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The unstoppable rise of marine premium in Asia


That the International Union of Marine Insurers should choose Shanghai for an Asia Forum (22-23 May 2019) is a clear indication of the rise of China as force to be reckoned with in the marine insurance sector.
 
But it took Timothy Lee, a senior underwriter with MS Amlin, in Hong Kong to spell it out. Put simply – what a difference a decade makes.
 
Globally, in 2008, marine premium (hull & cargo) amounted to US$22.33bn. By 2018 this figure had grown to US$28.5bn. far more striking however, has been the altered distribution. In 2008, Europe accounted for 58.96% of the global marine premium, while Asia Pacific trailed with just 23.34% of the pie. Also rans included North America with 11.05% while the rest of the world had to be satisfied with a mere 6.5% of total premium.
 
By 2017, anything that Europe lost was snatched up by Asia Pacific as can be seen from the following list:
 
Europe              49.2%
 
APAC                 29.2%
 
Latin America  9.7%
 
North America 5.6%
 
Middle East      4.0%
 
Africa                2.4%
 
Looking at cargo premium over the same period global premium has grown from US$12.4bn in 2008 to US$16.1bn in 2017. From a country perspective meanwhile, there were some unexpected shuffling in the top players. The top three countries in 2008 were Japan (16%), Germany (11%) and the UK with 7%. By 2018, Germany had dropped out of the top three and last year the top contenders were the UK with (12.1%), China (9.6%) and Japan (9.0%). Given the meltdown at Lloyds that began in 2018 and has seen capacity drop precipitously, the rankings look set to change again this year.
 
If anything, the shift in marine premium to Asia is at its starkest when considering hull business. In 2008 Europe was writing 54% of the global business valued at US$6.1bn, while APAC had just 15%. On a country basis during that year the Nordic countries accounted for 16%, the UK (15%) and Japan 10%. By 2017, when total hull premium had edged up just US$800m to US$6.9bn, the move to Asia is most keenly felt. Europe was still holding on to 48.1% but APAC had gained 39.7%. On a country basis the move eastwards was more noticeable as the UK accounted for 21.5% but newcomers Singapore (12.1%) and China (10.6%) were sending a clear message.
 
Of course, the more sobering thought is that Asia maybe taking on a poison chalice. Throughout the 10 year period reviewed both hull and cargo on a market wide basis have rarely made money and more often than not have lost huge amounts. Asian insurers would be foolhardy to take advantage of the Lloyds shake up. The London market has seen rates harden by as much as 7-8%. Now is the time to increase rates globally.
 
Source:hongkongmaritimehub

The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.

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