Global marine premiums were $28.5 billion in 2017, up by two per cent from 2016, the International Union of Marine Insurance (IUMI) has reported.
In its annual statistical report on the marine insurance market, IUMI said that, despite the increase, there had been an increasing mismatch between income levels and covered risk.
This is when current premium levels are viewed in relation to covered risks and the impact of claims.
In the hull market, falling vessel values have, among other market conditions, contributed to an erosion of income to a degree where income is now not sufficient to allow for normal repair costs in a given year.
The last 10 years’ statistics show an increasing volatility in the impact of claims on underwriting results caused by the random occurrence of claims with unprecedented cost.
As vessel sizes continue to increase, this trend will not reverse, says the IUMI, and the heightened risk must be taken into account. The shipping and insurance industries will have to embrace this level of volatility and uncertainty which may impact future profitability.
The offshore energy market has also seen a substantial erosion of premium income caused by the low oil price and the consequent low activity in the offshore sector.
The distribution of the $28.5 billion global income between geographic regions remained stable, with only a one per cent increase in the share of Asia and Latin America as compared with Europe.
In 2017, Europe represented 49 per cent of the global income, Asia/Pacific 29 per cent, Latin America 10 per cent, North America six per cent, Middle East four per cent and Africa 2.4 per cent.
For global marine premium by line of business, cargo continued to represent the largest share with 57 per cent in 2017, hull 24 per cent, offshore energy 12 per cent and marine liability (other than P&I) seven per cent.
Read more: Business and Maritime