IUMI reveals 6% jump in global marine premiums last year

Global marine insurance premiums rose 5.9% increase to $38.9bn in 2023, with premium levels up across all lines of business, according to the International Union of Marine Insurance (IUMI).

Presenting market statistics at its conference in Berlin this week, IUMI said Europe dominated global marine premiums, taking a 48.5% share, followed by Asia Pacific (28.1%), Latin America (10.9%) and North America (7%).

Astrid Seltmann, vice-chair of IUMI’s facts and figures committee, said global premiums have been driven up by an ongoing rise in global trade and higher hull values, while geopolitical conditions have impacted premiums in several regions.

“Overall, 2023 appears to have been a positive year for marine underwriters”, with a relatively benign claims environment continuing for the past few years, said Seltmann. She said some individual big claims have given rise to concerns about fires, while the market has also seen some visible inflation impact on the average cost of attritional losses.

But she warned underwriters: “Ever larger vessels, increasing value accumulations, changes in technology and fuels as well as changes to trading routes, all mean a change of risk, which needs to be monitored and taken into account going forward.”

The largest line of marine business is cargo. It booked a 6.2% rise in global premiums to $22.1bn for 2023. All regions – in particular Europe and Asia – reported growth. Europe claimed a market share of 39.8%, followed by Asia with 32.2%. IUMI said loss ratios in Europe “appeared to be more positive than in recent years”, despite claims impacted by fires and floods.

Offshore energy premiums increased 4.6% in 2023 to $4.6bn, with Lloyd’s taking 28.2% of the business and the London company market accounting for 36.8% of global premiums. But IUMI said offshore energy is likely to underperform in 2023, compared with 2020-2022, after incurring two major losses.

“A fragile balance between premiums and claims remains,” IUMI said.

Ocean hull reported global insurance premiums of $9.2bn in 2023, up 7.6%, with Europe taking the largest slice at 51.8% followed by Asia at 35.5%. IUMI said the UK, China and Latin American markets all increased their market share in 2023, while the recent dramatic rise in the Nordic market has stabilised.

Hull claims started to show an increase, IUMI said, but have remained below pre-pandemic levels. However, claims cost per vessel increased last year to exceed pre-pandemic figures for the first time. This was driven by costly vessel fires, which IUMI said “remains an ongoing issue”.

Jun Lin, chair of IUMI’s facts and figures committee, said: “World trade continued to grow, which impacted positively on the global premium base, particularly for cargo insurance. The oil price appears to have stabilised, which is good for the offshore sector. Inflationary pressure has eased and many central banks are beginning to cut their interest rates.

“The claims environment was also relatively moderate in 2023, with no major weather events or vessel casualties making a significant impact on the overall costs, despite a few costly fires. Large vessel fires, particularly on containerships and car carriers, are still a major concern for hull and cargo insurers.”

However, he warned that the marine sector faces headwinds from increasing geopolitical tensions.

“There seems no end to their impact in 2024 or beyond,” Lin said. “The continuing Houthi attacks in the Red Sea area and the Russia/Ukraine war are disrupting traditional shipping routes and causing some carriers to change the way they operate.”

He added: “Re-routing vessels around Africa brings additional risks but, so far, we have not seen any significant issue. On the flip side, these longer routes, particularly for containerships, have absorbed the influx of newbuilds into the market, ensuring freight rates remain stable.”