Deirdre Littlefield, President of the International Union of Marine Insurance (IUMI), has fired a warning shot across underwriters’ bows on the eve of the IUMI annual conference in Bruges (September 13-16).
Speaking today, she said: “The shipping industry generally is admitting that conditions remain dire and short-term prospects bleak. Every sector is in trouble despite one or two bright spots. A lot of companies have already folded or filed for bankruptcy, and more will follow.
“This is putting considerable pressure on marine insurers who are trying to cope with greatly reduced ship and commodity values, and far fewer ships trading as an increasing number go into lay-up or lie idle, not to mention a rise in claims resulting from an increase in costly partial losses, returns of premium for vessels in cold lay-up, and the leaking of money down the seemingly bottomless piracy drain.
“The number of total losses may have stabilised, as the facts and figures committee will reveal on Monday, but overall the claims picture is very worrying. Repair prices remain high, which may put further pressure on owners to defer essential repairs and maintenance, to the detriment of underwriters.
“A leading rating agency said last Wednesday that the global insurance industry had an overall negative outlook, with few signs of improvement over the coming months.
“In the marine insurance market, capacity continues to be more than adequate. The danger now is that many underwriters will be tempted to cut rates and make other concessions in order to maintain market share as the amount of new business available continues to dwindle.
“We have seen this cut-throat situation before, of course, but never at a time like this when the shipping industry is literally on its knees. I sincerely hope that the several hundred underwriters joining us in Bruges will not ignore the danger signs. The hull renewal season will soon be on us, and we must all assess risks and set fair prices in a disciplined and responsible manner and aim for stability.
“Insurers must also look ahead, to the challenge of changing risk profiles and new technology. The pace of change in the shipping industry can be both exciting and challenging, and we must be ready with creative thinking and innovative solutions as shipping plots its future course.”
Against this background, the IUMI president added that this week’s conference will be one of the most important, and perhaps decisive, for many years.
The Bruges programme covers the whole gamut of marine insurance, with a particular focus on the mainstream subjects of updated statistics, hull and cargo insurance, offshore energy and, most importantly, loss prevention.