The world's maritime industry is growing in scale in the size of ships and the tonnage they haul, but the London insurance market is finding itself in a battle with the rest of the world to remain the premier underwriter for the sector, an insurance brokers report said.
In its Marine Insurance Market Review for 2006, the Chicago-based insurance brokerage firm Aon said that while the shipping industry is thriving in a strong global economy, marine "insurers are surviving rather than thriving."
Expectations that 2006 renewal rates would harden after Hurricanes Katrina and Rita did not materialize. Instead, the market has witnessed fierce competition and new capacity, "ensuring that prices remain broadly stable," the report finds.
Larger ships holding more cargo bring their own challenges, Aon's London office, which produced the report, went on to say.
"Cargo--and to a lesser extent hull--insurers are already having to revise their underwriting strategies and realistic disaster scenarios," said the report.
Protection and indemnity (P&I) insurers, which offer broad coverage to the maritime industry, also have to adjust to the potential of massive liability claims from the super-size vessels.
While Norwegian, Asian and some American insurers are entering the market with sophisticated practices, the "London market is under increasing pressure to overhaul outdated trading practices and finally embrace the electronic age," Aon said.
London, which still remains the premier maritime insurer, is seeing especially stiff competition from Norway. According to statistics from the Central Union of Marine Underwriters, Norway was close to equaling London in premium dollars written at around $600 million.
With no significant shipping losses, the market is expected to remain stable in the future.
Copies of the report are available by contacting Alexandra Lewis at 0207 882 0541 or [email protected]
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