Hull insurance rates set to soar?
The "Diamond Princess" is the most significant in a string of expensive claims to hit the marine insurance market. The vessel, which had a full contract value of up to $500 million, was being builtĘ for P&O Princess Cruises at the Mitsubishi Heavy Industries yard in Nagasaki, Japan, when it was engulfed by fire, which caused extensive damage.
That incident followed rapidly on the grounding of the car carrier "HUAL Europe", with an estimated insured value of over $50 million, in Tokyo Bay, off Yokohama, on October 1. Other major casualties include the "Jolly Rubino", the "Hidir Bay", the "HUAL Troubadour", the "Treasure Bay", the "Alva Star" and the "Limberg".
The JHC has been working with London brokers to try to assess the potential impact of recent big losses on the London market. Simon Beale, chairman of the JHC, says, "These events put huge additional pressure on rating levels within the hull account at a time when existing rates are well known to be at an uneconomic levels. At the recent IUMI conference in New York, various presentations showed the hull market still to be in loss and way off providing the required return on capital. There has been much talk of the market needing to strengthen considerably. These recent losses will give the underwriting market no choice but to take the necessary action to rapidly return the business to acceptable levels of profitability."