AIMU: Marine Markets Are Leveling Off
By Michael Ha
NU Online News Service, Nov. 18, 3:07 p.m. EST?The departing chairman of the American Institute of Marine Underwriters reported today that marine insurance pricing for most lines increased 5-to-10 percent in the first half and rates for cargo and offshore/energy risks have been falling this year.[@@]
David French, president of American International Marine Agency and senior vice president of American International Underwriters, made his remarks today at the institute's annual meeting in New York.
Mr. French, who has been serving as the AIMU chairman for the past two years, handed over his chairman's post at the meeting to Robert Huffert, vice president of American Reinsurance Company.
"So, what's the state of the marine market today? We have no benchmarking data as yet, but there is a body of sentiment among brokers and underwriters," Mr. French told meeting participants.
He noted general marine insurers recognize that the rate corrections made over the last few years could not continue at the same pace.
"A survey of AIMU members found that rates in most of the marine lines increased between five and 10 percent during the first half of 2004," Mr. French said.
He added that there were two notable exceptions: "Respondents said that cargo rates had dropped by between three and 10 percent during the first half of 2004. And rates for offshore and energy risks were down by more than 12 percent with most of that decline occurring during the second quarter."
Mr. French observed that marine underwriters were hit by unprecedented Florida hurricanes this year. "The Boat Owners Association of America estimates that recreational vessel losses in Florida totaled $680 million," he said.
Mr. French noted also that there was a clear consensus among AIMU members that the combined ratio for marine underwriters would be higher in 2004 than last year when the reported ratio was 103. Additionally, survey respondents believed that results in the hull line would improve, while cargo and liability lines would most likely deteriorate.
Despite the exit of a number of traditional marine markets from this segment of the property-casualty market, Mr. French noted, adequate capacity remains available for most marine risks. "Marine insurers continue to underwrite on the presumption that there will be no investment income to offset underwriting losses, despite the improved investment results realized by most insurers," Mr. French said.
The American Institute of Marine Underwriters, established in 1898, is a New York-based trade association representing ocean marine insurers in the United States.
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