Swedish Club has said in the publication of its Hull & Machinery insurance terms 2022 that its renewals would be tailored according to individual performance and exposure. In a Business Development Update, the Club said that, as a result of poor underwriting performance worldwide and reduced capacity, the last couple of years had seen a shift into a hardening hull market. “Strict action plans in the Lloyds hull market and elsewhere to improve results led to a corrective rating environment and withdrawal of capacity”.
Because of this reduction in London market capacity, the Scandinavian hull market experienced significant growth, at improved rating levels. The Club observed that, with a largely unchanged demand for insurance cover and improved underwriting results, capacity was slowly beginning to return to the hull market. This shift in the supply curve had led to some tapering of the strong rate increases seen in the recent past. The Club said that it was too early to say if this was a short-term reaction or a trend back to a soft market.
The past year had also seen a sharp increase in the average sum insured on renewed vessels, for the first time since 2008. Generally under unchanged market conditions one would expect reductions in insured values at renewals because of vessel ageing. Swedish Club noted that there were “substantial differences to be noted between vessel types, with container vessels and bulkers being the main driver of this increase in values”.
The Club said that, even though rates had been on the rise for the past few years, premiums in the market were not yet commensurate with exposure. Therefore it would continue to align rates with exposure over the whole marine portfolio.
Looking at claims trends, Swedish Club said that during the Covid-19 pandemic in 2020 and amid reduced activity levels in some shipping segments the frequency of Hull & Machinery claims had been significantly lower than in preceding years – a sector-wide phenomenon rather than one peculiar to Swedish Club.
So far in 2021 the frequency of claims seemed to have turned upwards again, the Club said, observing that this was likely attributable to the increased shipping activity in the aftermath of the pandemic.
Average claims cost remained stable, with a high degree of volatility of larger claims.
Swedish Club said that It could be anticipated that the increased activity in shipping would also have an effect on steel prices and yard availability, and that this would have a significant impact on the average claims cost.