While the marine insurance industry has performed slightly better than the overall property/casualty market in recent years, the business is still navigating in some extremely stormy seas. That’s the assertion of Deirdre Littlefield, outgoing chairman of the American Institute of Marine Underwriters (AIMU) who, in addressing the AIMU annual meeting recently, said the U.S. market’s success is tied to both achieving an industry-wide combined ratio of 91.6 percent and ensuring that trade security is made a global priority.
In discussing a return to profitability, Littlefield, who serves as Swiss Re Americas Division senior vice president and business unit head of Special Lines, said her outlook is buoyed by the combined ratio of the U.S. marine market’s two largest lines representing more than 50 percent of U.S. net written premium – cargo (86.1) and yacht (93.4).
Additionally, AIMU reports its members posted a combined ratio of 98.9 percent, representing an improvement from the nearly 102 percent combined ratio in 2000. Still, Littlefield said, the industry has a long way to go to achieve a combined ratio below 91.6 percent, “the magic number needed to cover capital costs.”
“It’s difficult to say what the final results will be for our industry 2002, as there are some wild cards,” Littlefield said, citing the long-lasting West Coast port strike, the effects of a bridge collision in Oklahoma and several other recent large losses.
“I believe the market has at least kept pace with the rest of the P/C industry in moving to secure more adequate pricing,” Littlefield said. “Our operations are well capitalized, and risks will continue to gravitate toward marine carriers with financial strength. I believe that gives U.S. marine underwriters a competitive edge.”
Nonetheless, Littlefield still points to the Maritime Security Bill, recently passed by both the House and Senate as a key to ensuring that “our seaports do not remain vulnerable to terrorist activity.”
Among the key elements of the bill:
* Implementation of a comprehensive maritime security plan with specific area plans.
* Security systems of foreign ports to be assessed. Legislature to
include unilateral authority for the U.S. to deny entry to vessels from
ports that do not maintain effective security.
* Vessel personnel and workers in designated port areas will be required to have transportation security cards issued by the Department of Transportation.
* Provides for cargo tracking, identification and a screening system for containers shipped to and from the U.S. directly or through a foreign port.
“For many years, marine insurers have been at the forefront of the effort to improve port security, and we will continue to play a significant role in that effort to push back borders.” Littlefield added.
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