Tagged: charterer, claims, hard market, IUMI, recession, shipowner

In January, IUMI (International Union of Marine Insurance), warned of bleak times ahead as the industry prepared to face the impact of a global slowdown. Slowing demand and lower freight rates are forcing shipowners and charterers to cut costs and find efficiencies. Inevitably, marine insurers will feel the effects through increasing claims, and pressure on pricing and conditions.

Deidre Littlefield, IUMI president, said “There is no doubt that the all-time historic profits made by owners during the halcyon period marked by the last five years were helped in no small measure by driving ships and crews as hard as possible.

“Inevitably, such a strategy impacts heavily on claims, and we expect that many ship repairs and onboard unit replacements, which have been deferred or ignored during the sky-high profit years, will start to surface, along with the results of skimped maintenance, leading to a further escalation of claims. And adding to the financial pressure on insurers, we will see spiralling requests for return of premiums applying to ships going into ‘cold’ or long-term lay-up.”

The pressures on insurers may be offset by certain benefits that lower trade brings, namely fewer older vessels on the water and fewer problems finding suitable seafarers, although as Ms Littlefield adds, “recruitment going forward remains a huge problem when seen against the threats of piracy and the criminalisation of mariners.”

At FP Marine Risks we have not yet seen a sustained or widespread hardening of the marine market, despite many insurers’ predictions at the end of last year.

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