Although the forecast is for mediocre economic growth, it is still growth, compared to the decline that the world trade system experienced a couple of years ago. Overall, the September HSBC Trade Confidence Index finds that despite a dip in global-trade confidence, the majority of respondents (84 percent) anticipate either an increase in international trade or consistent levels of international business activity over the next six months. However, the trade-confidence survey, which was conducted between July and September of 2011, shows that confidence amongst U.S. traders was at its lowest since the first survey was conducted in 2009. Less than half of U.S. respondents (49 percent) anticipate a slight or significant increase in trade volumes in the coming six months—a 13 percent drop from a similar period in the first half of 2011.

This variance of views parallels the results of global and U.S. marine insurers. The IUMI reported that global marine insurance premiums totaled $25.3 billion in 2010, up 10.5 percent from $22.9 billion in 2009. But as IUMI's numbers now include nearly $2 billion in premium from China that had not been reported in the past, growth was very modest.

The growth picture in 2010 was even more modest in the United States. Members of the American Institute of Marine Underwriters (AIMU) reported that total 2010 premiums rose slightly to $2.33 billion, up 1.3 percent from $2.30 billion in 2009. Underwriting results declined somewhat but still remained strong. AIMU reported an overall combined gross loss ratio for all marine lines of nearly 82.9 percent in 2010, up from 81.5 percent in 2009. That's remarkable when you consider the combined ratio for all property-and-casualty lines in 2010 was over 102 percent.

Intense price competition among ocean marine insurers in 2010 is reflected in the annual OpCost report on shipping costs. That survey found that while total annual operating costs in the shipping industry increased by an average of 2.2 percent in 2010, the cost of insurance fell by 4.7 percent for all vessel types.

What about 2011 and 2012? It depends on whom you ask and their perspective. Marsh's Marine Market Monitor reported in September that in spite of major catastrophe losses, any anticipated market hardening has not been realized. In fact, said Marsh, "the opposite has been the case, and the first half of 2011 has seen continuing and wide-ranging softness across marine insurance markets." In particular, the report said that soft-market conditions in the hull line have become more widespread during 2011 and that the influx of new-cargo underwriting capacity in recent years has resulted in a continuing downward trend in pricing and a general broadening of terms and conditions.

An October report from Conning on U.S. market conditions said unfavorable economic conditions and depressed investment income will continue to plague growth in the P&C industry through 2011 and early 2012. But the Conning report found at least one major bright spot: Ocean marine insurance premiums grew 16.9 percent between the second quarter of 2010 and the second quarter of 2011. This finding contrasts sharply with commercial-lines pricing in the U.S., which has been in negative territory since 2004. 

There are a few more key uncertainties affecting the marine insurance industry. One federal issue to keep in mind is the impact of Medicare's mandatory reporting program on marine-liability insurers. All insurers and self-insured entities are now required to report claims made by Medicare-eligible claimants to the Center for Medicare and Medicaid Services. Companies are subject to a $1,000 daily fine for late reporting.

Also impacting marine insurers are thorny issues like sanctions and piracy. The extent of sanctions clauses vary widely from market to market. The existing AIMU sanctions clause, for example, is very specific to the violation of any U.S. economic or trade sanctions, while the clauses of other nations often are broader. AIMU is in the final stage of releasing an International Sanctions Clause and will continue to review its trade-sanction clauses as sanctions are likely to continue to proliferate.

Regarding piracy, AIMU and other marine organizations are neutral on the subject of using armed guards on vessels as a deterrent. The consensus is that such a decision rests with ship owners.

Many of the uncertainties challenging marine underwriters are the result of new technology. Today almost half of all container ships have a capacity of more than 10,000 twenty-foot equivalent units. The average size of vessels delivered this year will be more than double that of a decade ago. What does the size of such behemoths mean for accumulations of cargo, and how will marine underwriters deal with them?

There is growing interest in offshore wind farms, and as more offshore wind towers have been installed off the coast of Europe and the United Kingdom, a new type of ship has evolved to install them: the Wind Tower Installation Ship, a unique vessel designed to operate under extreme conditions and provide ample deck space for heavy and oversized cargo and equipment. How will marine underwriters meet the challenge of developing proper coverage to insure them?

Marine insurers are used to managing change brought on by new technology, economic turbulence or political volatility. But the number, breadth and complexity of the challenges confronting the industry today can appear daunting to even the most experienced underwriter. In concluding his IUMI address this fall, Kessler observed: "Decision-making in a time of high uncertainties is management's most difficult task." More than ever, U.S. marine insurers will have to rely on their skill, dedication and knowledge in dealing with myriad uncertainties while competing in a dynamic global marketplace.