H&M rates continue to harden in H1 2021, but pace is slowing

The first half of 2021 saw continued hardening of Hull & Machinery rates, albeit at a slower pace than the previous year, reports broker Gallagher in its just-published Marine Hull & Machinery and War Risks Market Report.

Many Underwriters were still seeking rises of 10% and higher on clean renewals, but Gallagher said that there was now pressure on the most desirable fleets to settle at more modest increases.

There was some additional capacity being deployed to take advantage of the more favourable trading environment, most notably Navium Underwriting, a new MGA writing Marine business backed by Fidelis. Navium has market figure Clive Washbourn at the helm. He was previously at Beazley for many years.

After the Ever Given catastrophe in the Suez Canal in March, running through to this week, but mainly hitting the P&I and cargo markets, Hull & Machinery Underwriters were asking ‘when’, rather than ‘if’, they would be picking up a large bill for a similar incident, and how complicated general average could become.

The other recent major incident, the burning out and sinking of the X-Press Pearl off the coast of Sri Lanka, had a hull, cargo and liability impact. Gallagher said that the X-Press Pearl incident served “as a further reminder of the risks if a similar incident occurred on a much bigger vessel”.

As noted in a precious IMN, the Joint War Committee has issued a new set of Listed Areas. The Cabo Delgado area has been included due to ongoing conflict in Mozambique. There had also been some reduction in the Indian Ocean excluded area, most notably allowing vessels to call Oman without breaching.

Gallagher observed that the recent escalation in hostilities in Israel had seen a sharp spike in rates for vessels calling at Israeli ports. As was often the case, rates could vary substantially due to the evolving situation and differing assessments on the level of risk.

The Gallagher issue continues its theme of sustainability in shipping, which will be covered over the next couple of issues of IMN.