Canadian Underwriter

Superstorm Sandy cost global marine market $2.5 billion to $3 billion: IUMI

March 22, 2013   by Canadian Underwriter

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Superstorm Sandy’s hit to the global marine market effectively wiped out 2012 marine premiums for the United States, note figures released this week by the International Union of Marine Insurance (IUMI).

Sandy damage

“The cost of Superstorm Sandy to the global marine market has been put at $2.5 billion to $3 billion, effectively wiping out the entire U.S. marine premiums for 2012,” notes IUMI’s Spring Statistics, which cover the cargo, ocean hull and offshore energy sectors.

The statistics remain a litmus test for the marine insurance market and the impact of Sandy will define 2012 in the eyes of the underwriters, notes a press release from IUMI, which currently has 54 national associations as members.

With regard to the offshore drilling industry, the statistics indicate the pace of new rigs coming into service continued and a further increase is anticipated this year. Thirty-six new builds were delivered in 2012, with 74 new builds scheduled to be delivered in 2013, IUMI reports.

Key trends highlighted by the statistics include the following:

  • the rally in financial markets is creating an upturn in trade with a positive impact on the cargo market;
  • the number of total hull losses increased marginally, but the level of tonnage has fallen;
  • weather continues to be the major cause of the total hull losses, representing 50% of the vessels lost between 2008 and 2012;
  • the number of vessels scrapped in 2012 reached an all-time high of almost 60 million DWT (deadweight tonnage); and
  • the size of the world drilling rig fleet increased to 833 active units in 2012.

Drawn from the Clarkson Research Services Limited database and other services, the statistical report includes numerous graphs and charts. One chart displays information about serious losses from 1998 to 2012, by cause and vessel type (> 500 GT). In descending order, the most common causes for the 2008 to 2012 period wee machinery, followed by grounding, collision/contact, fire/explosion, other, hull damage, weather.

The Clarksea Index is a weighted average of earnings for all the main commercial vessel types, where the weighting is based on the number of vessels in each fleet sector. It notes that the 1980s average was $8,500 per day; 1990s average was $12,023 per day; and the 2000-2008 average was $23,455 per day.

Record highs developed before the economic downturn, and record lows as the downturn developed. “Many markets have faced serious problems for the past two years after a relatively strong performance in 2010. The index was below $10,000 per day for most of 2012,” the report states.

It adds that the average for 2011 was $12,876 per day; $9,959 per day for the 2012 average; and $9,079 per day at January 11, 2012.

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