IUMI report highlights 2020 growth for marine insurance sector but 2021 uncertain

Global marine insurance premiums for 2020 increased by 6.1% from 2019 to reach $30bn, according to the International Union of Marine Insurance’s (IUMI) 2021 analysis of the global marine insurance market. IUMI called this “real market development” but said early indications in 2021 are showing that continued development is uncertain. The IUMI Stats Report reveals what it calls “positive market development” in most insurance lines (except P&I) in both income and results, and from most geographic regions. It states: “This is due to the combination of an increased premium base, an extraordinary low claims environment in 2020, and a better-than-expected economic bounceback following the initial effects of the pandemic.” However, it goes on: “Whilst a positive trend, recovery began from a very low base and is already appearing to falter in some markets. It is unclear how sustainable the 2020 uptick will be. The extraordinary drop in claims frequency in 2020 needs to be seen in connection with reduced activity in parts of the shipping sector as a reaction to the pandemic… With the economy recovering and shipping and offshore activity increasing, it is expected that claims frequency and severity will normalise during 2021.” The hull underwriting sector grew by 6% in 2020 and global premiums reached $7.1bn. The report notes that the gap between global premiums and global tonnage had begun to reduce. “For the first time in many years, loss ratios had improved to return the sector to a technical break-even position. However, any recovery had begun from a very low base and a return to more normal levels of shipping activity is likely to increase current low levels of claims frequency,” it says. “Indications in H1 2021 appear to show that any market improvement might have slowed or even plateaued and this, coupled with an inevitable rise in claims as activity levels normalise, is likely to dampen the modest recovery. Uncertainty remains.” According to IUMI, cargo underwriting also returned to a technical break-even position in 2020 for the first time in many years, with a 5.9% increase in global premiums to reach $17.2bn. However, the report notes that a likely increase in nat cat events going forward, coupled with increased risk accumulations, has the potential to impact cargo underwriting performance in 2021. “2021 is looking less optimistic as it appears that the frequency and severity of claims is increasing again. This is particularly due to the increase in severe nat cat events that can be observed in many places around the world, such as the summer floods in Germany and China or Hurricanes Ida and Nicholas in America. Climate change, supply chain disruption and the accumulation of risk all contribute to increased claims impact,” the report states. Stronger oil prices halted the declining premium base of the offshore energy insurance sector in 2020, with premiums totalling $3.6bn. The report explains that claims were at an all-time low in 2020, and on track to produce the fewest upstream claims this century – both in numbers and value. “However, reactivation in the sector driven by stronger oil prices has the potential to reverse this trend. Similarly, nat cat events – to which the offshore energy sector is particularly susceptible – had been relatively benign in recent years but the outcome of Hurricanes Ida and Nicholas on offshore energy claims is not yet fully known at publication. This could easily offset the current fragile balance,” the report adds. IUMI’s secretary general Lars Lange commented: “The health of marine insurance as detailed in this year’s IUMI Stats Report is mixed. The 2020 global premium results and loss ratios from the hull and cargo underwriting sectors showed that both these insurance lines returned to a technical break-even in that year. This was achieved after many years of unprofitability. However, the recovery was from a very low base and within the context of reduced shipping activity and, consequently, a very low claims frequency. “As we move forward, we are seeing shipping activity return to pre-Covid levels and offshore projects being commissioned and reactivated. There is concern that a revitalised shipping and offshore industry will generate additional claims which may, in turn, impact on future profitability.”

IUMI report highlights 2020 growth for marine insurance sector but 2021 uncertain

Premiums up and claims down in 2020 for marine insurers but claims now expected to grow

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Related Articles