Lloyd’s of London, the renowned insurance marketplace that has its roots in a 17th century London coffee house owned by Edward Lloyd, has been suffering. 2017 was a difficult year for the market, with Lloyd’s syndicates suffering a combined loss of over US$2.5bn. This was the first loss reported by Lloyd’s in five years, a testament to the spread of risk that its syndicates underwrite. While 2017 offered an unusual combination of hurricanes, earthquakes, floods and wildfires, the market has not flinched. Syndicates have continued to pay valid claims promptly, and have continued to offer experience, expertise and insurance capacity, evidence underlined by its motto Fidentia, Latin for “confidence”.
2018 has not seen the number or the severity of insured losses due to natural events although they have been far from absent. Of more significant note is the impact of the year’s incidents on marine classes of insurance, already under scrutiny since 2017. The March fire incident on Maersk Honam, carrying over 7,000 containers, is expected to result in US$500m of total claims for insurers. A $700m loss is expected from the Lurssen yacht fire in September 2018, the largest single hull loss for the marine market since the Costa Concordia in 2012. Other losses include a $75m loss after Hurricane Michael ripped through a shipyard in Panama City in October, and a $500m possible collision claim between the tanker Sola TS and a military vessel in Norway in November, which will most likely fall on the marine liability market. A large proportion of insurers underwriting these losses are likely to absorb a significant proportion of the claimed amounts net of reinsurance, which is usually purchased at a high attachment point on an excess of loss basis. For many insurers, 2018 has compounded the problems that the 2017 year has started.
The state of the marine Hull insurance market has changed. The market is not hard, but it is firm. A growing disparity in renewal outcomes now exists between distressed business (insurance policies with unsustainably high year-on-year claims in relation to premiums paid) and business that yields generally positive results.
What has changed most significantly in the last 12 months is the availability of a plethora of competitive leading insurers. Such competition to aggressively quote for sought-after risks drove competition that in the past resulted in more options and downwards pressure on rating. Appetite has become muted, and prior to quoting, insurers usually request to know as part of the underwriting submission the rates that the risk is currently paying. There are increasing instances of declinatures and more conservative underwriting throughout the market.
During these times it is important to understand the breadth of the insurance market, not only in London but in other underwriting centres worldwide. It is also advisable to seek advice not only around the financial strength of insurers but about the proven track record of paying valid claims and not disputing claim amounts payable. The right strategy at the outset usually yields better results overall in particular in times of a major casualty.
Howden Broking Group has launched its marine centre of excellence in Dubai and advocates knowledge sharing with its clients to enable informed decision making. Having hosted a Marine Insurance Trends 2019 event in January this year, we have continued our client communications through a series of Client Advisors and customized market reports. Our team consists of marine insurance experts including maritime law, underwriting, seafaring and brokering experience, combined with knowledge and expertise in creating customized and simple insurance solutions to complex risks. Our claims proposition is market-leading. We focus on managing complex casualties in partnership with our clients and provide critical advice and insight throughout the claims process.
Who is Howden?
Howden, the retail broking arm of Hyperion Insurance Group, provides a range of specialist insurance solutions to clients around the world. Howden has offices in Europe, Asia, Iberoamerica, the Middle East and Africa. It has the greatest reach with its own offices of any independent broker and a total reach to over 90 territories with its partner network Howden One.
Since the appointment of Atinc Yilmaz as Regional CEO in 2017, Howden has acquired a majority stake in broker ACP in Turkey, completed the majority acquisition of New Generation Insurance Services Company in Oman, and Howden UAE celebrated its ten-year anniversary in Dubai. With Howden One and the establishment of Howden Puri in Tanzania, the region now covers 12 countries and is one of the fastest growing in the group.
In November 2018, Howden’s TMEA region was awarded Broker of the Year at the fifth Middle East Insurance Industry Awards (MIIA) 2018.
Visit www.howdengroup.com or contact [email protected]
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