Marine rates harden after difficult year
The marine reinsurance market experienced substantial rate increases at the 2013 1/1 renewals, following a difficult year and several large losses. This is the view of two of the world’s largest reinsurance brokers in January 2013 renewals reports.
The reports said that 2012 had been particularly tough for the marine market, which has suffered one of its worst underwriting years in recent history. Already suffering from the Costa Concordia and the deterioration of the Rena loss from 2011, Superstorm Sandy is widely expected to be the largest ever marine loss with a disproportionate impact on the market.
As such, rate increases reached a minimum of 15 percent on most lines, according to Willis Re in its 2013 renewals report, 1st VIEW. The report states that there are large losses coming from yachts and pleasure craft, general cargo, imported cars, specie and inland marine. Many buyers have increased retentions on loss hit programmes to help mitigate rate increases which are a minimum of 15 percent, even on loss-free offshore energy excess-of-loss contracts.
The report found that the P&I market had experienced minimum increases of around ten percent and that many P&I Clubs were passing on increased reinsurance costs to their clients via increases of between 7.5 percent and 10 percent.
In its January 2013 renewals report, The route to profitable growth, Guy Carpenter also mentioned that the marine market had experienced ‘noticeable’ rate increases, in contrast to many other lines of business, which had seen reductions.
The 2013 1/1 marine renewals were especially late due to uncertainty surrounding losses emanating from Superstorm Sandy.
Both brokers also gave similar estimates of total insured losses for 2012, with Guy Carpenter reporting them to be over $50 billion, and Willis estimating them to be around $60 billion.
