April 13 - According to statistics released by the International Union of Marine Insurance (IUMI), average costs of global marine insurance claims are increasing on the back of increased risk onboard cargo vessels and in ports.
The IUMI said that the frequency of major vessel casualties rose in 2016 for the second consecutive year, following a year-on-year decline until 2015 when incidents suddenly recorded a sharp upturn which continued in 2016.
The IUMI report notes that, conversely, the trend in total vessel losses (from 2000 onwards) continued its downward trajectory through to 2016. In general, many markets were reporting a reduction in frequency of claims but an increase in the average cost of the claim.
The main causes of the total losses to 2015 were weather related but the frequency of losses caused by grounding or machinery damage were increasing faster than any other cause, said an IUMI spokesperson, adding that this was followed by fire and explosion.
Commenting on the issues raised, Donald Harrell, chairman of IUMI's Facts & Figures committee, said: "Marine risks continue to grow both in size and complexity and it is vital that underwriters fully understand the potential losses that they are being asked to insure. It is gratifying to see the year-on-year decrease in total losses, but we must take particular notice of the recent increase in major casualties and the reasons for this.
"The offshore sector continues to face challenges that look likely to get worse before they get better. Energy risks per se have not reduced, but the premium base from which they are settled, or reinsured, has shrunk dramatically.
"The disaster in the port of Tianjin in 2015 serves as a reminder of the growing accumulation risk that continues to dog our sector and one that will only intensify over the coming years. As marine underwriters, we must continue to innovate and provide cost-effective insurance solutions to enable seaborne trade to continue without interruption."