• 12 April 2022

In our April Marine Liability market update, we discuss what we observed during this year's 20th February renewals, recent losses that may impact the current rating environment, latest market capacity and movements, and finally how we've been helping our clients impacted by the situation in Ukraine.

20th February renewals

Back in January we explained that differentiation had become more achievable. This remained the case through the 20th February P&I reinsurance renewals, particularly for accounts that have shown better performance and long-term profitability for the market. 

Since the beginning of 2021, the increases sought by leaders in the general marine liability market, pushed hard by the followers, have been in the region of 12.5 - 15%. With the emergence of differing views amongst underwriters, we are starting to see the minimum level of rise taper off and, dependent upon a number of factors, even single figure rises for some accounts being achieved. Accounts that suffered significant losses, however, were subject to restructuring and/or substantial increases, as the market pushed for more sustainable rating. Notwithstanding the possible differentiation, underwriters continued in their requirement for real rate rises across the board, with reductions still not possible.

It became clear through the renewal season that reinsurers are not completely aligned in their view of where the marine liability class currently is within the insurance cycle and therefore, whether further pricing correction is required. Pockets of softer market attitudes were appearing and with new capacity in the market, those underwriters holding out for better terms were no longer successful.

We appear to be a transitional phase, where the majority of markets are comfortable with the current or even lower level of rate rise, whilst a small number of markets believe pricing levels need to increase further. 

It is important to note that whilst there is a slight easing of pricing pressure on some accounts or layers, the excess, high-capacity stretches that allow our clients to offer the highest limits available in the market still require a significant number of supporters. It is therefore no surprise that coupled with underwriters’ continued concern around increased claim severity and inflation, these placements are still attracting rises at the higher end of the spectrum. 

In recent years, the market has been increasingly unified in its messaging that reinsureds should be taking larger retentions. This thinking has been borne from a belief that the increasing frequency of losses, and inflation, means that primary levels of programmes are more exposed to attritional losses and by increasing the amount retained by reinsureds will lead to increased focus on risk selection and original rating. To persuade reinsureds to increase their retentions, the market has been willing to give relative value in premium saving and whilst each programme is different, we would expect this to continue moving forwards.

At Miller, we use our market expertise to carefully suggest strong leaders and foster long-standing relationships with key markets who understand our clients and their business. Our ability to successfully articulate the differentiation of each portfolio allows us to obtain the best possible terms available. During the 20th February renewals, we were able to avoid any major capacity issues, particularly where some following markets showed dissatisfaction with renewal terms. Having developed core panels of supporters on our clients’ reinsurance programmes, and utilising new markets where possible, we were able to negotiate the best possible terms for our clients. 


Whilst the rating environment has flattened and even reduced slightly, there are a number of potential large losses within the marine and energy liability market that could alter this position. These include the “Felicity Ace” car carrier that sunk on 1st March 2022; the Repsol oil spill in Callao, Peru in mid-January; and a lawsuit relating to a 2020 incident that occurred onboard the Transocean drillship, “Deepwater Asgard” in the US Gulf of Mexico. 

Incidents such as these could evolve into large reinsurance losses, and considerably impact the market. We take a keen interest in any situation that could impact our clients, and the market generally, and will be watching closely as things progress. We expect that markets will continue to draw on any major marine or energy casualties to explain why the rating environment should continue to rise. 

Market capacity and movements

Since 2021, no new capacity has entered the marine liability market and due to the relatively poor returns in recent years. Whilst we don’t anticipate big changes in the near future, it will be interesting to see how this develops with syndicates starting to post profits once again and entering growth modes.

There has been a more cautious deployment of capital from a few markets with their participation across whole programmes reducing, however, with the ‘class of 2021’ building portfolios and going through their first P&I renewal season, there is substitute capacity available. This is starting to apply some pressure to incumbent markets who do not want to lose market share, but are also seeking larger rises than those being quoted. This is not yet significantly impacting overall reinsurance terms available, but it is dampening the increases being sought and we expect this to carry on through 2022. However, this will depend on claims experience and developments over the coming months. 

In terms of market personnel moves; Convex, TMHCC, Ascot and Markel have strengthened their teams by hiring new underwriters. This has created openings at a number of (re)insurers in the market, which will no doubt lead to further market moves as we continue through the first half of 2022. SCOR and Sompo have also recently expanded their Marine & Energy Reinsurance teams with new senior hires in their Zurich offices.

Ukraine and Russia

It would be remiss of us not to mention the current devastating situation in Ukraine; our thoughts are with those affected by the ongoing war. 

From an insurance perspective, commercial shipping in the region has reduced significantly and many ports have been closed. Whilst these both reduce marine liability exposure, there could be instances where circumstances potentially give rise to a liability claim. Though it is unlikely that the marine liability market will be severely impacted. 

There are, however, other classes of business, such as marine war, property and aviation where the exposures are much larger. The potential scenarios around these classes have been well covered in the media already.

Helping our clients

As a recognised world-leading marine war broker, we understand the complexity of this situation for the marine world and have been on hand to assist Clubs develop solutions for shipowners with exposure in the region. One example has been a facility offered to Member Associations of The International Group of P&I Clubs where the individual Clubs extend cover to seafarers whilst they are not on the entered vessel. In one instance, we were able to assist a client who had a vessel discharging cargo in the port of Odesa (Ukraine) when the Russian invasion commenced. Port operations and shipping traffic were halted, and the crew were told to remain on the vessel. After a few days, the shipowner decided to move the crew by bus to Moldova and wait for the situation to become clearer.  

Insuring a shipowner’s liability to crew lies at the heart of P&I cover, and our client was keen to assist but were constrained by their own Rules – they can cover repatriation (back home) but not this half-way, wait and see scenario. We advised the Club that our facility was suitable for this risk and were able to turn the enquiry round in a short space of time. A great example of why Miller is widely recognised as one of the world’s leading marine liability (re)insurance brokers, and for our understanding of shipowner, charterer and transport exposures and the mutual system.

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