IUMI warns of impact on marine insurance sector due to large cargo losses
The International Union of Marine Insurance (IUMI) cargo committee chairman Nick Derrick has cautioned that the marine insurance sector is significantly impacted by the large cargo losses.
The profitability of the marine cargo sector in 2014 and 2015 is expected to be heavily impacted by the Tianjin incident, grounding of car carrier Hoegh Osaka, resulting in a vehicle loss exposure of £35m combined with other large losses.
Citing the 12 August 2015 incident at the port of Tianjin, China, as an example, Derrick said: "Tianjin port covers an area of around 125km2, but only a small part of the port was affected by the explosion.
"Even so, we are expecting to see cargo losses of at least $1.5bn with some reports stating that the final figure could be as high as $6bn.
"Cargo insurers need to understand what the dollar loss might have been if the entire port had been affected, perhaps by a natural catastrophe such as an earthquake or tsunami."
According to Derrick, cargo insurers are expected to face problems in managing unexpected accumulation risk in the future.
However, technological advancements in the fields are expected to help insurers handle the risk.
"Added to the direct impact of the Tianjin explosion, we also understand that goods outside of the blast area have been contaminated by dangerous chemicals. This will add to the final loss figure."
Derrick also reported a reduction in successful piracy attacks off the Somali coast but warned that attacks off the Malay Peninsula were increasing and called for more to be done to suppress this trend.
The committee also discussed another growing threat of broker facilities cargo underwriters.
These facilities allow the brokers to channel business to enhanced fee paying insurers without assessing the individual risk, which in turn pressurises the full service underwriters to carry full costs with lesser business.