The marine energy re/insurance market in London, and Lloyd’s in particular, remains in a ‘state of flux’ at 3Q 2018 as the class struggles to break even, according to a report from Lloyd & Partners.
The report noted that the recent ‘Performance Management Directorate’ at Lloyd’s has forced re/insurers to contend with the fact that Marine in insurance as a whole, and Hull in particular, continues to predominantly perform as a loss-making class.
In response to mounting regulatory pressure from Lloyd’s, there has been widespread talk of syndicates, as well as plans to reduce marine capacity, rationalise marine product lines, withdraw from certain marine classes and geographic exposures, and let go of individual insurers and staff.
Lloyd & Partners observed that this climate has produced erratic and inconsistent underwriting decisions, with a tendency for the newer capacity and inexperienced underwriters to overreact.
Nevertheless, there is a general realisation that an overall upswing in rates and a tightening of underwriting discipline will be required.
The report noted that London’s results in the marine class will be mirrored in the competing overseas wholesale markets, but suggested they will remain more consistent and stable for the meantime as they cannot correlate and combine results to the extent that the Lloyd’s market can.
Significant overseas markets in America, Scandinavia and the Far East are therefore likely to continue increasing their share of both local business and larger wholesale offerings, Lloyd & Partners said, adding that it cautioned against making any long-term radical decisions in this marketplace.