Positive growth during 2021, but war, inflation and energy costs may herald a more brutal 2022
The IUMI Stats Report shows that global marine insurance premiums were up 6.4% in 2020, rising to USD 33 billion in 2021. Lifted by increased international trade volumes, a stronger US dollar, increased offshore activity and higher vessel values, premiums for cargo, hull, offshore energy and marine liability rose in 2021. Insurers in Europe and Asia, in particular, saw premium growth.
Regionally, global income was split:
Europe 47.2%, Asia/Pacific 29.3%, Latin America 10.3%, North America 7.7% and Other 5.5%.
Offshore Energy
Global premiums from the offshore energy sector continued to rise in 2021, reaching USD 3.9 billion, representing a 6.9% increase in 2020. This is the second straight year of rises, following six years of declines (2014–2019).
The demand for offshore energy insurance typically tracks oil prices as projects become viable. Historically, there is an 18-month time lag between improved oil prices, authorised offshore expenditure and unit reactivation.
Lloyd’s of London and the International Underwriting Association (IUA) continue to command the majority of the market, with 33.2% and 32.1%, respectively.
Cargo
The global premium base for the cargo market for 2021 reached USD 18.9 billion, up 9.9% on the back of a stronger dollar and increased international trade volumes. Cargo premium reflects the value of goods transported and global trade volumes.
However, in July 2022, the International Monetary Fund (IMF) released a pessimistic forecast predicting global economic growth to slow from 6.1% last year to 3.2% in 2022. Loss ratios in most markets continued to improve due to increased premium volume in combination with recent benign claims impact.
Cargo insurers face persistent challenges, including rising onboard fires, misdeclared cargoes, and worsening severe weather conditions, including stronger winds and waves, floods and wildfires.
Ocean Hull
Global premiums relating to this sector increased in 2021 by 4.1% to USD 7.8 billion. There was continued strong growth in the Nordic region and China, but much weaker in the UK (Lloyd’s) market, where the decline of recent years continued.
The overall value of insured vessels rose significantly in 2021, driven primarily by the significant increase in containership prices which were up over 35%. Dry bulk and general cargo vessel values also saw gains in 2021, but all other segments were down.
In terms of underwriting profitability, results showed continued improvement. However, a return to total shipping activity, value increases, inflation of various costs impacting repair costs, new vessel designs, propulsion and fuel types are likely to impact claims trends in the future.
