30 January 2014 Insurance

Marine market remains unprofitable

The marine market remains unprofitable despite an economic recovery. That is the view of International Union of Marine Insurance (IUMI) president, Ole Wikborg, speaking ahead of the firm’s annual conference.

“There are a number of issues for the market at present. As the economy recovers gradually, for the marine insurance market there continues to be a lack of profitability,” he said.

Wikborg also said that while 2013 was not marked by a major loss that could be described as “market changing" the losses of 2012, which could be described as market changing, had not delivered any change.

While the results for 2013 were yet to be seen, the expectation was that the level of profitability could fall short of what was required.

“There is a difference between profit and profitability,” he said. “There needs to be a yield on the capital we use.”

Speaking about the themes for the IUMI 2014 conference, which will be held in Hong Kong, Wikborg also stressed the potential for conflict when setting up offices in emerging markets, saying that regional offices would naturally be targeting business that had traditionally been channelled into established hubs such as London and New York.

“These operations will want to prove themselves by winning business and the way to win business is to offer a cheaper price,” he said.

Other issues for discussion included the geographic spread of the underwriting markets, the length of supply chains and the scale of the exposure underwriters are being asked to cover.

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