The International Union of Marine Insurance (IUMI) has warned the global marine insurance sector to remain cautious, even though the hull casualty frequency is stabilising, and other associated fields are witnessing improvements.
Offering its expert opinion on the existing state of the hull, cargo and offshore energy insurance markets, IUMI stated the frequency of total losses within the global fleet stabilise at 0.13% by number over the past three years.
The development has been primarily driven by an improved safety climate, as well as improvements in naval architecture and marine engineering, and the introduction of more effective regulation, IUMI noted.
The volume of total loss involving vessels younger than 15 years was considerably less during the 2013-2017 period compared to the 2008-2012 period.
The rate of serious casualties such as sinkings, groundings and others has grown since 2014, but was found to be stable in 2016-2017.
However, the hull insurance market is still facing concerns, said IUMI.
IUMI Ocean Hull Committee chair Mark Edmondson said: “All hull markets acknowledge the severe volatility inherent in a typical international hull portfolio.
“The global premium base has been eroding year-on-year as a result of reduced asset values, reduced activity in some sectors, and reduced premium rates.
“Although the financial impact of major casualties was modest recently, increasing values of single risks bear the potential risk of new record losses, and attritional losses are a growing concern.”
IUMI expressed its concern over the use of new and digital applications in naval architecture and in the operation of vessels.
The organisation also expressed its concerns over crew training and their ability to manage advanced technology and large amounts of data, which it suggested could possibly be the reason for the rise in the frequency of collisions.
According to IUMI, the marine cargo insurance market has seen improvements and stabilisation, but still remains highly competitive with the availability of numerous capacities.
Among other observations, IUMI noted that, last year, the National Catastrophe Team (NAT CAT) experienced the worst losses in the property and casualty (P&C) insurance sector across the globe.
The losses were caused by hurricanes Harvey, Irma, Nate and Maria, the earthquake in Mexico, monsoons in Bangladesh, storms in Durban, South Africa, and wildfires in California, US.