Ship owners could face further hikes in P&I insurance costs
While the marine insurance market remains relatively weak overall, there are some signs of hardening rates in sectors such has protection and indemnity insurance and the Scandinavian hull insurance markets, according to the latest Marine Market Review from insurance broker Willis Group Holdings.
Shipping companies on average saw double-digit rate increases when they renewed their P&I renewal in February, and Willis predicts rates may rise another 10 percent at the next round of renewals in February.
“While rate reductions in the hull market have slowed, the Norwegian Hull Club, the world’s largest single hull and machinery leader, is leading the charge for increased premium by attempting to impose increases of between 10 percent and 15 percent,” Willis said.
“To push these increases through, the club is prepared to lose around 30 percent of their book, albeit not their core favored domestic clients. While other insurers have attempted to be supportive of this move, they have wilted in the face of the intense competition that remains in the hull sector.”
Richard Close-Smith, executive director and coordinator of the Willis Marine Market Review, said within the marine cargo and liability markets, “there are still opportunities for both improved terms and broader product offerings.”
Willis also said that because of the boom in new ship construction, “insurers remain concerned that the skyrocketing cost of steel may be causing shipyards in some countries to cut back on the quality of steel used in shipbuilding. This, coupled with the growth of new, but relatively inexperienced, ship builders and diminishing crew resources, will likely give rise to the potential for greater losses.”
The full Marine Market Review is available at www.willis.com/Documents/Publications/Industries/Marine/marine_market_review.pdf.
Ship owners could face further hikes in P&I insurance costs
