Global marine insurance premiums for 2020 increased by 6.1% compared to 2019 to reach $30 billion, according to the latest available statistics released by the International Union of Marine Insurance (IUMI). During the same time, cargo premiums grew by 5.9%% to $17.2 billion, while the ocean hull underwriting sector grew by 6% to reach $7.1 billion. Importantly, the gap between global premiums and global tonnage began to reduce, and for the first time in many years loss ratios improved to return the sector to a technical break-even position.However, according to IUMI, any recovery began from a very low base and a return to more normal levels of shipping activity was likely to increase current low levels of claims frequency.“Cargo premium growth was largely aligned with strong global trade, which looks to continue. Loss ratios have also improved, and a technical break-even position was achieved in 2020. As 2021 showed an increase in natural catastrophes around the world, it remains to be seen how these will impact cargo results and future profitability,” reads a report. “As climate change increases the probability of severe nat-cat events, in combination with larger accumation, cargo insurers will need to control their exposure.”According to IUMI secretary general Lars Lange, the health of the marine insurance industry at present is mixed. “The 2020 global premium results and loss ratios from the hull and cargo underwriting sectors showed that both these insurance lines returned to a technical break-even in that year. This was achieved after many years of unprofitability. However, the recovery was from a very low base and within the context of reduced shipping activity and, consequently, a very low claims frequency. As we move forward, we are seeing shipping activity return to pre-Covid levels and offshore projects being commissioned and reactivated. There is concern that a revitalised shipping and offshore industry will generate additional claims which may, in turn, impact on future profitability,” he said.According to Lange, economic and business confidence is returning after seeing a sharp dip at the outbreak of the pandemic in late 2019, early 2020. “Confidence levels are at their highest since the global financial crisis of 2008. Global economic performance has bounced back from a 3.5% decline in 2020. Global seaborne trade has also returned strongly.”IUMI has expressed concern for the 2021 figures, which will only be available towards the end of this year. “Cargo underwriting might have returned to technical break-even in 2020, but 2021 is looking to be less optimistic as it appears that the frequency and severity of claims have increased.”At the same time there is worry over the ageing merchant f leet with the average age of vessels with greater than 2000 gross tonnage coming in at 14.7 years. The global orderbook is also much shorter than in recent years at just around 4% of the total f leet. In 2008, for example, it stood at more than 50%. The current value of the order book is $251 billion, with the majority of new ships being built in China and Korea. The fastest-growing newbuild sectors are cruise lines and not merchant vessels.
