Underwriting profit is key to marine insurers staying afloat
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Ample capacity in the marine insurance market looks to continue for at least the near future. Marcus Baker, London-based chairman of Marsh Ltd.'s marine practice, said buyers have several highly rated insurers from which to choose, “so from that perspective, if you purchase right now, it's not a bad time.”
Leon Palmer, Farmington, Connecticut-based director of risk management at United Technologies Corp., said the healthy capacity provides stability for the competitive marketplace, “and we don't see any near term things to disrupt that.”
“I think if you have moderate to low cat activity, and moderate to low vessel casualties, you'll continue to see downward pressure on rates,” said John Barnwell, New York-based chief underwriting officer of marine at Allianz Global Corporate & Specialty, a unit of Allianz S.E.
But marine insurers must still generate an underwriting profit, he said.
“You don't have as much investment income. The insurance companies really do need to live off of an underwriting profit, and so you can't maintain unprofitable marine portfolios anymore,” Mr. Barnwell said.
Peter Austen, New York-based CEO of marine North America for Willis North America Inc., Willis Group Holdings P.L.C., estimated marine rates range from flat to down as much as 10%, with the exception of protection and indemnity.
Protection and indemnity clubs, which control more than 95% of the worldwide marine market, “have the ability to maintain a little bit more rating discipline,” Mr. Austen said.
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