Signs of market hardening in marine insurance lines, Willis finds

Although an ongoing shipping boom continues unabated, insurers remain concerned the skyrocketing cost of steel may cause shipyards in some countries to cut back on the quality of steel used in shipbuilding.
“This, coupled with the growth of new, but relatively inexperienced, ship builders and diminishing crew resources, will likely give rise to the potential for greater losses,” Willis Group Holdings noted in its latest report on the marine insurance market, ‘Sailing Close to the Wind.’
Overall, Willis notes, although the marine insurance market remains “relatively weak,” there are some signs of market hardening. Firmer rates have been seen in a few very specific sectors, namely the Protection & Indemnity (P&I) and Scandinavian Hull markets.
“The review found that, while the marine market remains predominantly soft, there were double-digit average rate increases seen at the last P&I renewal in February this year. Willis predicts that rates may rise by another 10% at the next round of renewals in February.”
Specifically, the Willis report notes that while rate reductions in the hull market have slowed, “the Norwegian Hull Club, the world’s largest single hull and machinery leader, is leading the charge for increased premium by attempting to impose increases of between 10% and 15%.
“To push these increases through, the Club are prepared to lose around 30% of their book, albeit not their core favoured domestic clients.”
Other insurers have attempted to be supportive of this move, Willis notes, but they have “wilted in the face of the intense competition that remains in the hull sector.”