The world's maritime industry is growing in scale in the size ofships and the tonnage they haul, but the London insurance market isfinding itself in a battle with the rest of the world to remain thepremier underwriter for the sector, an insurance brokers reportsaid.

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In its Marine Insurance Market Review for 2006, theChicago-based insurance brokerage firm Aon said that while theshipping industry is thriving in a strong global economy, marine"insurers are surviving rather than thriving."

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Expectations that 2006 renewal rates would harden afterHurricanes Katrina and Rita did not materialize. Instead, themarket has witnessed fierce competition and new capacity, "ensuringthat prices remain broadly stable," the report finds.

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Larger ships holding more cargo bring their own challenges,Aon's London office, which produced the report, went on to say.

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"Cargo--and to a lesser extent hull--insurers are already havingto revise their underwriting strategies and realistic disasterscenarios," said the report.

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Protection and indemnity (P&I) insurers, which offer broadcoverage to the maritime industry, also have to adjust to thepotential of massive liability claims from the super-sizevessels.

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While Norwegian, Asian and some American insurers are enteringthe market with sophisticated practices, the "London market isunder increasing pressure to overhaul outdated trading practicesand finally embrace the electronic age," Aon said.

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London, which still remains the premier maritime insurer, isseeing especially stiff competition from Norway. According tostatistics from the Central Union of Marine Underwriters, Norwaywas close to equaling London in premium dollars written at around$600 million.

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With no significant shipping losses, the market is expected toremain stable in the future.

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Copies of the report are available by contacting Alexandra Lewisat 0207 882 0541 or [email protected]

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