Losses that have hit the maritime sector this year are a clear wake-up call for underwriters across the world, the chairman of the cargo committee for the International Union of Marine Insurance (IUMI) has said.
Speaking at the organisation’s annual conference in Berlin, Nick Derrick said the cargo losses suffered this year will impact the wider industry.
He added that the estimates for the insured losses from the explosions at the Port of Tianjin have now reached an upper limit of USD6 billion.
The explosions at Tianjin coupled with other large losses in 2015 – including the grounding of car carrier Höegh Osaka resulting in a vehicle loss exposure of GBP35 million – is expected to have an impact on the profitability of the marine cargo sector in 2014 and 2015, Derrick outlined.
“The management of unexpected accumulation risk will become an increasing problem for cargo insurers in the future,” he said. “There is now a real need for new technology to assist insurers handle that risk.”
He added that Tianjin had to serve as a substantial wake-up call to all cargo insurers. “Tianjin port covers an area of around 125 km², but only a small part of the port was affected by the explosion.
“Even so, we are expecting to see cargo losses of at least USD1.5 billion with some reports stating that the final figure could be as high as USD6 billion. Cargo insurers need to understand what the dollar loss might have been if the entire port had been affected, perhaps by a natural catastrophe such as an earthquake or tsunami.”
He continued, “Added to the direct impact of the Tianjin explosion, we also understand that goods outside of the blast area have been contaminated by dangerous chemicals. This will add to the final loss figure.”
IUMI’s cargo committee have highlighted a growing threat to cargo. The world’s biggest reinsurers Munich Re said it believes the losses from the Tianjin explosions are set to be above USD2 billon with USD3.3 billion also being cited in Monte Carlo where the world’s reinsurer are holding their annual rendezvous.
Torsten Jeworrek, a member of Munich Re’s Board of Management said he had heard estimates ranging from USD1.6 billion to USD3.3 billion. “Our view is that the losses will be in the higher half of those estimates and potentially around the upper estimate, but at present there is little access to the port or claims information,” he added.