Insurance market, P&I, in flux in the aftermath of 'Costa Concordia' disaster
After an inauspicious start, 2012 will be another difficult and uncertain year for the maritime industry faced with the aftermath of the Costa Concordia, further problems in the Euro zone, pirate attacks and increased sanctions, according to the latist Willis Marine Market Review (part of Willis Group Holdings, the global insurance broker).
The latest report reveals the Hull market is in a state of flux following the Costa Concordia disaster in January. Some underwriters in the London insurance market, which will bear the majority of the estimated USD 500m hull claim, are adamantly refusing premium reductions or even flat renewals. However, unaffected underwriters in the Far East and Scandinavia are more open to negotiations.
Alistair Rivers, CEO of Willis Global Marine said: “For many marine insurers the year began badly with the loss of the Costa Concordia cruise liner. It was a timely reminder that 100 years on from the loss of the Titanic, disasters on this scale are still possible despite all the industrial and technological advancements. But while this loss may have stiffened the hull market, the long term impact is questionable. The P&I and Liability aspects of this loss will be of far greater significance to insurers as matters evolve throughout the year."
The Marine Review describes this years’ February P&I renewals as disproportionately confrontational and protracted as ship-owners operating in one of the worst economic environments for a generation contested even inflationary increases from Clubs. On average, rate increases of 4% were achieved. Excess capacity in the Asian marine insurance market is putting pressure on rates as local and foreign insurers compete for market share.
Asia is now home to around half of the world’s merchant fleet, 14 of the top 20 ports and three of the largest ship building nations.