New data in a report from the global marine insurer’s body, the International Union of Marine Insurance (IUMI), paints a generally positive picture of world trade and marine insurance.
“The global economy appears to have bounced-back more strongly than expected post the outbreak of COVID-19. Consumer and business confidence are at their highest levels since the financial crisis of 2008,” the IUMI notes.
The various Purchasing Managers’ Indices, which track how purchasing managers view current and forward global economic conditions, have hit a 14-year high, the IUMI adds.
IUMI noted that world seaborne trade has also returned “strongly” and that 2021 trade is likely to exceed that recorded in 2019. Various shipping sub-sectors, such as containers, dry bulk and gas, have returned to pre-pandemic levels. The world fleet of ships continues to grow, albeit slowly of about 2%, as new deliveries have slowed and scrappings have remained steady, the IUMI reports.
However, it should be noted that there is a wide variation between sectors. The containership sector is showing a boom of about 4.5% year-on-year in total cellular capacity. There are 593 box ships on order with a total TEU capacity of about 5.2 million TEU, according to analyst Alphaliner.
Global marine insurance premiums in 2020 reached USD$30 billion – a 6.1% increase on 2019 and demonstrating real market development in all marine insurance lines except Protection & Indemnity (P&I), the IUMI reports. Although a positive result for 2020, early indications in 1H 2021 show that continued development is uncertain”.
Premiums for ocean hull underwriting in 2020 grew by 6% to reach USD$7.1 billion. The gap between global premiums and global tonnage has begun to reduce. Loss ratios have improved returning the sector to a technical break-even position for 2019 and 2020 underwriting years after many years of unprofitability, the IUMI reports.
Cargo premiums for 2020 were reported at USD$17.2 billion, an increase of 5.9% on 2019. Growth was largely aligned with strong global trade which looks set to continue. Loss ratios have also improved and a technical break-even position was achieved in 2020, the IUMI reports. It adds that 2021 has shown an increase in natural catastrophe events and so it “remains to be seen” how cargo insurance will be affected.
“As climate change increases the probability of severe nat-cat events, in combination with larger accumulation, cargo insurers will need to control their exposure,” the IUMI reported.
