BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Marine insurance market hardens amid global tensions, pandemic

oil tanker

Marine insurers are continuing to increase prices on lower reinsurance capacity, and underwriters also are contending with heightened political tensions in various international shipping areas, sources say.

Insurers are also introducing policy exclusions in response to the COVID-19 pandemic and facing increased health concerns for ship crews.

“We’ve got a market that is hardening, as the reinsurance market demands more by the way of exclusions and increased premiums,” said Stephen Harris, senior vice president, marine and cargo practice, with Marsh JLT Specialty, a unit of Marsh Ltd. in London.

“The marine insurance market across the board in every line of business is strengthening after a long period of price decreases and coverage creep. Vessel and cargo insurance is rising with coverage changes,” said Michael Burle, London-based head of marine for Liberty Specialty Markets, a unit of Liberty Mutual Insurance Co.

Insurers are moving to broadly exclude COVID-19 exposures from coverage.

“There are a lot of new COVID exclusions,” said Lars Gustafson, New York-based managing director of Arthur J. Gallagher & Co.’s marine practice. Lloyd’s and U.K. insurers began excluding COVID-19 specifically on renewals or even virus more broadly “where they have not in the past,” he said.

“Many of the exclusions we are seeing insurers come out with now are the CDEs – communicable disease exclusions,” Mr. Harris said.

Such exclusions were introduced as COVID-19 exclusions but have been expanded to exclude losses related to bacteria and other communicable diseases, he said. The exclusions cover such things as infected cargo and delays in deliveries.

In addition to exclusions, the marine market is seeing reduced reinsurance capacity.

Reinsurance capacity previously abundant in the London market began to contract in late 2018, said Ryan O’Connor, New York-based North American regional head for ocean cargo at Allianz Global Corporate and Specialty, a unit of Allianz SE.

The reduction in reinsurance capacity has led insurers to cut back on primary capacity, he said.

Where previously an insurer might have offered $10 million, $20 million, or $40 million in primary limits, it might now take several insurers to assemble the same limit, Mr. O’Connor said.

Rising tensions from military and trade friction are also affecting underwriters’ view of the marine market.

“When we see photographs of the U.S Navy sailing through the South China Sea, we realize it is raising tensions, and tension is what underwriters don’t like,” Mr. Harris said. “Given they are already in a hardening attitude, this is not going to help at all.”

The U.S has been conducting right of navigation exercises in the South China Sea, and sanctions against Iran have roiled the Middle East.

“Tensions in the South China Sea and Middle East have been longstanding and remain so. In the Middle East tensions are heightened and the insurance industry has seen significant events occur over the last 18 months,” Mr. Burle said.

“Marine underwriters always have to follow current events and be watchful,” said Mr. O’Connor of Allianz.

The insurance sector has also been the subject of pressure from the U.S. State Department to do more to stem the flow of oil from Venezuela in violation of U.S. sanctions.

The COVID-19 pandemic has also made it more difficult to secure crews for vessels.

Testing crews as they cycle off vessels has become a challenge for the maritime industry, Mr. Gustafson said.

“For vessel operators, they’re having difficulty switching out crews,” Mr. Gustafson said. U.S. crews on inland waterways generally are onboard for two to four weeks and international crews may serve for several months at a stretch.

“Crew management and their welfare,” has been one of the challenges faced by the shipping industry, Mr. Burle said.

Continually changing COVID-19 hotspot maps both in the U.S and overseas have complicated changing out crews for vessel owners. “Logistics in coordinating crew changes has been a big problem for our client base,” Mr. Gustafson said

The result has been crews serving on ships for extended tours to reduce the number of people cycling on and off ships, he said.

More insurance and risk management news on the coronavirus crisis here.