Global Marine Insurance Market Sees Positive Growth in 2022, Reports IUMI

The International Union of Marine Insurance (IUMI) reports a positive trend in the marine insurance market, with an 8.3% increase in global premium base for 2022.

The growth is attributed to the rebound in global trade post-pandemic and reduced market capacity. However, sustainability remains uncertain, and factors such as claims trends, vessel activity, natural catastrophe impact, technology use, and repair costs need to be monitored. Fires also continue to be a concern.

According to the IUMI report, all lines of business experienced an increase in global premium base for 2022, reaching USD35.8 billion, an 8.3% growth from the previous year. The global income was distributed across regions, with Europe accounting for 47.7%, Asia/Pacific 28.4%, Latin America 10.3%, North America 8.5%, and Other regions 5.1%.

In terms of line of business, transport/cargo commanded the largest share at 57.3%, followed by global hull at 23.4%, offshore energy at 11.5%, and marine liability (excluding P&I covered by IG clubs) at 7.7%.

“Marine underwriters have suffered poor returns over several years but from 2020 results started to improve. 2021 and particularly 2022 have shown a relatively strong growth in the global premium base across all lines of business. In combination with a benign claims impact, this has translated into a much better performance in terms of loss ratios, specifically for hull and cargo,” said Astrid Seltmann, Vice-Chair of IUMI’s Facts & Figures Committee.

Offshore Energy Sector

Global premiums in the offshore energy market increased by 7.3% in 2022, following a prolonged reduction in 2019. Premiums are influenced by oil prices, which have been strong but are expected to fall in 2023, potentially impacting returns for insurers. Losses in this sector remain low and stable, but the activation of offshore assets can disrupt the balance.

Cargo Sector

Cargo insurance premiums grew by 8.3% in 2022, with growth in all regions except Asia/Pacific. Exchange rate fluctuations and the location of insurance contracts may have influenced regional performance. Cargo premiums generally follow world trade trends, which have rebounded strongly post-COVID. Loss ratios for 2022 are at their lowest since 2015, indicating a positive trend. However, challenges such as mis-declared cargoes, vessel fires, accumulation of risk, climate change, political tensions, inflation, and natural catastrophes remain concerns for cargo underwriters.

Ocean Hull Sector

Global premiums for the ocean hull sector increased by 5.7% in 2022, reaching USD8.4 billion. Except for Latin America, all other regions experienced growth. The Nordic countries saw a significant increase, potentially due to their involvement in war risk coverage.

In 2022, the world fleet to grow alongside its value, while reduced market capacity had a positive impact on the premium base. The gap between total gross tonnage/number of vessels and global premiums, which had widened from 2011-2018, has slightly closed since 2020 and is now relatively stable.

Claims frequency had a long-term downward trend but increased after a dip in 2020. Average repair costs have been rising, likely due to inflation. Major losses, particularly fires, have seen an uptick in 2023.

Loss ratios in all regions, except Latin America, have been decreasing for the past three years. Cargo loss ratios for 2022 are at their lowest point since 2015, which is positive for hull underwriters.

The sustainability of the current relatively low loss ratio pattern remains uncertain, despite the recovery of high-value sectors like containers and cruise ships post-COVID and the increase in major losses observed in 2023.

“The overall results from our 2022 analysis do appear to indicate positive growth which is welcomed after a prolonged period of poor returns. Inflation has fallen slightly which is also positive but interest rates remain high which can mask the underperformance of the underwriting sector. However, consumer confidence is slowly recovering which should help the container trades; and I’m hearing reports that the slowdown in China might not be as severe as some believe,” said Jun Lin, Chair of IUMI’s Facts & Figures Committee.

“That said, we shouldn’t lose sight of future challenges that are likely to inject a degree of uncertainty into all our lines of business,” Lin added.