Daily Insurance Industry News
 
 
Daily Insurance Industry News
Thursday 13th of December 2018
January 29, 2008

Ship and cargo premiums set to fall

by Gill Montia

Story link: Ship and cargo premiums set to fall

The marine sector can expect ship and cargo premiums to fall by up to 10% during 2008, despite the fact that overall, risks in the sector are increasing.

According to Aon’s 2008 Marine Insurance Market Review, ship and cargo owners are paying less in premiums because claims have decreased as a result of advances in ship design, cargo handling and general maritime safety. At the same time, competition between underwriters is strong.

However, the market for protection and indemnity (P&I) will continue to see premium increases because both the number and size of claims is rising. To a lesser extent, the same is true of hull and machinery insurance.

The review summarises the key elements in the shipping industry likely to lead to a rise in the size and cost of claims as follows: crew shortages; a shortage of skilled officers; and larger vessels.

Peter Dobbs, chief executive of Aon’s marine team, comments: “Although the short term prospects for insurers and ship-owners are generally very favourable, the combination of falling premiums and rising risk does ultimately hold the potential to destroy this equilibrium. And, as we are seeing in the P&I market, that could provoke a dramatic response from insurers as they try to restore the balance between premiums and claims.”

 

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