However, unaffected underwriters in the Far East and Scandinavia are more open to negotiations and are acting as a weight against upwards rate movement.

Marine liability underwriters meanwhile are hoping the disaster drives through a general hardening of rates, with many seeking 5% increases going forward.

Alistair Rivers, CEO of Willis Global Marine, said: “For many marine insurers the year began badly with the loss of the Costa Concordia cruise liner. It was a timely reminder that 100 years on from the loss of the Titanic, disasters on this scale are still possible despite all the industrial and technological advancements. But while this loss may have stiffened the hull market, the long-term impact is questionable. The P&I and Liability aspects of this loss will be of far greater significance to insurers as matters evolve throughout the year.”

For their part the P&I renewals in February were ‘disproportionately confrontational and protracted’ as ship-owners operating in one of the worst economic environments for a generation contested even inflationary increases from P&I Clubs, said Willis. On average, rate increases of 4% were achieved.  

Although insurance costs for certain types of marine cover appear to be heading northward there is a feeling that this may be a temporary phenomenon.

“A truly hard market is a mirage as long as capital providers are prepared to tolerate marginal returns from their hull and machinery book,” said Mr Rivers.

Excess capacity in the Asian marine insurance market is putting pressure on rates as local and foreign insurers compete for market share.

Asia is now home to around half of the world’s merchant fleet, as well as 14 of the top 20 ports and three of the largest ship building nations.

Away from the recent Concordia fall out and troublesome P&I renewals, cargo insurance buyers continue to enjoy the benefits of a soft market, said Willis.

It has been relatively easy for them to achieve reductions in both premium and deductibles, as well as increases in limits, at little or no additional cost, added the broker.

“Despite ever-dwindling returns to insurers, competition for business remains fierce with a flurry of new entrants creating excess capacity,” it said.

Cargo underwriters are also feeling the impact of piracy, which continues to blight the shipping industry with no clear resolution in sight.

The security measures taken by shipowners are increasingly effective with less than 20% of attacks successful in 2011.

However, this has only served to increase the demands and expectations of those attacks that do occur with total ransoms increasing 77% from 2010, according to Control Risk figures.

“These are difficult times for the maritime industry: world shipping is in recession; the economic turmoil continues to dampen demand; pirates are seizing property and crew; and increased sanctions demand further resources and attention. But maritime trade has seen and overcome similar challenges in the past and the entrepreneurial spirit that drives the industry remains intact,” said Mr Rivers.

The 2012 Willis Marine Market review is available for download at http://www.willis.com/Documents/Publications/Industries/Marine/10412_MARINE_MARKET_REVIEW_2012_Low_res.pdf

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