IUMI reaffirms continued Red Sea, Black Sea support amid instability in the region

IUMI reaffirms continued Red Sea, Black Sea support amid instability in the region | Insurance Business Asia

Marine

IUMI reaffirms continued Red Sea, Black Sea support amid instability in the region

Forecasting this year’s premium base poses a greater challenge

Marine

By
Kenneth Araullo

During its winter gathering in London, the International Union of Marine Insurance (IUMI) announced that the global marine insurance sector continues to facilitate international trade through its ongoing support in the Red Sea and the areas surrounding Ukraine and the Black Sea.

Following the halt of the Ukraine grain corridor in September 2023, the marine insurance industry was integral in the exportation of approximately 10 million metric tons of Ukrainian grain. This achievement was realised despite the challenges posed by the destruction of Ukraine’s coastal infrastructure and the presence of naval mines by Russian forces.

The insurance coverage was also deemed instrumental in ensuring the Ukrainian grain harvest reaches global markets and has contributed to the stabilisation of worldwide agricultural commodity prices.

In the Red Sea region, the marine insurance market is offering hull and cargo insurance solutions at competitive rates, allowing vessel owners to secure the necessary coverage. Despite ongoing attacks in the area and military efforts to counteract them, the marine insurance industry has managed to avoid catastrophic vessel losses.

The industry’s resilience was also made evident in its capacity to insure transit through the Suez Canal as well as the alternative route via the Cape of Good Hope, despite the challenges posed to global supply chains and Suez Canal transits.

IUMI highlighted the impact of reduced water levels on the Panama Canal, which has led to limitations on vessel draught from 50 feet to 44 feet, subsequently decreasing the number of daily vessel transits. This situation is expected to be exacerbated with an expected reduction in sailings further complicating global shipping routes, especially in light of the ongoing situation in the Red Sea.

These developments, IUMI noted, are occurring ahead of the anticipated export increase linked to the lunar new year shutdowns in Asia, potentially leading to shortages, mispositioned containers, and port congestion.

On a more optimistic note, the growth in global marine insurance premiums recorded in 2022 is expected to bolster the sector’s performance in 2023, as reported by IUMI. However, predicting the premium base for 2024 presents challenges due to existing supply chain disruptions, fluctuating consumer confidence, rising interest rates, and an economic slowdown in certain areas, even as inflationary pressures begin to wane.

IUMI is set to delve deeper into these topics and more at its annual conference scheduled in Berlin, marking the union’s 150th anniversary.

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