The International Union of Marine Insurance (IUMI) says that global marine insurance premiums rose 6.4% last year to reach $33bn.
The statistics by Global Marine Insurance Report says that this increase happened because of a combination of increased global trade volumes, a stronger US dollar, increased offshore activity and higher vessel values, premiums for cargo, hull, offshore energy, and marine liability rose in 2021. Insurers in Europe and Asia in particular saw premium growth.
Astrid Seltmann, vice chair of the Facts & Figures Committee at the IUMI, said: “Building on the gains made in 2020, 2021 was another positive year for marine insurers. It was the year when global trade saw a tentative recovery, absolute premiums rose, claims impact was benign, and as a result loss ratios improved.”
She added: “However, this position is tempered by the economic uncertainties the world is facing today. We are reporting this data at a time when several shocks have hit a world economy already weakened by the pandemic. There is no end in sight for the war in Ukraine, soaring global energy costs and inflation, a gloomy outlook for trade and the possibility of further climate and pandemic related disruptions. Marine underwriters are navigating some extremely complex issues.”
IUMI also said that global income was split, with Europe taking up 47.2%, Asia and the Pacific region taking up 29.3%, Latin America at 10.3%, and North America at 7.7%. It said that cargo continued to represent the largest share along lines of business with 57.4% in 2021, hull 23.5%, offshore energy 11.8%, and marine liability (excluding IGP&I) 7.3%.
The London marine hub still maintained its command and control as Lloyd’s of London and the International Underwriting Association (IUA) continue to command the majority of the market, with a respective 33.2% and 32.1% market share. In 2021, claims were lower than premiums collected. However, a shadow still hangs over the offshore energy market in the form of potentially significant unquantified losses still to arise from 2019.
However, in July 2022, the International Monetary Fund released a pessimistic forecast predicting global economic growth to slow from 6.1% last year to 3.2% in 2022.
However, challenges are on several fronts including rising on-board fires a persistent challenge for all including for cargo insurers, mis-declared cargoes, worsening severe weather conditions including stronger winds and waves, floods, and wildfires. With the increased value accumulation on ever larger vessels and single port sites, the risk of large event losses continues to grow.
Global premiums relating to the ocean hull sector increased in 2021 by 4.1% to $7.8bn. There was continued strong growth in the Nordic region as well as China, but much weaker in the UK (Lloyd’s) market where the decline of recent years continued.
The overall value of insured vessels rose significantly in 2021, driven primarily by the large increase in containership prices which were up over 35%. Dry bulk and general cargo vessel values also saw gains in 2021, but all other segments were down.
After a subdued year for claims in 2020 when shipping activity, particularly in the high value cruise sector decreased, 2021 saw an uptick of Hull & Machinery claims. However, claims remain low. Total losses stood at 0.06% and partial claims at 0.14% of the total global fleet. Claims cost per vessel were slightly up on 2020, but still at historically low levels. However, rising steel prices and labour costs are expected to impact future hull claims.
As reported in previous years, the frequency of onboard fires in both the engine room and cargo areas continues to cause concerns, particularly for car carriers and container vessels. Fires occurred on over 1% of the containership fleet in 2021 with 0.4% of the fleet experiencing fires incurring over $500,000 in claims.
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