Secretary general reveals that marine ‘underwriters are navigating some highly complex issues’, despite ‘another positive year’ overall for marine insurers in 2021

Continued economic uncertainties have cast a shadow over a positive year for the marine insurance market, according to the secretary general of the International Union of Marine Insurance (IUMI).

The organisation, which represents the world’s marine insurance underwriters, released its 2022 global marine insurance market analysis yesterday (1 December 2022) - this showed that London’s share of the global marine hull market continues to fall.

The report found that global marine insurance premiums in 2021 reached $33bn (£27.3bn), up 6.4% on 2020.

Premiums have been lifted by increased global trade volumes, a stronger US dollar, increased offshore activity, higher vessel values and in reaction to deteriorating results in previous years. Insurers in Europe and Asia, in particular, saw premium growth.

Meanwhile, the positive trend for ocean hull business, starting in 2021, continued into 2022.

Premiums in this specific class of business grew 4.1% in 2021, reaching $7.8bn (£6.4bn). However, IUMI said that London’s market share continued to fall in the face of rival maritime centres.

The report stated: “There was continued rapid growth in the Nordic region and China, but [growth was] much weaker in the UK (Lloyd’s) market, where the decline of recent years continued.

“The extraordinarily benign claims impacted both the frequency and the cost in recent years and could achieve the recovery of previous years’ adverse results.”

Estimated ‘subdued growth’

Commenting on this year’s report, IUMI’s secretary general, Lars Lange, said: “We are reporting this data at a time when several shocks have hit a world economy already weakened by the [Covid-19] pandemic.

“Indicators in many economies now point to an extended period of subdued growth. Marine underwriters are navigating some highly complex issues.

“This report presents data on the global marine insurance market in the context of world economic performance, trade and the shipping industry. We also offer commentary and opinions based on the data we have collected.

“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. However, this position is tempered by the significant economic uncertainties the world is facing today.”

Premium rises

The report additionally found that the cargo market saw an increase in premiums for 2021 to $18.9bn (£15.6bn), driven by increased global trade volumes. Also, claims impact was comparably benign in 2021 and loss ratios in most markets improved.

The offshore energy sector saw an increase in overall premiums, reaching $3.9bn (£3.2bn) in 2021, representing a 6.9% increase on 2020. This is the second year of premium rises after six years of decline between 2014 and 2019.

The report continued: “The demand for offshore energy insurance typically tracks oil prices as projects become viable. Historically, there is an 18-month time lag between improved oil prices, authorised offshore expenditure and unit reactivation.

“Loss ratios in recent years kept a fragile balance, with significant loss events being absent - but with a long backlog in claims reporting, the youngest years still have to mature.

“With the oil price rally in 2022, a demand for offshore energy insurance may be expected.”