Canadian marine lines continue to see softening in 2010 Q4 : Most companies in Canada paid the same or less for their commercial marine insurance in 2010 Q4, a trend likely to continue into 2011, Marsh reported. Abundant capacity for all but the least attractive marine risks and the absence of catastrophic losses have created a buyers' market in Canada, Marsh said in its report, Approach Your Risk with Clear Direction: North American Insurance Market Report 2011. In the Canadian market:
* specialty craft hull rates were typically flat to down 15%;
* brown water hull rates were typically flat with rate adjustments tied to loss results;
* marine liability rates were typically flat to down 15%; and
* cargo rates were typically down 5% to 30%.
"Higher commodity prices and improved general cargo activity helped increase the volume of premiums for Canadian marine underwriters in 2010 and contributed to positive environment for insurance buyers," said Matthew Yeshin, marine practice leader for Marsh Canada.
"We expect favourable conditions to continue as new entrants keep pressure on insurers to offer rate reductions where warranted by positive results."
The report also identified the following trends:
* Hull underwriters are concerned about the number of ships currently not trading. Any upturn in world trade in 2011 will see ships that are currently laid up returning to service. Experience indicates claims increase when ships return to employment after an extended period lying idle.
* In the aftermath of the Deepwater Horizon oil spill, oil field business practices and the strength of enforceability of indemnity agreements will come under review by insurers in the coming months.
* Piracy of ships, cargoes and crews continued throughout last year, with Somali pirates widening their reach deep into the Indian Ocean. The average ransom rose to $5.4 million in 2010, increasing from $3.4 million in 2009.