks

  • P&I war risks limit increased from $ 400 million to $ 500 million.

  • Costs

  • The renewal in total money terms represented in essence an 'as expiry' offer from the reinsurance market.
  • Due to the increase in overall insured tonnage, reductions in rate per gt achieved on all classes of ship, other than passenger vessels, were modest.
  • VUS voyage additional premiums were reduced by 7.5 %.

    Fixed premium P&I market

    The most notable developments in the fixed premium P&I market in 2005 were: 1) the agreement by QBE Insurance Group (QBE) to buy British Marine, 2) the decision taken by (Markel) Terra Nova to phase out cargo ships from its portfolio and 3) the withdrawal of AXA Corporate Solutions from the liability market.

    At the end of November 2005, AXA made the following announcement: 'In 1999 we decided to launch a new P&I activity based on a possible liberalisation of the regulatory framework governing this particular industry. As this liberalisation did not materialise we have decided with regret, given our reduced prospects both in the short and medium term, to cease with immediate effect the further underwriting of the P&I product which represents 0.5 % of our overall activity'.

    Nowadays, insurers such as British Marine, Navigators, Osprey, and Terra Nova concentrate on seeking business from the operators of smaller, more specialized ships, many of whom didn't have full P&I cover in the past nor did they need the huge limit of cover provided by the Group clubs such as smaller blue and brown water vessels for example, supply boats, tugs and barges, diving support vessels, depending on the environment and area in which they operate.

    The main priority in today's price driven market is for marine underwriters to prove that they are able to satisfy their shareholders' profit requirements, whilst offering a stable product to their clients' base.

    In the future, there is no alternative to the International Group clubs for large ocean going cargo ships. The primacy of the clubs is reinforced and the economic argument that a mutual must be cheaper in the long term seems to be proven.

    * * *

    What stands out from 2005 and the beginning of 2006 is that the maritime insurance market still rests principally on the ''supply and demand'' relationship, and does so despite the effects of ''technical and financial'' factors, such as:

  • the increase in reinsurance costs, but also the cost of ship repairs,
  • the number and extent of natural disasters and maritime accidents,
  • the increase in the levels of responsibility held by the players of the maritime world, and in the number of litigations,
  • the pressure of financiers (shareholders or rating agencies) who are trying to push the market towards greater profitability.

  • The coming year is thus presenting itself with better omens for assured' as long as there will be enough maritime insurers!

