Global marine underwriting premiums for 2016 fell by 9% to US$27.5bn according to the International Union of Marine Insurance (IUMI).
The decline was driven by the strong value of the US dollar compared to other currencies, general weak market conditions, general commodity prices and the state of the shipping and offshore sectors.
Vice-chairman of the IUMI’s facts and figures committee, Astrid Seltmann, said: “This worrying downward trend leads to an increasing mismatch between income levels and the marine insurer’s obligation to cover major losses, particularly in light of the trend for larger vessels and greater accumulation of risks in port.”
In the cargo sector, premium income was reported as US$15bn, representing a 6% fall, partly caused by exchange rate fluctuations and the strong dollar.
The 2015 Tianjin disaster significantly eroded the performance of the 2014 and 2015 underwriting years, noted a statement from the IUMI.
The trend towards higher value cargoes and increasing accumulation of values in ports is likely to continue and this will impact further on loss ratios, it added.
It is also impacting on premiums which are increasingly reflecting stock exposure rather than transit exposure according to the report.
Donald Harrell, chairman of the IUMI’s facts and figures committee, said that the outlook for 2017 remained uncertain, with the “true impact” of hurricanes Irma and Harvey yet to be seen.
He said: “Exposure to risk will only increase as vessels grow larger and values accumulate in port.
“A drop in premium income makes it challenging for underwriters to continue to cover their obligations, particularly in relation to major losses.”