Insurance premiums in check... for now
The January 2012 renewals have shown that once again, liability cover remains the main battlefield for the insurance custom of ports and terminals, but a Costa Concordia cloud hangs over future renewals.
The degree of insurer competition appears to have kept pricing under control, despite the pressure on primary insurers from rising reinsurance costs.
Reinsurers have taken severe earnings hits since the beginning of 2011, by events ranging from earthquakes in Japan and New Zealand, to floods in Australia, Thailand, and the US - $335bn worth of catastrophe losses, of which insured losses were $105bn, far exceeding the previous worst year of 2005, according to statistics from Munich Re.
While it has been very hard for insurers to draw dearer rates from operators of port installations in areas of benign climatic conditions, they are marshalling much stronger arguments in regard to catastrophe-exposed areas. There, brokers have to enlist a selection of insurers who will underwrite on a subscription basis.
Still, the January tranche of renewals overall was “relatively flat,” said one London insider. There is no guarantee that this will obtain when other renewals are negotiated at the other key calendar points, April and July, especially in light of the recent Costa Concordia tragedy. Clients who negotiated two-year deals a year ago will probably be proven wise.
London remains the word for marine liability, with so much of the capacity and expertise lodged in the City. Take as an example the Piraeus Container Terminal concession run by a subsidiary of Cosco Pacific. Its liability cover is now understood to be placed again with the TT Club, after a year with other insurers; while the property risk is underwritten by local interests.
Turkish insurers have meanwhile concluded agreements for the property cover at some of their domestic ports. Not only is property a more straightforward cover than liability, but local insurers can often offer reasonable terms, while London insurers remain cautious of taking on commitments that could lead to frequent or expensive claims.
In addition to a variety of liability providers including the TT Club, Lloyd’s syndicates, and Chartis and other companies, the word is that RSA Insurance, which has always been prominent in the marine sector, is in the London fray making a big play for liability business.
Still talking of London, the role of the capital has been underscored by the decision of Aon, the world’s largest broking group, to move its corporate headquarters there from Chicago. The move, expected to be completed before mid-2012, is partly for tax reasons, but primarily to gain even greater access to emerging markets and be closer to the Lloyd's and London company markets.
Aon and its arch-rival in the mega-broker field, Marsh, and the number three Willis, have some of the biggest client accounts, but in the ports and other sectors they are up against medium-sized broking houses which can bring just as much fire power to the arena when engaging in their niche specialities.
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