Period of change is predicted
The marine insurance industry is about to undergo a period of change as a result of a number of impacting factors, including the effects of the 2017 Caribbean hurricanes, reduced investment in this sector and the uncertainty of Brexit.
”A cycle in the marine insurance market is well documented from the 1950’s through to the late 90’s, but since then competition has driven pricing, keeping premiums supressed at unrealistic levels,” explained Keith Lovett, senior marine trade underwriter at MS Amlin. “We must take a prudent and thoughtful approach to ensure longevity of our industry as a whole.”
For around 20 years, marine insurance premiums have been stable and in some cases reducing, due to investment in insurance companies and Lloyd’s syndicates, combined with competition and customer demand.
However, more recently insurers underwriting the risks of marine insurance saw premiums reduce to unprofitable and ultimately unstainable levels. Up until 2016, insurers remained profitable due to existing investments, but from a pure underwriting perspective losses had begun to emerge.
2017 was a turning point for the marine insurance industry as a whole; the combination of increased claims as a direct result of three hurricanes - Harvey, Irma and Maria - and a number of high profile and expensive claims, alongside a continued rise in litigation meant that significant losses occurred.
Going forward there is every indication of predictable increases in premiums, while the highest risk cases may find it difficult to arrange cover. Also premiums reflecting increased risk may have the possibility of restricted terms and higher excesses.
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