Global marine insurance premiums rising, reports IUMI

Global marine insurance premiums rising, reports IUMI

The International Union of Marine Insurance (IUMI) Global Marine Insurance Report shows that global marine insurance premiums were up 6.4% on 2020, rising to US$33bn in 2021. Lifted by a combination of increased global trade volumes, a stronger US dollar, increased offshore activity and higher vessel values, premiums for cargo, hull, offshore energy and marine liability rose in 2021. Insurers in Europe and Asia in particular saw premium growth.

Regionally, global income was split: Europe 47.2%, Asia-Pacific 29.3%, Latin America 10.3%, North America 7.7%, other 5.5%. By line of business, cargo continued to represent the largest share with 57.4% in 2021, hull 23.5%, offshore energy 11.8% and marine liability (excluding IGP&I) 7.3%.

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Vice-chair of IUMI’s facts and figures committee, Astrid Seltmann, explained: “Building on the gains made in 2020, 2021 was another positive year for marine insurers. It was the year when global trade saw a tentative recovery, absolute premiums rose, claims impact was benign, and as a result loss ratios improved. However, this position is tempered by the economic uncertainties the world is facing today. We are reporting this data at a time when several shocks have hit a world economy already weakened by the pandemic. There is no end in sight for the war in Ukraine, soaring global energy costs and inflation, a gloomy outlook for trade and the possibility of further climate and pandemic related disruptions.  Marine underwriters are navigating some extremely complex issues.”


The global premium base for the cargo market for 2021 reached $18.9bn, up 9.9% on the back of a stronger dollar and increased global trade volumes. Cargo premium is a reflection of the value of goods transported and global trade volumes. However, in July 2022 the International Monetary Fund released a pessimistic forecast predicting global economic growth to slow from 6.1% last year to 3.2% in 2022. Loss ratios in most markets continued to improve as a result of increased premium volume in combination with recent benign claims impact. A return to pre-Covid activity in 2022 is likely to increase the impact of claims on underwriting performance.

Cargo insurers continue to face persistent challenges including rising cases of onboard fires, misdeclared cargoes, worsening severe weather conditions including stronger winds and waves, floods and wildfires. With the increased value accumulation on ever larger vessels and single-port sites, the risk of large event losses continues to grow.

The IUMI reports an increase in the 2021 cargo insurance premium base (from 2020) of 8% to US$18.9bn alongside an improvement in overall loss ratios.

Isabelle Therrien, chairperson of the IUMI cargo committee, said: The cargo market has shown growth in 2021 partly due to a rise in the volume of cargo shipped globally combined with the pricing corrective measure still prevalent in that underwriting year. The much-needed correction has yielded favourable underwriting performance. However, the industry is still facing headwinds as the global supply chain remains volatile and is still dealing with the aftershock of the pandemic while now adding inflationary pressures to the mix.”

Cargo premiums increased in most markets, with China leading the growth in 2021. China now accounts for 14% of the cargo market, with the UK (Lloyd’s of London and the International Underwriting Association) having a 12.2% market share. With 2021 claims starting at a low level due to subdued activity in 2020, loss ratios continue to improve in all markets.

Ocean hull

Global premiums relating to the ocean hull sector increased in 2021 by 4.1% to $7.8bn. There was continued strong growth in the Nordic region as well as China, but much weaker in the UK (Lloyd’s) market where the decline of recent years continued. The overall value of insured vessels rose significantly in 2021, driven primarily by the large increase in containership prices which were up over 35%. Dry bulk and general cargo vessel values also saw gains in 2021, but all other segments were down.

After a subdued year for claims in 2020 when shipping activity, particularly in the high value cruise sector decreased, 2021 saw an uptick of hull and machinery claims. However, claims remain low. Total losses stood at 0.06% and partial claims at 0.14% of the total global fleet. Claims cost per vessel were slightly up on 2020, but still at historically low levels. However, rising steel prices and labour costs are expected to impact future hull claims.

As reported in previous years, the frequency of onboard fires in both the engine room and cargo areas continues to cause concerns, particularly for car carriers and container vessels. Fires occurred on more than 1% of the containership fleet in 2021, with 0.4% of the fleet experiencing fires incurring more than $500,000 in claims.

In terms of underwriting profitability, results showed continued improvement. However, a return to full shipping activity, value increases, inflation of various costs impacting repair costs, new vessel designs, propulsion and fuel types are likely to impact claims trends going forward.

Rama Chandran, chairperson on the ocean hull committee expressed concern over the long-term sustainability of the hull and machinery insurance sector, saying: “While it is encouraging to see the 2021 premium base growing from the previous year we face deteriorating loss ratios, albeit from a low 2020 base. Premium base has only recently begun to creep upwards following a sustained decline since 2012. The increase of 4.1% is lower than the 6% seen last year and the reducing quantum is a worrying trend. This is likely due to increased market capacity, particularly from London and Latin America which is a surprise for many.”

In addition to long-term sustainability, IUMI’s Ocean Hull Committee has identified three major concerns for the coming period:

Inflation: Since 2021, there have been substantial increases in steel prices as well as inflation and labour costs which influence hull repair cost. There has been a significant increase in spare parts cost and which will increase the machinery claims even further. The weakening of some currencies will also have an impact directly on the loss ratios.

Fires: Fires onboard large containerships continue to impact hull, cargo and P&I insurance and, sadly, have resulted in tragic loss of life and environmental damage. The main cause appears to be misdeclared or non-declaration of dangerous cargoes. Much work is being done to address the issue and IUMI is at the forefront of lobbying for change. There is also an increase in engine room fires, which may reveal some underlying risk including crew competencies and modern technologies.

GHG 2050: Decarbonisation of shipping is underway, but remains a long way from reality. With the medium- to long-term measures still under discussion, there is a lot of uncertainty and hesitation from both owners and insurers due to the lack of regulation and market-based incentives. The expectation is that there will not be one solution/fuel going forward, but rather a number of these – provided also that the infrastructure on land is in place. From an insurance perspective, focus is on identifying risks related to the new fuels, how to mitigate them and engaging with class and regulators to develop necessary rules, standards and guidelines to ensure a safe transition.

Offshore energy

Global premiums from the offshore energy sector continued to rise in 2021, reaching US$3.9bn, representing a 6.9% increase on 2020. This is a second straight year of rises, following a six-year period of declines (2014-2019). The demand for offshore energy insurance typically tracks oil prices as projects become viable. Historically, there is an 18-month time lag between improved oil prices and authorised offshore expenditure and unit reactivation. Oil prices remain high, but volatile.

Lloyd’s of London and the International Underwriting Association (IUA) continue to command the majority of the market, with a respective 33.2% and 32.1% market share.

In 2021, claims were lower than premiums collected. However, a shadow still hangs over the offshore energy market in the form of potentially significant unquantified losses still to arise from 2019.


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