State of the insurance market commentary – ship builders and repairers

State of the insurance market commentary – ship builders and repairers

The Lürssen Shipyard fire in September 2018 was arguably the catalyst for the upheaval in the global Marine Insurance market around the world.

It has been widely reported that the global marine insurance market is undergoing a substantial change, with Marine Hull premiums on the rise, and P&I clubs looking at general increases for the first time in many years.

Large scale claims such as the $1 billion Lürssen Shipyard fire, the Container fires onboard Maersk Honam and Grande America, the catastrophic results of Hurricane Michael on USA’s East Coast (approx. $25 billion in total), and even the Costa Concordia have all eroded market capital and as a result, insurers ability to provide capacity.

With the marine insurance market being a global marketplace, Australia and New Zealand based companies are also feeling the effects of these events. Many Australian insurers are reducing their available capacity or withdrawing from the market completely.

Insurance and Risk Management for ship builders and repairers is highly complicated and requires experienced, specialist brokers and insurers to arrange for the necessary protection of the business. Standard ISR or Property insurance policies are often used to provide insurance cover. However, typically, these do not incorporate all the specific risks and issues which face vessel builders and are simply not adequate for the risks being assumed by a vessel building business.

It is not only the risk of losing a vessel under construction. The risks of loss or damage to a vessel being repaired are arguably even greater and can severely impact a business. In the event of damage to a vessel under maintenance or repair, the potential consequential losses (such of loss of income from the vessel) could far exceed the value of the vessel itself.

What can you do:

Each business is different, however there are some things that all businesses can do that will assist in ensuring that you receive the broadest form of cover, at the most competitive premiums:

  • Be open and transparent with your broker and insurer. Your broker should be on your side, and the more information they have, the better armed they can be to go to insurers and fight your case.
  • Provide details of accreditation’s, particularly if you operate to Class standards (such as Lloyd’s Class) ISO standards or even AS/NZ standards. They all help!
  • Work with your staff to ensure a safe working environment. A safe working environment affects all aspects of the operation, including the quality of the final vessel.

For more detailed state of the market information or to discuss your specific circumstances please contact us