Marine Industry Continues To Suffer From September 11

Wednesday, February 13, 2002
Still more than five months later, the maritime industry continues to feel the effects from the terrorist attacks on America, as the events of September 11 have accelerated hardening market conditions in the marine sector. Prior to September, capital providers were beginning to force the upward trend of the cycle. This trend was underpinned with some withdrawal of capacity and reduction in the overall number of players through mergers or withdrawal from the class. Much of the recent aviation war losses (Air Lanka and WTC) are to be paid by the marine war market in which they were underwritten. It is therefore unsurprising to see a strong impact on the appetite and rating of marine war business. Annual marine hull war rates have moved from, typically 0.01 percent to 0.02 per cent prior to September 11 to 0.04 percent to 0.05 percent, irrespective of where the vessels trade, although even harsher rating has been imposed in the cruise vessel sector.

At the same time, the trading warranties have been amended to exclude a wide range of destinations in respect of which additional premiums are charged. There is, however, a competitive market developing in war business. We anticipate that even the best fleets will attract some level of increase as the market contracts. These same conditions are expected to apply to the marine liability market as reinsurance costs and limited capacity drive rating levels upwards. With the main protection and indemnity (P&I) renewal date being February 20, the main focus of concern has been in connection with the P&I Clubs' stance on war risks. The P&I Club market has explicitly stated that P&I war cover offered by them is only in excess of any underlying war P&I cover, bought with the hull insurance, or in excess of the hull insurance value, whichever is the greater.

However, the combination of anticipated increases in reinsurance cost, together with reduced investment income has led to a hardening in the general increases that will be charged at renewal. Prior to the events of September 11, such increases were being predicted in the range of 10 percent to 15 percent; the range is now 20 percent to 30 percent. The perceived deterioration in the political situation in certain parts of the world since September 11 has resulted in a revised war risks rating schedule for marine cargo risks. The practical application of these war rates has translated into general premium increases for cargo owners, depending on the destination of their goods.

Additionally, where composite rates had previously been charged, underwriters have now called for these to reflect the additional cost of war/strikes coverage. Also, the reductions in capacity over the past few weeks have contributed further to the general upward cycle. In the principal marine markets outside London, the situation is much the same as London. While some of these markets, such as Norway, will not have been directly affected by the events of September 11, there has still been hardening of rates combined with some uncertainty as to what capacity will be available at January 1, 2002 Source: Willis Group Holdings, 7 Hanover Square, New York, NY 10004-2594

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter February 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Brazil's CEEE to sell stakes in Wind Farms, Dams

Brazil's Companhia Estadual de Energia Elétrica (CEEE), a power utility controlled by the state of Rio Grande do Sul, will sell assets including stakes in wind farms,

DP World Bolsters Investment in India

DP World Pvt. Ltd, the world’s fourth biggest container port operator majority owned by the Dubai government, has plans to invest over $1 billion in India for augmenting its port-related operations.

SunEdison Restrained from 'Unusual' Asset Transfers

Solar company SunEdison Inc said a U.S. court has restrained the company from making any unusual asset transfers until a hearing in a lawsuit brought on by investors

Education/Training

Helsinki, Tyumen State Universities to form Arctic station

Within the framework of the international project Reeh, Tyumen State University in cooperation with the University of Helsinki are planning to create a unique Arctic observation stations.

Update on Seagull Mobile apps for Crew

The Seagull mobile app for crew training status is set to revolutionise the way seafarers track their training records and receive critical safety alerts, by making

Maersk Line to Face Miserable 2016

In a video interview Group CEO of AP Møller-Maersk Nils S. Andersen comments on the 2015 full year result, low oil and freight rates, and the challenges and opportunities

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Navigation Pipelines Port Authority Salvage Ship Repair Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0585 sec (17 req/sec)