60
MARINE | State of the market In association with AIG
A market in flux Michael Nukk, Head of Marine, North America, AIG, assesses the state of the marine insurance market during this period of significant change The marine insurance market is in an era of disruption, realignment, and most of all, opportunity. The long-term effects of the global downturn and ongoing trade disputes remain unclear. By constricting capacity, more disciplined underwriting and a renewed drive toward technology and more efficient processes, the market could be poised for more profitable growth. Recent research indicates that the global marine insurance market could grow upwards of $8bn through 2024. However, both developed and emerging risks continue to evolve and grow, with the potential to threaten sustained profitability in the market. Some of these are highlighted below.
EXTREME WEATHER AND CLIMATE CHANGE Last year the US alone endured a total of 30 named storms, The Marine Insurer Americas Edition | June 2021
with 13 hurricanes, of which six were classified as major. This activity has caused an estimated $60-65bn in economic damage with the insured damage in the tens of billions. Hurricanes are becoming more frequent and costly - 14 of the 15 costliest Atlantic hurricanes have occurred since 2004 and this increasing trend puts people, insurers, and governments in danger for larger and increasingly regular recovery bills. Particularly exposed are companies that rely on efficiencies gained by utilizing warehouses in port cities to import or export goods, that insure these inventories in the marine cargo market. In addition, there are ever more expensive commercial and pleasure vessels that are damaged as these storms hit the coastline. Developments in supply chain interconnectivity over decades represent another layer of vulnerability in these extreme weather scenarios.
