Lloyd's rivals on crest of marine insurance wave
Rivals to Lloyd's of London are riding a rising tide of marine insurance rates, leaving the 330-year-old market behind after it jettisoned sections of its oldest line of business last year.
Premiums for marine insurance, which until 2018 had fallen for years due to rising competition and lower claims, are increasing after a surge in catastrophe losses in the past two years and growing geopolitical tensions.
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For Lloyd's, still reeling from two years of losses due to the heavy claims from natural disasters, it will still take 12-24 months before the segment returns to profit, CEO John Neal told Reuters in New York.
Mr Neal said that although the sector had performed better in the first quarter, syndicates needed to set "the right price" for the risks and consider whether all types of marine business were insurable after Lloyd's told its 99 members to cut the worst 10pc of their business last year.
Broker Gallagher said in a February report that 10 Lloyd's syndicates have withdrawn or reduced their marine business. That has benefited the smaller London company market, which operates separately in the City. "We are definitely seeing business from Lloyd's coming through our door," said a senior London company market insurer.
Marine cargo rates are up 12pc to 14pc this year, Miles Taffs, head of marine and aviation at Lloyd's for MS Amlin, said, while sources say yacht rates have risen by at least 20pc, and by triple digits in some locations. "The (London) company market has demonstrated greater flexibility in its approach, as have other European markets, particularly France and Scandinavia," Alexander Mott, marine director at broker AFL, said.
The Standard Syndicate at Lloyd's no longer writes new business, while other firms have moved. Norwegian marine insurer Skuld said it will close its Lloyd's syndicate in July, and switch the business to Oslo and the London company market. Against this backdrop, Asia Pacific and North American insurers have won business in marine cargo, said a spokeswoman for the International Union of Marine Insurance, which said global marine insurance premiums totalled $28.5bn in 2017.
Although marine insurance slipped to 7pc of business at Lloyd's in 2018, down from 8pc a decade ago, it remains bigger than energy, motor or aviation.
Lloyd's started life providing shipping information and insured ships during the American Revolution and the Napoleonic Wars.