Page 19: of Maritime Logistics Professional Magazine (Q1 2016)
Maritime Training and Education
INSIGHTS e l d e
Navigating r 2016’s Marine
By Anne Marie Elder arine insurance may have the distinction of being the the current market is driven by insurers need for scale and oldest line of insurance in existence, but it’s not let- depth of product service, but to best serve their maritime cli-
M ting its venerable age hinder its growth or ? exibility. ents, they will also need to be ef? cient, nimble and not encum-
Given the new, emerging and increasingly complex risks faced bered by heavy infrastructure.
by the maritime industry, the insurance market must adapt to The growing number of marine insurance carriers, along meet the evolving needs. with some other factors, has created a very competitive mar-
In fact, the marine insurance market continues to grow and ketplace that looks like it will persist into 2016 and beyond. evolve to address maritime industries new operating and trad- For maritime companies, marine insurance rates – across all ing environment. While bad weather and rough seas may have lines of cargo, hull & machinery, and marine liability – have been the big risk of days gone by, today’s risk management continued to show downward pressure. While initially, there challenges also include constantly changing global econom- was market speculation that the explosion at China’s port of ic conditions, and larger, more technically-equipped vessels Tianjin would result in increased rates, there is little evidence which pose a cyber threat and a larger concentration of in- we will see signi? cant movement in today’s market.
sured values. The maritime industry’s insurance needs are Loss estimates from the blasts at Tianjin, which also killed changing, often quite rapidly, but so is the marine insurance more than 170 people, hover around $3.3 billion. The abun- industry that’s intent on meeting them. dance of market capacity helped absorb the losses without generating much in rate increases. In fact, according to global 2016 Market Snapshot broker Willis’ report, Marketplace Realities 2016, rates are ex-
In 2016, there are over 100 marine insurance carriers in the pected to remain ? at to fall by as much as 10 percent. global insurance market with continued new entrants every While competitive rates can be good news for maritime year. Last year, and continuing this year, the insurance in- companies, it carries some risk of its own. With many new dustry has seen its share of Merger & Acquisition activity. market entrants, there is the risk that they lack the longev-
Most notably, global marine insurance XL Group acquiring ity and track records to support their maritime clients through
Catlin Group to become XL Catlin in May 2015 and more “rougher seas” or at least a large loss event. Few would argue recently, in January 2016, ACE Group completed its acquisi- that while the market has seen fewer losses, especially those tion of Chubb and is now operating under the Chubb name. related to natural catastrophe events, the ones that do occur
We have also seen UK’s Amlin being acquired by Japanese – Tianjin, Costa Concordia, Deepwater Horizon – have been
Mitsui Sumotomo and US –based HCC’s acquisition by To- larger and more complex than previously seen. kio Marine Holdings. Both large and small maritime companies require special-
M&A activity like this can increase a marine insurers’ scale ized expertise both in underwriting and claims. Unfortunately, and their global reach. For maritime companies, that can the repercussion of having so many marine insurance markets translate into access to more insurance capacity – higher lim- is that talent can be diluted. Similar to the maritime industry’s its from larger carriers – as well as a connection to insurance talent shortage concerns, the marine insurance market is hav- coverage in more countries across the globe. This activity in ing similar issues. Experienced marine underwriters – with an www.maritimeprofessional.com Maritime Professional 19| | 18-33 Q1 MP2016.indd 19 2/29/2016 10:42:54 AM