Hull claims trends stabilized at low level: Cefor

Major hull claims impact continued to be low in the first half of the year, despite one grounding in Q1 costing $25m, said The Nordic Association of Marine Insurers (Cefor) in its report to June 2018. Vessel valuations were recovering slightly but still on a small downward trend.

The overall claims frequency continued a positive trend and appeared to have stabilized at a relatively low level.

Insured values dropped on average by 2.5% at the 2018 renewals, continuing the trend of minus 5.8% in 2017 and minus 7.0% in 2016.

Cefor said that there had been some recovery in the supply/offshore segment in 2018 after an increase in the oil price, following a recovery in the bulk market in 2017.

The association noted that there was an increasing gap between the development of vessel values as compared to the average vessel size.

The frequency of total losses so far this year was at its lowest level since 1996.

“Although it is too early to conclude for the whole year 2018, the general trend over the last eight years has been a stabilization of the total loss frequency at low levels, with some oscillation between 0.05% and 0.10%. This stabilization followed a continuous reduction towards the current level in the years prior to 2010”, said Cefor.

In the first half of 2018, three losses of more than $10m were reported, down from five such losses during H1 2017 and two in H1 2016.

Since 2015 no losses have been reported that exceeded $30m. The largest loss Since 2015 occurred in 2017 ($26m), followed by a $25m loss in Q1 2018.

Claim cost per vessel in H1 (excluding total losses) was similar to 2016 and 2017, although 2017 showed a slightly higher cost mainly due to the occurrence of two major losses exceeding $20m. Claim cost per vessel for the past three years have been at a lower level than the average in the preceding 10 years.

Overall claims frequency has been stable at around 22% since 2012.

Renewals in 2018 have thus far shown less reduction in the insured values than renewals in the previous years, said Cefor, noting that the drop in 2018 was only 2.5%, compared to an average drop in values of 5.7% in 2017, 7.5% in 2016 and 9.3% in 2015.

The improvement had been influenced by a recovery of the bulker market from 2017, followed by some recovery in the supply/offshore market in 2018.

The average value of the whole portfolio continues to be influenced by the inflow of high-value new-built vessels, but Cefor said that recent years showed an increasing mismatch in the evolution of the average vessel sizes as compared to the average insured values.

Vessels with IMO-number:

274,325 vessel years since 1985

2017: 16,333 vessels,

2018: 10,911 vessels registered as of 30 June.