Despite some major losses, continued significant capacity is putting a damper on rate hikes in the marine market. The trend is expected to continue, as more insurers enter a market that has low barriers of entry, market observers say (see related story).

The two biggest losses have been associated with Superstorm Sandy, which cost the global marine, hull, liability and cargo markets an estimated $2.5 billion to $3 billion, and the wreck and salvage of the Costa Concordia cruise ship, whose cost to insurers may exceed $1 billion, making it the most expensive marine loss of all time.

Other major marine losses cited by observers include those associated with the MOL Comfort, a container ship that split in half in July, the 2011 Japan earthquake and the 2004 Thailand tsunami.

“We have to do a lot more in improving our modeling capabilities to better define exposures and risk appetite,” said Dieter Berg, Munich-based senior executive manager for marine at Munich Reinsurance Co. “Many markets were surprised by Sandy” and its impact on different lines of business, including cargo, private yachts and flooding, including fine art losses in Manhattan.

“We're not really seeing big rate increases just because of capacity, specifically in the cargo market,” where there are many players, said Joe Sheridan, New York-based senior vice president-marine for Lockton Cos. L.L.C.

“I would characterize the current market as improving from a carrier's standpoint, but very spotty,” said Bill Queen, Hartford, Conn.-based president of Travelers Ocean Marine, a unit of Travelers Cos. Inc.

Don Harrell, New York-based senior vice president for marine at Liberty International Underwriters, a unit of Liberty Mutual Group Inc., said: “Overall it's been, I would say, a fairly healthy market” that has not continued to go down during the soft market cycle, but neither has it bounced back into a hard market cycle, “which a lot of people predicted after Sandy.”

It is tightening in pockets, especially in the marine liability side, “mainly because of the Costa Concordia event and the P&I Clubs' reinsurance purchase having a dramatic increase,” said Guy Claveloux, New York-based U.S. marine practice leader for Marsh Inc.

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Reinsurers bore the brunt of heavy losses on the container ship Rena, which sank off the New Zealand coast in October 2011, as well as of the Costa Concordia, according to Standard & Poor's Corp.

“As is always the case in marine, the culprit is a lot of capacity in our market that undercuts any effort of marketwide increases so, for marine liabilities, that has abated to maybe single-digit attempts, and on cargo and hull there are still reductions to be had,” said Mr. Claveloux.

In some cases, some observers say, insurers are increasing deductibles in areas that were exposed to Sandy, but not necessarily rates.

New entrants continue to come into the market, including Bermuda-based Endurance Specialty Holdings Ltd., which began writing this year, while the London market has also been more active.

Sean Dalton, New York-based senior vice president and head of marine for Zurich North America, said, “There's a lot of capacity, but at the same time, due to the nature of the marine markets, there are low barriers to entry and exit, so it tends to attract a lot of commodity players.” However, well-established players that have experienced years of depressed market conditions are taking a hard look at their portfolios “and managing them accordingly,” he said.

Participation in some classes of business is relatively easy, such as the hull business, which “lends itself to subscription-type business,” said John Barnwell, New York-based chief underwriting officer of marine for Allianz Global Corporate & Specialty, a unit of Allianz S.E. New entrants mean regular players have “to have a very sharp pencil for their accounts when they renew,” he said.

Most marine markets are looking for rate increases, “but as usual, revitalized or new capacity works against the marketplace” in terms of rate hikes, said Richard J. Haverlin Jr., managing director at New York-based brokerage Hugh Wood Inc.

Endurance is “not going to shake up the market,” however, said Senior Vice President Christopher Smith, who joined the insurer in May to build and lead an ocean marine insurance unit writing blue-water hull, brown-water hull, marine liability and cargo.

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“We have extremely experienced underwriters here that are going to be responsible, dedicated and disciplined,” he said. “We're comfortable that our conservative business plan can be executed, and we're going to go slowly.”

Meanwhile, Mr. Harrell said one trend is that many insurers in the U.S. market are moving a bit more into the co-insurance marketplace, particularly on large-limit business, rather than just leading a line, as done in the past.

Larger companies, which have significant capacity, “could write a $50 million limit by themselves,” he said. However, “what you're seeing, even with the larger players, is they're restructuring how much capacity they're putting out per account, and they're managing their aggregation and cat management across the board more than they did before.”