Tag Archives: IUMI

Marine Insurers Feel the Impact of Sandy too

As we look ahead to the start of the 2013 Atlantic hurricane season marine insurers are among those that will be closely monitoring forecast storm activity.

Annual spring statistics recently released by the International Union of Marine Insurance (IUMI) noted that the cost of Superstorm Sandy to the global marine market has been put at between $2.5 billion to $3 billion – effectively wiping out the entire U.S. marine premiums for 2012.

The statistics which cover the cargo, ocean hull and offshore energy sectors remain a litmus test for the marine insurance market and the impact of Sandy will define 2012 in the eyes of underwriters, IUMI said.

While Superstorm Sandy’s main areas of impact were the states of New York and New Jersey, it was one of the largest storms ever and its impact stretched over 1,000 miles from the Great Lakes to Boston.

In its  analysis of the cargo market, IUMI noted:

The total insured loss from Sandy is currently estimated to be between $25 billion-$30 billion of which approximately 10 percent or $2.5 billion-$3 billion is for the marine business.

It’s still unclear how much of that was for ocean cargo, but we do know that major industry groups such as automotive, coffee/cocoa trade and fine arts were particularly hard hit. There is also a substantial inland marine loss.

To put the claim in perspective this one loss has eroded an entire years worth of premium for the whole U.S. marine market.†

Insurance Journal has more on this story here.

Lessons learned from Superstorm Sandy are among the topics to be addressed at the 20th Biennial Marine Insurance Issues Seminar sponsored by the American Institute of Marine Underwriters (AIMU) on May 8 in New York City. The conference will be held at the New York Marriott Downtown, 85 West St.

To register for the seminar or for further information click here.

IUMI President: Marine Insurers Face Bleak Present

The marine insurance industry is facing a bleak present as it seems to be unable to adapt to a changing business environment amid ongoing economic uncertainty, an international gathering of marine insurers was told.

In a keynote address  to the annual conference of the International Union of Marine Insurers (IUMI) in San Diego, IUMI president Ole Wikborg noted that some marine underwriting entities – both old and new – were facing downgrades, and even closures, as a result of prevailing economic uncertainty.

What continues to surprise me is that with one gone, new capacity quickly fills the vacant spot with a business model not very much different from the one that had to quit. In our practical day-to-day dealings, it may be argued that our business models are not very innovative.†

This lack of innovation may be a result of marine insurers’ inability to renew a business model that is out of touch with the needs and requirements of the client base, Wikborg said.

He went on to suggest that the marine insurance industry may be unable to build and maintain a sustainable business activity through continuous profitmaking and service delivery because underwriters are disobeying the undeniable truths of their past performance.

I know it’s a hackneyed phrase, but its bottom line growth and not top line premium production inflation we need.†

Wikborg also pointed to the short-term view of some investors in the marine insurance industry:

Maybe our industry is dominated by shareholders who have no basic knowledge of the marine insurance business and its volatility, – with a short term investment philosophy and no ability nor interest in staying put when times are tough.†

New and stricter regulation was another concern for the industry:

Maybe our regulators are to be blamed for not understanding the marine insurance business model, its global reach and special requirements.†