Marine Insurance: Lower Prices, Higher Risks for 2008
30 Gennaio 2008 - 12:30AM
PR Newswire (US)
Aon launches annual Marine Insurance Market Review LONDON and
CHICAGO, Jan. 29 /PRNewswire-FirstCall/ -- The marine industry is
set for a continued run of favorable insurance premiums in 2008,
despite facing higher risks. According to Aon's 2008 Marine
Insurance Market Review*, the cargo and liability markets offer a
win-win situation to ship and cargo owners who are paying less and
underwriters who remain profitable due to few claims -- at least
for the time being. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) Rates for
well-managed risks are expected to continue falling throughout 2008
by up to 10 percent. This positive outlook is due to a plentiful
supply of capacity combined with a low level of claims creating
fierce competition between underwriters. The relatively benign
claims environment reflects major advances in recent years in ship
design, cargo handling and general maritime safety. However, the
market is turning for protection & indemnity (P&I) and the
clubs have announced big rate increases for 2008 in response to a
surge in the size of large claims. Neither is the situation quite
so rosy in hull and machinery, where losses are starting to impact
the accounts of many insurers, although not to the same extent as
in P&I. For the shipping industry, two continuing key risks
threaten to increase the size and cost of claims: -- crew shortages
and a dwindling pool of skilled officers in the marine industry
could result in increasing claims due to human error. At the same
time, shipyards are working at full capacity on new builds and
these additional ships will exacerbate the existing crew shortage,
especially for complex vessels such as the new generation of LNG
tankers. The industry must focus on recruitment, training and
retention programmes. -- bigger ships, tankers and dredgers are
creating bigger concentrations of risk and magnifying the potential
scale of disaster for P&I, liability and cargo insurers as well
as hull underwriters. Peter Dobbs, CEO of Aon's marine team,
commented: "Although the short term prospects for insurers and
shipowners are generally very favorable, the combination of falling
premiums and rising risk does ultimately hold the potential to
destroy this equilibrium. And, as we are seeing in the P&I
market, that could provoke a dramatic response from insurers as
they try to restore the balance between premiums and claims." The
market in the United States closely resembles the international
market, with a key exception. "U.S. marine insurers are generally
responding to rate pressures in a parallel manner to international
markets," said Bob DeMotta, managing director and head of the U.S.
marine practice. "It is also historically true that in an upward
market U.S. insurers will reach a price ceiling prior to their
international counterparts." Despite new markets and capacity from
Bermuda and elsewhere to write U.S. marine risks, Aon expects price
reductions will begin to level off in the United States within the
next 12 months. "This is also a great time to review policy wording
and expand coverage where possible," DeMotta said. "For example,
U.S. insurers are still the most familiar and comfortable with
primary and low level excess liability layers involving U.S.
exposures. We have a creative underwriting community that will
consider coverage enhancements as a means to mitigating premium
reductions." The report provides insight on rates, capacity and
outlook for the key marine markets in 2008. Highlights include:
Hull -- Rates are reducing by 5-10 percent. Insurer accounts are
unlikely to be profitable due to the combination of falling rates
and emerging losses -- most are subsidizing hull business with
profits from other lines. Korean, Japanese and Singaporean insurers
are aggressively writing international tonnage. Cargo -- Ample
capacity and few claims are resulting in savings of around 10
percent at renewal and profitable accounts for insurers. London
maintains the role of leading rate setter on the majority of
complex global placements. Meanwhile, Singapore is emerging as an
international force for straightforward risks. Outside of London,
insurers are willing to tempt clients with offers of much lower
deductibles. P&I -- The surge in costly P&I pool claims in
2006 could be a sign of the times as booming shipping operations
become more expensive. In anticipation, P&I clubs are already
initiating increases of 10-20 percent in shipowners' premiums at
the next renewal in February 2008. Liability -- Rate reductions are
expected around 5-10% percent. Liability deductibles are fairly
stable after years of increases to stay ahead of rapidly rising
litigation costs. Capacity is growing and becoming more global,
notably in the Asian hubs of Singapore and Hong Kong. Yachts -- In
2004 the world population of super yachts (30 meters plus) was
around 4,000. It now stands close to 7,000 and boat builders are
struggling to keep pace with demand. After several years when
annual increases were in the region of 10-15 percent, rates began
to level off in 2006/7. By the end of 2007 early signs of softening
had begun to emerge, but were generally limited to newly built
vessels. Rates may come under slight pressure during 2008 simply
because of the amount of capacity entering the market. * Please
access the report in the Aon Risk Services section of Aon's global
online newsroom: http://aon.mediaroom.com/index.php?s=55. About Aon
Aon Corporation (NYSE:AOC) is the leading global provider of risk
management services, insurance and reinsurance brokerage, human
capital and management consulting, and specialty insurance
underwriting. Through its 43,000 professionals worldwide, Aon
readily delivers distinctive client value via innovative and
effective risk management and workforce productivity solutions. Our
industry-leading global resources, technical expertise and industry
knowledge are delivered locally through more than 500 offices in
more than 120 countries. Aon was ranked by A.M. Best as the number
one global insurance brokerage in 2007 based on brokerage revenues,
and voted best insurance intermediary, best reinsurance
intermediary, and best employee benefits consulting firm in 2007 by
the readers of Business Insurance. For more information on Aon, log
onto http://www.aon.com/. Media contacts: Chicago London Rahsaan
Johnson Alexandra Lewis 312.381.2684 0207 882 0541
http://aon.mediaroom.com/
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Chicago, Rahsaan Johnson, +1-312-381-2684, , or London, Alexandra
Lewis, 0207 882 0541, , both of Aon Corporation Web site:
http://www.aon.com/
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