While the marine insurance market is weak overall, some parts of it have positive news, according to the Willis insurance brokerage in London.

The firm said that in a few very specific sectors, there are firmer rates being seen, with hardening in the protection and indemnity (P&I) segment, as well as the Scandinavian hull markets.

Those findings were contained in the latest "Marine Market Review" from Willis Group Holdings.

The review found that while the marine market remains predominantly soft, there were double-digit average rate increases seen at the last P&I renewal in February of this year. Willis said it predicts that rates may rise by another 10 percent at the next round of renewals next February.

The Willis report notes that while rate reductions in the hull market have slowed, the Norwegian Hull Club--the world's largest single hull and machinery writer--is leading the charge for increased premium by attempting to impose increases of between 10 percent and 15 percent.

To push these increases through, Willis said, the Club are prepared to lose around 30 percent of its book--albeit not their core, favored, domestic clients. While other insurers have attempted to be supportive of this move, they have wilted in the face of the intense competition that remains in the hull sector, the report said.

"It seems that within the marine cargo and liability markets, there are still opportunities for both improved terms and broader product offerings," according to Richard Close-Smith, Willis Marine Market Review's executive director and coordinator.

"Conversely, the price of P&I insurance is expected to rise yet again, while the hull market is giving mixed signals and lies somewhere between these two extremes," he added.

The Willis review--"Sailing Close to the Wind"--found that while the shipping boom continues unabated, insurers remain concerned that the skyrocketing cost of steel may be causing shipyards in some countries to cut back on the quality of steel used in shipbuilding.

This factor--coupled with the growth of new, but relatively inexperienced, ship builders and diminishing crew resources--will likely give rise to the potential for greater losses, Willis predicted.

Other key findings of the report include the following:

o Concerns about the quality of underwriting security have been raised, with some pure marine underwriters being downgraded, while new startups find it increasingly difficult to raise capacity.

o There is a general shift in capacity eastwards from London towards Asia, with Singapore having a prominent role.

o There is sufficient global capacity for virtually all major marine risks, no matter how large or complex.

"We live in exciting times, as our clients' businesses are going through a period of unprecedented growth, with commodity prices at an all-time high," said Willis Global Marine's chief executive, Alistair Rivers.

"At the same time, we are seeing consolidation within the client base, while insurers seek to establish global presences closer to their clients," he added.

Special Reports /

Marine Insurance Has Some Bright Spots, Willis Says

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