The Joint Hull Committee (JHC), a cooperative organization between the London-based International Underwriting Association (IUA) and Lloyd’s Underwriters’ Association, announced that recent hull losses would increase pressure for rate increases.
The JHC estimates that the total cost of recent marine hull losses to the global insurance market could be as much as $750 million, indicating that further premium increases are needed on top of those imposed during the last 12 months, as the current rates are “still considered uneconomic.”
The bulletin cited several recent disasters, notably the fire that ravaged the “Diamond Princess,” a cruise liner under construction in Nagasaki, Japan with an insured value of $500 million.
The JHC indicated that the incident followed the grounding of the car carrier “HUAL Europe”, with an estimated insured value of over $50 million, in Tokyo Bay, off Yokohama, on October 1. “Other major casualties include the ‘Jolly Rubino’, the ‘Hidir Bay’, the ‘HUAL Troubadour’, the ‘Treasure Bay’, the ‘Alva Star’ and the ‘Limberg’,” said the announcement.
The JHC has been working with London brokers to try to assess the potential impact of recent big losses on the London market.
Simon Beale, chairman of the JHC, stated that, “These events put huge additional pressure on rating levels within the hull account at a time when existing rates are well known to be at an uneconomic levels. At the recent IUMI conference in New York, various presentations showed the hull market still to be in loss and way off providing the required return on capital. There has been much talk of the market needing to strengthen considerably. These recent losses will give the underwriting market no choice but to take the necessary action to rapidly return the business to acceptable levels of profitability.”
Was this article valuable?
Here are more articles you may enjoy.