The reductions in premium in the marine hull market over the past few years and constant erosion of margins are taking their toll on marine insurers.
A number of capital providers have been undertaking a detailed review of their hull and machinery book and have either withdrawn from the sector or changed strategy.
At Lloyd’s, 17 syndicates were under a performance management review and a number of initial business plans were rejected by the corporation.
In the past few months, more than ten marine insurers have ceased writing international marine insurance.
The Lloyd’s performance review is also affecting the cargo sector, driving syndicates to put a spotlight on their cargo account, with the loss-making sectors such as pharmaceuticals, temperature-sensitive goods and traders under the closest scrutiny.
As a result, capacity has been shrinking, with some syndicates closing their cargo account completely.
However, for those that remain and have had their business plans signed off for 2019, the change is around income and appetite.
Meanwhile, the marine market has been hit with some heavy losses, the largest being the fire in the Lürssen yard in Germany, which is estimated to be costing the market in excess of €600 million.
There have also been some significant losses in the cargo market in 2018 – one of real note being a Macy’s warehouse fire in West Virginia.
It appears that the primary $20 million layer and an excess stretch of $80 million will both suffer limit losses.
In general, renewals in the marine market are taking longer to finalise and therefore we are encouraging owners to start the renewal process sooner than they would have done in previous years.
For cargo, we expect 2019 to be every bit as tough – if not tougher – than the last two quarters of 2018.
For more information, please contact John Betz, Senior Vice President, on 212-510-1854.
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