Global marine underwriting premiums dipped 10.5% in 2015 to $29.9 billion compared to 2014, and the trend is expected to linger, the International Union of Marine Insurance (IUMI) said in a recent report.
IUMI said that 2015’s opening salvo was a cargo loss ratio that was higher compared to the previous year. Specifically, the Tianjin disaster is the largest recorded cargo loss in marine history, IUMI said, and its full impact on the years 2014 and 2015 have yet to be extensively assessed. The trend is expected to continue in the future with the increase in accumulation of values in ports and single vessels, and higher probability for claims due to natural catastrophes, IUMI further observed.
As the Chinese economy loses its steam, and commodity prices slide, cargo insurance premiums are expected to follow the downtrend as it trains global trade.
Further, it described 2016 as “challenging.” While claims in the first six months of the year have been modest, IUMI said insurance firms are still wary of the possibility of major claims due to increased accumulations risk.
“Commodity prices are weak and freight rates are low and these persistent soft market conditions are challenging for marine insurers. Uncertainty has also been driven by the increasing and unknown risk of accumulations and a growth in M&A activity across the globe. Although we are hopeful that the continuing global economic recovery will strengthen world trade and therefore lend greater support to our sector, marine insurers must adapt to this changing environment if they are to survive and remain effective in the future,” Patrizia Kern-Ferretti, chair of IUMI’s Facts & Figures Committee, observed.