Insurers report “dramatic increase” in ship losses

Insurers report “dramatic increase” in ship losses

Insurers report “dramatic increase” in ship losses

The International Union of Marine Insurance said “there has been a dramatic increase in the number of ship total and partial losses, and the upward trend looks likely to continue.”
   The organization of marine underwriters said statistics released last week indicate that the number of total losses of ships 500 gross tons was 92 in 2006. That’s a 37 percent revision upward compared to an early estimate of 67 made this time last year.
   The group explains that it often takes many months for all the parties involved in a casualty to decide if an event is a total loss, a total constructive loss where the cost of salvage and rebuilding a ship exceeds a vessel’s value, or partial loss.
   IUMI’s early estimate for total losses for 2007 is 82. But if a similar upward revision takes place over the intervening year, that number could hit 112. This is only the second year that IUMI has prepared such a report, so it is not known if the 37 percent upward revision in the 2006 number will turn out to be exceptional or typical.
   There has been a dramatic increase in serious partial losses.
   IUMI said there were 727 serious incidents in 2006, a 6 percent increase since the last report, and a “staggering” 914 reported so far for 2007.
   “This is a 270 percent increase in one decade, 1998-2008,” the group said.
   The statistics include events relating to the marine and offshore energy markets, collated and analyzed by IUMI’s facts and figures, ocean hull and offshore energy committees. They are based on information from a number of authoritative sources, including Lloyd’s Marine Intelligence Unit, Clarkson, Rigzone, Willis, and the International Association of Drilling Contractors.
   Deirdre Littlefield, the New York-based president of IUMI, said: “These figures underline the relentless surge in marine claims that has come about due to a number of factors, not least being the shipping boom itself with ships and crews being driven harder than anyone can remember. Further, the figures dramatically demonstrate the volatility of marine risks.”
   “Regrettably, this dangerous spiking of the casualty graph is happening when the worldwide premium base for marine insurers is flat and competition is rife,” she added. “Underwriters are struggling to obtain realistic increases in their pricing of risks. But they can and must help themselves by showing discipline and practicing responsible underwriting.”
   Weather remains the major cause of total losses, but collisions have overtaken groundings as the next most common proximate cause. ' Chris Dupin