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Nicholas Adamantiadis, president of the International Union of Marine Insurers, opened the group's 52nd annual conference saying the theme, "Marine Insurance-The Way Forward," "mirrors our deep concern about the threats and opportunities which surround us."
Mr. Adamantiadis, a marine underwriter with Athens, Greece-based Hellas Insurance Co. S.A., warned: "We either go forward, or marine insurance stagnates and becomes incorporated or absorbed by other larger lines of the insurance industry." The way forward requires that underwriters "reinvent the business" by starting to question the old rules under which they operate.
Marine insurers are operating in a global marketplace characterized by a wealth of opportunities but also challenges, said Jean Arvis, president of the Federation Francaise des Societes d'Assurances. He gave the keynote speech at the 1997 IUMI conference, held earlier this month in Paris.
His theme, "Marine Insurance Today: Issues at Stake," kicked off the conference with an outline of the favorable economic context in which marine insurers now operate. World trade has been growing steadily for five years, and maritime shipments from which marine underwriters make their living have also increased, with the prospects of demand for shipping "particularly encouraging for the years to come."
However, Mr. Arvis, who also is chairman of Groupe Victoire, one of France's biggest insurance companies, said there is one overriding worry about the global merchant fleet: its increasing age. The average age of vessels afloat is 18 years, which is worrying when coupled with "the constant question about the quality of their maintenance, management and even some commercial practices."
Other challenges facing marine underwriters come from bigger, faster vessels and quicker cargo-handling techniques, which are increasing the concentration and frequency of risks. At the same time, marine insurers, like underwriters of other classes of risks, face growing calls from clients for more guaranties. Among these are calls to cover costs associated with delivery delays, Mr. Arvis said.
The changing legal environment is another challenge. Mr. Arvis said that while maritime law has been based for decades on the principle of due diligence, meaning whoever caused the harm is liable, this is being increasingly "manhandled" so that carriers and shipowners are being gradually imposed with a strict liability that increases their commitments and thus those of their insurers.
Still further challenges come from the globalization of underwriting and the cover of corporate risks, the concentration of insurance companies and brokerage firms through takeovers and mergers, the opening up of new markets in Eastern Europe and Southeast Asia, and the increased use of captives.
Mr. Arvis warned it is imperative that the marine insurance market find a lasting stability. Not to do so would risk a loss of investors or the marginalization of marine risks within the insurance sector.
In 1995, the latest year for which IUMI has global figures from its 48 member associations, global marine insurance premiums in 1995 totaled $16.7 billion, slightly down from a restated $16.81 billion in 1994. The hull account was worth $5 million, down 11.2% from 1994. Transport and cargo in 1995 generated premiums of $8.5 million, up from $8 billion. Premiums for offshore and energy business were $1.2 billion, down from $1.5 billion.
The figures, compiled for IUMI by Norway's Central Union of Marine Underwriters, show London remained the top marine insurance market, accounting for $3.4 billion of 1995's total marine premiums, of which $2.5 billion was underwritten at Lloyd's and $957 million by member companies of the Institute of London Underwriters. This compares with a restated $4 billion underwritten in London in 1994, of which $2.8 billion came from Lloyd's of London and $1.2 billion from the ILU.
Japan remained the second-largest marine insurance market, accounting for $2.9 billion of 1995's premiums, against $2.95 billion in 1994. The United States stayed in the same position, with 1995 premiums of $1.54 billion, little changed from $1.56 billion in 1994.