    Shipping and Shipbuilding Markets in 2005

    I N D E X

    MSC in talks to acquire French logistics company Clasquin
    After obtaining 42% percent of the capital, an offer will be made for the remaining share
    MCL Feeder Services will go under the ownership of Unifeeder
    Both companies operate feeder services in the Mediterranean
    Seaspan Corporation enters the Naval segment of the Pure Car and Truck Carrier
    Will acquire garage ships that will be chartered to Hyundai Glovis
    Project for the creation of an autonomous vehicle for combined road-rail transport
    It is developed by the Glid Technologies that has signed an agreement with the Port of Woodland
    Koper confirms the first container port of the Adriatic
    Already exceeded the share of one million uneventful teu since the beginning of the year
    Three ships attacked in the Red Sea
    Tampa / London
    Missiles and drones launched from the Houthi-controlled area. Intervention by the American destroyer "USS Carney"
    In the third quarter, the transits of ocean vessels in the Panama Canal decreased by -4.4%
    In the first nine months of 2023, shipping traffic fell by -3.3% percent.
    The IMO Assembly elected the members of its Council for the biennium 2024-2025
    On Thursday, the election of the president and vice president
    BLS Cargo hopes for measures to support rail freight transport on the Rhine-Alps corridor
    To penalize this mode are mainly the construction sites, the prices of rail tracks and energy.
    On Tuesday in Livorno, the experimental phase of the Single Customs and Controls will be launched.
    The system favours the coordinated and concurrent control of controls
    Record shipping traffic for November in Suez Canal
    2,264 ships transited (+ 4.3%)
    Fincantieri will acquire Remazel Engineering
    The Company specializes in the design and supply of highly customized and high complexity equipment topside equipment
    FEPORT, ETA, EMPA and ECASBA are urging the EU Commission to assess without delay the negative impact on European ports of the extension of the ETS to shipping
    In the third quarter, the turnover index of the transport services marked a negative trend.
    The conjunctural variation is nothing
    In the third quarter the port of Tanger Med has handled more than 2.2 million containers (+ 13%)
    GPH has detected shares of Royal Caribbean in cruise terminals at ports in Barcelona, Malaga, Singapore and Lisbon
    The American group has sold 38% percent of the capital of Barcelona Port Investments to Global Ports Holding.
    In October, freight traffic in the port of Genoa grew 4.2% percent, while in Savona-I went down -0.9% percent.
    In October, freight traffic in the port of Genoa grew 4.2% percent, while in Savona-I went down -0.9% percent.
    The remarkable increase of the crucierists continues
    Confitarma, urgent the simplification of the Italian maritime order
    Coccia : the rapid and concrete implementation of the Ddl n. 673 will be the first step to reviving the Italian flag
    PSA Italy is set to close 2023 with a traffic of more than two million containers
    The volumes in Venice are growing. In Genoa, there is an increase in activity at Sech and a decline in Pra.
    Nicolò Iguera is the new president of YoungShip Italy
    Renewed the Governing Council for the biennium 2023-25
    TX Logistik finalized the acquisition of Exploris Deutschland Holding
    Established the second operator of iron freight transport in Germany
    SIOT-TAL will invest 44.4 million euros in upgrading of Trieste's Terminale Marino
    Work entrusted to the Fincantieri Infrastructure Works Maritime Works
    Agostinelli, well the search for Salvini of broader convergences on the proposal for the ETS moratorium
    Joy Tauro
    The President of the AdSP reiterated the risks to the port of Gioia Tauro
    European Council of Transport, not addressing the theme of the risk of loss of competitiveness of transhipment ports caused by EU ETS
    No response to the concerns expressed by Cyprus, Croatia, Greece, Italy, Malta and Portugal
    ACGM confirms no to the constitution of an agency for the provision of temporary port work in Taranto
    Following the march back of the AdSP, antitrust will not propose an appeal to the TAR
    Maersk will enhance its facilities and logistical activities in Southeast Asia
    Planned investment of more than 500 million
    In the port of Valletta the first supply to an electric power ship of the ground network
    To equip the five quays of the cold ironing terminal, 49.9 million euros have been invested.
    Visual Sailing List
    Departure ports
    Arrival ports by:
    - alphabetical order
    - country
    - geographical areas
    Agreement of the Italian Academy of Mercantile-De Wave in the field of shipbuilding
    Collaboration for the training of technicians for the supervision and installation of facilities on ships
    Anthony Veder-Accelleron agreement for assistance to turbochargers of 13 ships
    Agreement based on a fixed fee applied to effective hours of operation
    Ellerman seals a slot agreement with MSC related to transatlantic shipping routes
    It will enter into force on the first January
    AdSP of the Northern Adriatic, the Management Committee approves the third change in budget
    Confirmed the adjustment of 25.15% of maritime demanial canons for 2024
    Revamped the North East Confectural Steering
    Paolo Salvaro confirmed to the presidency, while Manuel Scortegagna was appointed vice president.
    GNV starts a new recruiting campaign
    The first date on Monday and Tuesday in Naples
    Logistics group Public Spinelli publishes its first Sustainability Budget
    Ok the transfer of the concession of Terminal Ferry Barcelona to the Grimaldi Group
    Barcelona / Naples
    Deliberation by the Catalan Port Authority after the green light of the antitrust authority
    The IMO assembly unanimously confirms the appointment of Velasco as secretary general
    The term, lasting four years, will begin next January.
    Launched in Ancona the cruise ship Viking Vela
    It will be delivered at the end of 2024
    Italian Ports:
    Ancona Genoa Ravenna
    Augusta Gioia Tauro Salerno
    Bari La Spezia Savona
    Brindisi Leghorn Taranto
    Cagliari Naples Trapani
    Carrara Palermo Trieste
    Civitavecchia Piombino Venice
    Italian Interports: list World Ports: map
    ShipownersShipbuilding and Shiprepairing Yards
    ForwardersShip Suppliers
    Shipping AgentsTruckers
    Conference on changes in port logistics
    It will be held in the first December in Ravenna
    Conference of Uniport on the future of Italian portuality
    It will be held on December 5 in Rome
    ››› Meetings File
    Ports cyber hack reveals Australia's 'vulnerability' to attack
    (The New Daily)
    Economy Minister: Anaklia port project developing “according to plan”, “no delays” in deadlines
    ››› Press Review File
    FORUM of Shipping
    and Logistics
    Relazione del presidente Mario Mattioli
    Roma, 27 ottobre 2023
    ››› File
    Port of the Spezia, signed the contract for the realization of the new pier cruises
    The Spezia
    Expected two benches of the length of 393 and 339 meters
    d' Amico International Shipping will become part of the FTSE Italia Mid Cap Index
    Includes the 60 companies with the largest market capitalization listed on the MTA and MIV markets of Borsa Italiana
    Santi Casciano appointed CEO of the Going Gateway and Reefer Terminal
    Go Ligure
    Will take office on December 15
    Rexi : signed the conventions with 12 interports for more than 11 million intended for completion of the network
    The notice for an additional eight million euros will be published shortly.
    Saipem has awarded two offshore contracts worth about 1.9 billion
    Are related to activities in Guyana and in Brazil
    At the port of Spezia it has been facilitated access to LNG-powered merchant ships
    The Spezia
    The soak of these units is governed by an Ordinance of the Capitanery in Porto
    Maersk Group comes out of the capital of Norway's Höegh Autoliners
    Sold the last 20 million shares
    End the ferry disincite operations Lider Prestij
    You will now proceed to check the safety standards of navigation
    Liberated the tanker Central Park
    The intervention of the Combined Maritime Force TF 151 made the attackers desisting, forced into surrender
    A ship seized in the Gulf of Aden and one hit by a drone in the Indian Ocean
    Attacks on the "Central Park" oil tanker and the "CMA CGM Symi" container ship
    Gruber Logistics has opened a new branch in France
    It is headquartered in Lyon and will focus on providing comprehensive logistics services
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