IUMI Global Marine Insurance Report 2022 - Analysis of the global marine insurance market

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2523

(www.MaritimeCyprus.com) The International Union of Marine Insurance (IUMI) operates at the forefront of marine risk, it gives a unified voice to the global marine insurance market through effective representation and lobbying activities. As a forum for the exchange of ideas and best practice, IUMI works to raise standards across the industry and provides opportunities for education and the collection and publication of industry statistics.

In this document data is presented on the global marine insurance market set in the context of world economic performance, trade and the shipping industry. It also offer commentary and opinion based on the data we have collected.

The International Union of Marine Insurance (IUMI) represents 45 national and marine market insurance and reinsurance associations. Its Fact & Figures Committee compiles and analyses data submitted by national insurance associations and cooperates with other data
providers. Our thanks go to those IUMI member associations for their continued support, and to the other data providers, who are identified at the end of this report, for supporting IUMI with extensive and up to date information on the relevant trends that impact the marine industry. Special thanks are offered to the Nordic Association of Marine Insurers (Cefor) for annually compiling global marine insurance data on behalf of IUMI and supporting IUMI with up-to-date hull trend analyses from the Nordic Marine Insurance Statistics database (NoMIS).

Report Highlights:

The IUMI Global Marine Insurance Report shows that global marine insurance premiums were up 6.4% on 2020, rising to USD 33 bn in 2021. Lifted by a combination of increased global trade volumes, a stronger US dollar, increased offshore activity and higher vessel values, premiums for cargo, hull, offshore energy and marine liability rose in 2021.  Insurers in Europe and Asia in particular saw premium growth.

Regionally, global income was split: Europe 47.2%, Asia/Pacific 29.3%, Latin America 10.3%, North America 7.7%, Other 5.5%.

By line of business, cargo continued to represent the largest share with 57.4% in 2021, hull 23.5%, offshore energy 11.8% and marine liability (excluding IGP&I) 7.3%.

Offshore Energy:

Global premiums from the offshore energy sector continued to rise in 2021, reaching USD 3.9 bn, representing a 6.9% increase on 2020. This is a second straight year of rises, following a six-year period of declines (2014-2019). The demand for offshore energy insurance typically tracks oil prices as projects become viable.

Historically, there is an 18-month time lag between improved oil prices and authorised offshore expenditure and unit reactivation. Oil prices remain high, but volatile. Lloyd’s of London and the International Underwriting Association (IUA) continue to command the majority of the market, with a respective 33.2% and 32.1% market share.

In 2021 claims were lower than premiums collected. However, a shadow still hangs over the offshore energy market in the form of potentially significant unquantified losses still to arise from 2019.

Cargo:

The global premium base for the cargo market for 2021 reached USD 18.9 bn, up 9.9% on the back of a stronger dollar and increased global trade volumes. Cargo premium is a reflection of the value of goods transported and global trade volumes.

However, in July 2022 the International Monetary Fund released a pessimistic forecast predicting global economic growth to slow from 6.1 percent last year to 3.2 percent in 2022.

Loss ratios in most markets continued to improve as a result of increased premium volume in combination with recent benign claims impact.,. For Europe, the gross loss ratio for underwriting year 2021 is estimated to end at 50%, while other regions reported the following 2021 accounting year loss ratios: US: 41% (incurred claims), Asia: 45% (paid claims only) and Latin America 43% (paid claims). A return to preCovid activity in 2022 is likely to increase the impact of claims on underwriting performance.

Cargo insurers continue to face persistent challenges including rising cases of onboard fires, mis-declared cargoes, worsening severe weather conditions including stronger winds and waves, floods and wildfires. With the increased value accumulation on ever larger vessels and single port sites, the risk of large event losses continues to grow.

Ocean Hull:

Global premiums relating to the ocean hull sector increased in 2021 by 4.1% to USD7.8 bn. There was continued strong growth in the Nordic region as well as China, but much weaker in the UK (Lloyd’s) market where the decline of recent years continued.

The overall value of insured vessels rose significantly in 2021, driven primarily by the large increase in containership prices which were up over 35%. Dry bulk and general cargo vessel values also saw gains in 2021, but all other segments were down.

After a subdued year for claims in 2020 when shipping activity, particularly in the high value cruise sector decreased, 2021 saw an uptick of Hull & Machinery claims. However, claims remain low. Total losses stood at 0.06% and partial claims at 0.14% of the total global fleet. Claims cost per vessel were slightly up on 2020, but still at historically low levels. However, rising steel prices and labour costs are expected to impact future hull claims.

As reported in previous years, the frequency of onboard fires in both the engine room and cargo areas continues to cause concerns, particularly for car carriers and container vessels. Fires occurred on over 1% of the containership fleet in 2021 with 0.4% of the fleet experiencing fires incurring over USD 500,000 in claims.

In terms of underwriting profitability, results showed continued improvement. The 2021 underwriting year gross loss ratios for Europe is estimated to end at 65%. This includes some expected increase compared to 2020 which had extraordinarily good results as a combination of rising premiums in combination with extraordinary low claims impact in 2020 due pandemic effects, particularly reduced vessel activity in some segments.

2021 accounting year loss ratios reported for the other regions were: US: 70.5% incurred claims) Asia:67% (paid claims) Latin America: 54% (paid claims).

However, a return to full shipping activity, value increases, inflation of various costs impacting repair costs, new vessel designs, propulsion and fuel types are likely to impact claims trends going forward.

 

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Source: IUMI

 

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