Hull Losses at Lowest Level since 1996
Hull losses recorded in the first half of the year stood at their lowest level since 1996, according to a report from The Nordic Association of Marine Insurers (Cefor).
Major claims impact continued to be low in the first half of 2018, despite one grounding with a cost of USD 25 million in the first quarter of the year. The overall claims frequency continued its positive trend and stabilized at a relatively low level.
Cefor said that, although it is too early to conclude for the whole year 2018, the general trend over the last eight years has been a stabilization of the total loss frequency at low levels, with some oscillation between 0.05% and 0.10%.
Insured values dropped on average 2.5% on 2018 renewals, compared to a drop of 5.8% in 2017 and 7.% in 2016. The report showed that the improvement is especially due to some recovery in the supply/offshore segment in 2018 after an increase in the oil price, following a recovery in the bulk market in 2017. However, Cefor noted that there is an increasing gap between the development of vessel values as compared to the average vessel size.
The number and impact of major and total losses has remained low since 2016. This trend continues into the first half of 2018. As of June 30, three losses exceeding USD 10 million were reported, the largest of which was USD 25 million. During the whole year 2017, eight claims exceeding USD 10 million were registered (two of these exceeding USD 20 million), compared to fourteen in 2016.
After the substantial drop in insured values on renewals from the last quarter of 2008, the annual reduction stabilized between 4% and 7% between 2011 and 2014. From 2015, the average reduction accelerated again. Especially two-digit value reductions on bulk and supply/offshore vessels contributed to this. The bulk market recovered somewhat in 2017, while the supply/offshore market still was under the influence of the low oil price level.
In 2018, also the supply/offshore market showed some signs of recovery, thus bringing the overall annual value change on renewed vessel back to a more moderate level. Under unchanged market conditions, a certain reduction in the insured value of a vessel, compared to the previous insurance period, is expected due to the aging factor.