Marine hull losses are expected to be the worst on record this year following a $1.5 billion loss year in 2007, according to a global market update report released by insurance broker Lockton.

The report, titled “Market Update,” released by the Kansas City, Mo.-based firm, said marine hull insurers believe there were 67 total losses declared in 2006 and that final 2007 figures would bring that number to around 80.

While the number of losses of vessels of more than 500 gross tons has reduced year-over-year since 1990, 2007 is the first year of increase in total losses for the period.

Both the number of vessels and tonnage has grown substantially, the report said, and the total number of ships is expected to increase by 40 percent in the next five years for ships above 300 gross tons.

The report puts the total number of vessels at 42,872, citing figures released by the International Union of Marine Insurance.

The loss problem is expected to worsen because of the growing shortage of qualified and experienced crew. Plenty of capacity remains in the market, however, and fleet owners with good loss records can obtain improved terms on renewals, according to the report.

Marine cargo remains very competitive, the report noted. Some risks running at losses exceeding 100 percent are being offered premium at reduced rate just so insurers can put the business on the books.

The report covers a wide variety of markets. Other highlights of the report reveal:

o The U.S. energy market has benefited from two years of very calm activity, posting record high rates and profits following 2005 record losses from hurricanes.

Capacity continues to build with new entrants to the market.

o Directors and officers insurance continues to decline despite growing litigation trends from the subprime meltdown and the economic downturn.

There are estimates that D&O losses due to the subprime meltdown could exceed $3.5 billion. Much of that loss, however, may be uninsured due to high retention rates and limited coverage.

Capacity remains plentiful and small capitalized and private firms are benefiting from competition. Terms and conditions remain attractive.

The 58-page report is available at www.lockton.com.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
  • Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.