MARINE: Marine Insurance Remains Stable
Recent Western Cape Business News
THE first half of 2011 has proved rather benign as regards the local marine hull insurance market.
The trend is currently that of previous years, with renewals being offered on essentially unaltered terms, although slight reductions are being achieved on accounts with good claims history. Very often, the discounts achieved are in the form of profit share arrangements and/or no-claim bonus/continuity discounts being incorporated into the policy wordings, says Grant Fugard of Alexander Forbes in Cape Town.
The various worldwide natural catastrophes suffered during the latter part of 2010 and first half of 2011 have, to date, had little impact on the local marine hull insurance market. Whether this trend will continue for the remainder of 2011 and into 2012 is debatable. “It is my opinion, however, that unless direct insurance markets are forced to increase their rating levels by reinsurers, then I would not anticipate there to be much change to the current approach being adopted by the local market”, says Fugard.
In overseas markets (predominantly the Lloyd’s/London markets), the situation is similar with the hull market having seen little impact from the recent spate of natural disasters. While both the New Zealand and Japan earthquakes caused considerable damage in and around ports, pure marine hull losses are not thought to be sufficient to cause a major shift within the market at this time.
Many of the smaller Japanese vessels were covered by government schemes, as opposed to insurance companies. If reinsurance costs start to rise, however, then it will be interesting to see whether the direct insurers absorb these costs (in order to maintain marketshare in the face of competition) or whether the market turns and we see these increases being passed onto consumers, he comments.
“Regarding rating and underwriting considerations, different insurers apply different philosophies. Some will not quote on certain vessel types (e.g. diamond recovery vessels), others will not quote on vessels in excess of 15 years of age, while others may have a preference for certain vessel types or industries (e.g. squid vessels operating off the east coast around the Port Elizabeth area). As a result of these likes and dislikes, we often encounter a broad range of rates (and conditions) when broking a particular risk.”
“It is, therefore, imperative for us to have a good working knowledge of the different insurers, as well as their levels of experience and expertise”, says Fugard.
Piracy remains an issue for Africa, especially off Somalia and the Horn of Africa/Gulf of Aden.
At this stage, there does not appear to be a solution in sight, with little co-ordination between countries as regards an action plan that will resolve (or just reduce) the current crisis.
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