Bleak year for marine

International

Marine underwriters and Protection & Indemnity (P&I) clubs are bracing themselves for a sharp increase in their claims costs in 2007. According to the International Union of Marine Insurance (IUMI) which held its winter meeting in London, the marine insurance industry is facing one of the most damaging claims situations in recent memory. IUMI said the situation was exacerbated by the rising values of new buildings and commodities. IUMI president, Deirdre Littlefield, added that the increase in claims is occurring at a time when the sector’s premium base is flat. Underwriters, she said, are struggling to obtain realistic increases in their pricing of risks. Excess capacity in the market is partly to blame and the hope within the industry is that the current financial/credit crisis will eliminate many of the weaker new entrants. According to IUMI figures, 20 major claims in the first six months of last year amounted to a claims bill for hull and machinery underwriters of around $780.0mn. The claims bill for 2007 is expected to be in excess of $1.5bn. This compares with total claims costs of about $350.0mn for 2006.