Ocean marine insurance is the oldest line of insurance and today represents a small specialty line in the property/casualty insurance industry. Since those early days, marine products have evolved as risks and exposures have increased in both size and complexity. The recent sailing of the MSC Gulsun, the world’s largest containership at 23,000+ TEU capacity, with cargo values well in excess of $1 billion, is just one example of the increasing assets that are insured.
Today’s marine industry is facing some tough challenges. On a global basis, reports show that many lines of marine business are unprofitable and have been so for several years, including the larger lines of cargo, hull and yacht. While some geographic markets as well as insurers within the market have performed better, none have been immune to the challenges facing the industry.
There are several reasons for this situation but a significant one has been an abundance of capacity entering the marine insurance market with relatively low barriers to entry and exit. This has resulted in the “commoditization” of this specialty line of business. In the simplest of terms, premiums have not been technically adequate to cover losses and expenses let alone provide a return for capital providers that meet their expectations.