In a recent assessment of the Marine and Energy reinsurance market, Guy Carpenter, a leading global risk and reinsurance specialist, has highlighted key market trends and challenges that are reshaping the industry.
The ongoing Russia-Ukraine conflict is presenting formidable challenges for the energy market. Global sanctions have led to a reduction in premium levels, impacting the industry’s financial landscape.
Additionally, marine reinsurers have taken a cautious approach by excluding losses on land and limiting coverage for voyages and shipping risks within conflict zones.
Renewals for programs involving war, terrorism, and political violence exposures are expected to remain a persistent challenge. The evolving geopolitical climate, including the military conflict in Europe, has thrust the marine market into uncharted territory, making it imperative to assess the current and future impact on vessel movements.
James Summers, Deputy CEO of Global Specialties and Global Head of Marine & Energy Specialty at Guy Carpenter, expressed concerns about these global issues’ repercussions on the marine market.
“With an ongoing military conflict in Europe and the potential for an escalation in geopolitical tensions in other parts of the world, the marine market finds itself in uncharted territory as it assesses the current and future impact on vessel movements.”
Inflation remains a significant factor influencing market dynamics, affecting both insurers and reinsurers in the marine and energy sectors.
While insured values typically adjust with rising inflation rates, the rising costs of repairs and potential time delays are creating challenges within the market. Inflation is also driving demand for higher coverage limits as insured values are reassessed.
Nick Jay, Deputy Global Head of Marine & Energy Specialty at Guy Carpenter, emphasised the impact of inflation.
“Inflation is still a significant factor for both insurers and reinsurers in the marine and energy markets. While insured values are customarily adjusted in line with rising inflation, the cost of repairs and potential time delays are both issues for the market. Inflation is also driving demand for more limit as values are reassessed.”
In navigating these challenges, Guy Carpenter stresses the importance of data-driven renewals discussions. They advocate for a focus on what clients truly need, emphasising transparent, data-led negotiations to align insurers and reinsurers effectively. The use of data remains paramount in understanding the original risk and facilitating alignment between all stakeholders.
Summers concluded, “Guy Carpenter believes that the focus at renewals should be on what the client needs to buy, and negotiations should be transparent, data-led, and appropriate. Data continues to be key to understanding the original risk and finding alignment between insurers and reinsurers.”
