Marine rates have continued to harden in the first half of 2021, although hull and machinery underwriters seeking rises of 10% and higher are under pressure to settle for more modest rate increases on clean renewals, according to Gallagher’s latest sector report.
Buyers have also been helped by the boost in capacity from new underwriter Navium, backed by Fidelis and led by Clive Washbourn, formerly at Beazley.
Hull and machinery underwriters dodged the bulk of the loss from the Ever Given’s blockage of the Suez Canal earlier this year, with claims falling mainly on P&I lines. But Gallagher says many hull and machinery underwriters “are asking ‘when’, rather than ‘if’ they will be picking up a large bill for a similar incident, and how complicated general average could become”, with the increasing size of large containerships.
Gallagher adds in the report that the reality of new IMO 2020 regulations on cleaner fuel has proven “much less brutal” than expected for the shipping industry and its insurers. The industry was concerned about an increase in machinery and breakdown claims from the move to low-sulphur fuels and the use of exhaust cleaning scrubbers to comply with the new rules.
“The overall effect has so far not met the worst-case scenarios,” states Ole Wikborg of Norwegian Hull Club, writing in the Gallagher report.
Mr Wikborg says this is largely down to the amount of preparation by shipowners and operators ahead of the new regulations.
Mr Wikborg says while it is still too early to tell if concerns about corrosion for scrubber-fitted vessels will play out, some examples of severe corrosion have already been identified. Corrosion claims to date are “far from alarming” but could rack up over time as wear-and-tear claims, he says.
“Marine insurance providers have fared much better than they themselves expected when it comes to claims following IMO 2020. The shipping industry has, again, been proven to adapt very well to the challenges associated with the changes imposed on the industry,” Mr Wikborg says.