Despite some positive indicators, concerns remain for offshore energy underwriters, reports IUMI
At IUMI (International Union of Marine Insurance) conference in Toronto, Canada, James McDonald, Chair of the IUMI Offshore Energy Committee reported a further reduction in global offshore energy premiums. Global premiums in this sector were reported to be USD 3.4 billion which represented a 3% reduction from 2017. This continued the downward trend: premiums in 2017 were down 5% on the previous year and premiums in 2016 were down 21% on 2015.
Sentiment appears to be driving the current market and there are modest indications that a return to profitability is imminent. However, several challenges remain for underwriters including:
Aging infrastructure and the operation of platforms well beyond their design life.
Increasing cyber threat.
Climate change leading to more frequent and severe windstorms and floods; and the spectre of climate change litigation.
Rising and unsustainable acquisition costs.
Disruption to distribution and the need for new ways of working with changed procedures and processes; and capital expenditure to ensure IT infrastructure is fit for purpose.
Increased underwriting expenses.
The International Union of Marine Insurance (IUMI) represents 43 national and marine market insurance and reinsurance associations. Operating at the forefront of marine risk, it gives a unified voice to the global marine insurance market through effective representation and lobbying activities. As a forum for the exchange of ideas and best practice, IUMI works to raise standards across the industry and provides opportunities for education and the collection and publication of industry statistics. IUMI is headquartered in Hamburg and traces its roots back to 1874.