Buyers of marine insurance are likely to see a continuing softening of insurance rates in 2011, according to research carried in Marsh's latest Marine Market Monitor. The research also shows that marine insurance rates fell in 2010, driven predominantly by abundant capacity, light claims experience and the slowdown in world trade.
Marcus Baker, Chairman of Marsh's Marine Practice, explains that falling demand meant fewer ships carrying less cargo at slower speeds. This directly led to a reduction in the number and size of claims. In addition, plentiful insurance capacity has encouraged insurers to sacrifice underwriting profit for market share.
"For marine companies wanting to take advantage of these market conditions, standing out from the pack in terms of best practice risk management is critical to securing the best terms. In most parts of the marine market, underwriters are willing to take a long-term view if they believe their relationship with the client is sufficiently strong. They are also willing to compete aggressively for attractive new business," says Baker.
Marsh’s research shows that, in addition to good risk management practices, underwriters look most favorably on marine companies that can provide relevant and easily understood data. Companies building strong relationships with insurers are typically more able to obtain wider coverage conditions at a lower cost and with the greatest choice of quality insurer security.
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