Marsh targets German marine business

Marsh is not put off by the dire state of the maritime industry in which ship owners are suffering from low charter rates while the once renowned KG market is seeing a wave of insolvencies. In Germany, most ships are purchased via the KG scheme. Private investors provide equity for the ship and the remainder is financed by a bank loan. Now, many of these KG financed vessels are facing insolvency and investors are not prepared to provide money for such projects. "The ships are still there; there are 3,500 to 4,000 ships in Germany which still need to be insured," said Michael Hogger, newly appointed Marine Practice Leader at Marsh's Hamburg-based shipping team. "Markets are difficult, but we expect a turning point in 2015 or 2016," he told Commercial Risk Europe.hideMr Hogger joined Marsh from specialist marine insurance broker Junge & Co. Prior to that he worked for 10 years with Georg Duncker, also a well-known marine broker. Traditionally, German ship owners have relied on specialised marine insurance brokers or had their own brokering operations. But Mr Hogger expects that may change in the light of recent insolvencies at local marine brokers. Last year marine insurance broker Clausius Marine filed for insolvency. This year saw the collapse of fellow broker Carl Rehder. These casualties have raised concerns among ship owners and Marsh hopes it will be able to win over customers as a result. "Given that ship values often exceed €100m, owners have to ask themselves who will take care of their insurance contracts," Mr Hogger said. Mr Hogger would not give a concrete figure for Marsh's growth expectations. "We are well-positioned in the shipbuilding business and have some customers in marine hull as well, but not as many as we would like to have," he said. Marsh is recruiting additional staff to its Hamburg office that handles marine business. The marine hull business is notoriously difficult for insurers currently, with many complaining about premiums being too low to make a profit. Prices remain favourable for most ship owners in spite of large claims last year including the loss of the cruise ship Costa Concordia. "Large claims do not seem to have an effect on the hull market," Mr Hogger said. "There is a lot of capacity." New players have entered the hull business in Germany over recent years. Among them is Ergo, the primary insurer that is part of Munich Re. "It is good when a broker in Germany can access local insurers as well, but generally the hull business is very international," said Mr Hogger. Oslo and London are the most important markets for the marine hull business. Piracy remains another hot topic for shipowners and marine insurers, although the number of successful attacks has fallen recently due to improved safety measures. This has had knock-on effects for kidnap & ransom policies that cover payments to pirates to free ships and crews. "Now that a lot of owners are employing security forces aboard their vessels, the number of seizures has gone down and K&R premiums have fallen as well," Mr Hogger said.

Marsh targets German marine business

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