Exposures and risks are growing in size and complexity and these will require stable solutions in the future, according to the International Union of Marine Insurance (IUMI).
The cost of salvage and wreck removal is dramatically increasing. It is estimated that Superstorm Sandy is the sixth costliest event in global insurance history. Cargo theft, mysterious disappearance and the misappropriation of cargo is also growing in severity, IUMI’s Spring Statistics show.
Despite the continued recovery of global markets, inflation is likely to remain a factor due to the extent of economic slack in the major economies and the short term market interest rates continuing to be very low, the union said.
However, hull losses show a general downward trend in total loss frequency for most vessel types.
“The frequency of total loss since 1997, as a percentage of the world fleet, continues to decrease and has more than halved by both the number of vessels and tonnage. However, an overall increase in percentage of the frequency of heavy weather and grounding related total losses is reported, ” IUMI said.
PA casualties also reduced year-on-year during the period 2007-2014. Groundings are reported as being a significant cause of this type of casualty.
The energy industry continues to provide profitable results for insurers, as the worldwide mobile fleet continues to grow. Although the Gulf of Mexico is showing neutral growth, the rest of the world fleet has increased significantly. For the first time in recent years utilisation rates are down worldwide, with the exception of drillships. Day rates continue to increase in most areas with only a few reductions reported.
” The oil price reduction is expected to lead to less drilling this year. For platforms and pipelines, attritional loss activity continues to remain flat which follows the long term trend. Significant changes in commodity prices over recent months are likely to lead to operators accelerating the decommissioning of these assets ,” IUMI went on to say.