French orders to foreign shipyards

The
marine
insurance
markets
in 1999
1999 was the fifth consecutive year that marine insurance
rates fell in the industry, with apparently no single sector
avoided losses: Hull & Machinery, P&I/Marine Liability,
Cargo, Energy, etc.
Hull & Machinery
Many Hull underwriters that have posted technical losses
since the financial year 1997 could well record catastrophic
results in 1999. Some Lloyd’s syndicates or insurance
companies have decided - or were forced - to throw in
the towel, abandoning this overly cyclical and competitive
business.
At the same time, new entities arose in 1999 hoping to
cash in on the long-awaited recovery in the insurance
sector, which is yet to appear. The presence of these new
competitors maintains downward pressure on rates.
The effect on shipowners has been to reduce spectacularly
their Hull insurance budgets at a time when freight rates
in several sectors are particularly weak. Shipowners are
complaining of reduced freight rates due to substandard
norms for ships and to loose selection standards of certain
Another round
for the road
charterers for ships. At the same time, the operations of
second class underwriters and unscrupulous brokers are
contributing to the lowering of insurance rates to beneath
reasonable levels.
Nonetheless, some shipowners have decided to put an
end to this collapse in the market and have chosen to
favour continuity, loyalty and safety in their insurance
choices.
Our forecast of improved rates at the end of 1999 has
been proven wrong. It should be noted, however, that
the reinsurance sector has now started to harden and
that the effect of this on direct premiums cannot lag far
behind. We are seeing what are probably the last acquisition
initiatives, at very low prices, of market shares before the
inevitable recovery of a market that has experienced
losses in this business up till now.
The loss ratio for 1999 could reach 160% or higher.
Lloyd’s posted combined losses for all of its business lines
of more than $800 million for 1998.
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