“Statistically, these vessels are more prone to fire due to the large quantities and variation of cargo being carried, as well as the challenges inherent in fighting a fire on such a large vessel at sea. Containership fires affect seafarers, the environment, and cargo, hull and liability insurance, and must be urgently addressed,” the report’s authors wrote.
Meanwhile, although the cargo underwriting sector returned to technical breakeven for the first time in many years, there is potential for claims to rise again in 2021. “The trend of storing large amounts of cargo at single sites or on single vessels exposes high values to natural catastrophe or man-made events that could easily result in costly claims,” the analysts said.
Across the market, IUMI’s analysis noted that global marine insurance premiums for 2020 increased by 6.1% to reach $30bn. This demonstrated real market development in all marine insurance lines, except P&I, over the year. But early indications for 2021 put this continued development in doubt.
Astrid Seltmann, vice-chair of IUMI’s Facts & Figures Committee, commented: “The recent claims environment has been relatively benign, which needs to be seen in connection with reduced activity in some shipping segments in 2020 (cruise, container trades) as a reaction to Covid measures. With the economy recovering and shipping and offshore activity increasing, it can be expected that both claims frequency and severity will also rise again.”
Philip Graham, the Facts & Figures Committee chairman, noted both potential positives and negatives. Amongst the former, he noted that project sanctioning in the offshore wind sector had overtaken offshore oil and gas for the first time. Although the sector only represents 0.2% of the global energy mix, Graham said that it has the potential to grow rapidly and become a significant marine insurance line.
On the other hand, he sounded a warning note. “Increased shipping activity, reactivation in the offshore energy market, and an increasingly ageing merchant fleet have the potential to reverse the current downward trend in marine claims,” he said. “Underwriters need to be watchful and take care that increased claims don’t erode the advances made recently in strengthening the overall premium base.”
For the second year, the report is based on analysis of IUMI’s own Major Claims Database developed in partnership with Boston Consulting Group.
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