IUMI Member Outlines Current Difficulties Facing Marine Insurers

The marine insurance market is in for rough sailing as the shipping industry takes on the full impact of the global financial crisis, according to market observers.

Dieter Berg, a member of the International Union of Marine Insurers? facts and figures committee, told delegates of the IUMI's 2009 conference in Bruges, Belgium, that the financial crisis had been the worst since the Great Depression of the 1930s, and that although some commercial areas seem to be seeing a recovery, the crisis is not over and the insurance sector will be affected by a time lag until it feels the impact of any recovery.

According to Berg, over the next year the hull, cargo, liability and offshore energy insurance markets could see rising marine loss ratios, whilst the yacht and protection & indemnity markets might see lower loss ratios.

Berg said that a range of influences could impact marine insurers, including the cost of capital, ratings and regulation; economic factors such as competition, capacity and investment returns; as well as environmental factors such as the impact of climate change and pandemics.

Underwriters will have to look at what they do carefully, especially as future economic bubbles will eventually arrive, said Berg.

Berg said there are different economic dynamics in the United States, Europe and Asia, meaning any trend that might emerge from the market seems to be uncertain and fluctuating, depending on the region involved.

In addition, Berg said the slowdown in world trade has badly hit the shipping industry, with as much as 10% of global shipping volume currently inactive due to a lack of demand. That figure that could rise over the next few months.