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Member, Beacon International Group, Ltd.
Marine insurers’ fierce competition despite plentiful capacity and falling rates “defies logic,” Willis Group Holdings P.L.C. said Monday in an annual report.
In the “Marine Market Review,” the London-based insurance broker said the number of laid-up vessels has declined, freight shipping rates are increasing slowly and the value of ships has stabilized, all of which contribute to an improving marine insurance market for insurers.
Still, insurer profits are thin and Willis said the rush by new insurers to enter the market “defies logic.”
“From a client perspective, the outlook is good,” Alistair Rivers, CEO of Willis Global Marine, said in a statement. Pricing is competitive and “capacity for all but the largest risks is freely available and choice is greater than ever before,” he added. “In the insurance market where profit margins continue to be squeezed, we foresee increased divergence between those underwriters who are looking to build or expand their accounts and those who may become increasingly defensive or selective.”
The review found that as many as 11 new insurers have entered the hull and machinery market this year despite its lack of profitability. While profits are possible in ancillary coverages, such as war risks, Willis said it seems illogical that new capacity continues to flow into an already saturated market for main lines of marine business.
The report is available at www.willis.com.