Why in the face of softening rates and threats to profitability does capacity continue to be so high in the marine insurance market?
Why in the face of softening rates and threats to profitability does capacity continue to be so high in the marine insurance market? Willis Group Holdings investigates this paradox in its latest Marine Market Review entitled ‘Defying Gravity?’.
The 2007 review analyses developments in the key global markets by class in an attempt to shed some light on why such ample capacity exists when so many underwriters maintain that business is marginal at best and the current rates are unsustainable even in the short term.
It looks at the hull and machinery, large yacht, protection and indemnity, builders’ risks, loss of earnings, cargo, liabilities, and war and related risks markets. It also provides overviews of the marine insurance market in New York, Singapore and Norway.
The Marine Market Review concludes that competition will continue to increase with insurers attempting to defy the rules of supply and demand – resulting in some fingers getting burnt. Alistair Rivers, chairman of Willis Marine, warned: ‘It is a time for assureds to carefully examine the performance and financial strength of the insurance carriers they intend on using. Willis has already recognised this growing requirement with the soon-to-be launched Willis Quality Index® that will benchmark a wide range of insurers’ service and performance measures to help our clients make more informed decisions. Through this initiative, Willis is working with insurers to improve industry standards.’