MARINE INSURANCE | Fewer total losses, more partial losses in 2009

MSC Nikita, one of the total losses of 2009

MSC Nikita, one of the total losses of 2009

Marine insurers are welcoming early signs of a reversal in casualty experience as shipping operations continue to be impacted by the dramatic downturn in global trade volumes and freight markets.

That was the news in Hong Kong when the International Union of Marine Insurance met there for the spring meetings of its executive and seven technical committees.

Statistics compiled and analysed by IUMI point to a continuing positive trend in total loss figures – 67 in 2009 declared so far, a fall of 10% compared with 2008 at the same period last year (all figures relate to ships of 500 gross tons (gt) and over). The number of losses will undoubtedly rise as the year progresses. Even so, the current figure of 67 is the lowest level ever recorded.

However, this reduction did not extend to actual gross tonnage lost, the 67 ships accounting for approximately 463,000 gt, an increase of 25% on 2008 at the corresponding period last year.

Nevertheless, the total remains at a quite low level when compared with the period 1980-2008. But expressed as a percentage of the world fleet – which continued to grow in 2009, with all three main sectors, tankers, bulk carriers and containerships, now showing the largest number of vessels and deadweight capacity in history – underwriters expected to see an improvement both in ship and tonnage losses, cautioned Cédric Charpentier, chairman of IUMI’s facts and figures committee.

Weather continues to be the major cause of total losses, representing 43.2% between 2005 and 2009.

Partial Losses

Regarding serious or partial losses, the result for 2009 so far is mixed. Mr Charpentier said:

“Although there was an improvement over 2008, the number remained at a high level. This is the fourth highest total of serious losses reported in one year out of the last 16. Indeed, we have seen a significantly higher frequency of serious losses in the period 2006-2009 than in any of the preceding years.”

The 2009 experience was particularly disappointing, said Mr Charpentier, as shipping activity dropped dramatically. The downside for owners is that they face increasing economic strife and more technical operating problems. The upside for insurers is that many ships have less demanding and strenuous schedules and overworked crews are under far less pressure.

Machinery damage remains the primary cause of major partial losses, accounting for 35.21% of the total between 2005 and 2009, followed by collisions/contact and groundings. Weather represents only a small proportion of incidents despite being the major cause of total losses.

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One response to “MARINE INSURANCE | Fewer total losses, more partial losses in 2009

  1. Pingback: Survival During Financial Crisis | Filled Pocket Financial Guide

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