The London marine energy re/insurance market continues to exhibit “chaotic and undisciplined” underwriting practices but finally seems to be emerging from a prolonged period of softening rates, according to analysts at JLT.
The firm’s latest quarterly energy report observed that the predominately younger workforce in the London and Lloyd’s markets has generally been inconsistent in its approach to pricing marine energy risk.
Nevertheless, there appears to be consensus that the market has now turned, and ripples from London’s turnaround in pricing have begun to be felt overseas as re/insurers start to capitalise on the opportunity to put upward pressure on rates.
In the U.S, analysts noted that underwriters are generally defaulting to type and declining to participate in underperforming risks while chasing down good performers with competitive premium levels.
In contrast, Far Eastern markets are experiencing generalised rate rises across the board, albeit to a lesser degree than the hikes being applied in London.
JLT stated that European markets, and Scandinavia in particular, remain the most consistent, although the parameters of their underwriting appetite remain fairly narrow.
The report also noted the effects of recent restriction actions by the Lloyd’s Performance Management Directorate, which have significantly reduced the number of syndicates going forward writing Hull.
Despite these actions, analysts consider overall market capacity to be relatively unscathed as syndicate withdrawals have largely been smaller capacity providers who have not written enough business to survive the prolonged soft market conditions.
JLT does not anticipate that the confusing underwriting dynamic in the marine energy market will abate any time soon.