RISE IN SHIPPING DEMAND UP LOSSES: IUMI – BY GLORIA GONZALEZ


Increase in Claims Expected to continue in 2008busibess-insurance1

NEW YORK_The number of ship losses continues to climb, party due to increased shipping demand, according to a recent report by the international Union of Marine Insurance.


Currently, claims for 82 total ship losses have been reported for 2007, but that number could increase to 112 losses if claims increase at the same rate as they did in 2006, according to New York-based IUMI, which represents marine underwriters worldwide.


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In 2006, 92 total losses were reported, which was 37% higher than early estimates. Weather remains the major cause of total losses, while collisions are the next most common cause.


In 2006, 727 serious partial losses were reported—a 6% increase over the prior year—and 914 serious partial losses have already been reported for 2007, according to IUMI. Machinery damage is the primary cause of serious partial losses.


A key factor driving the higher losses is the “shipping boom" that is forcing ships and crews to work harder than ever, according to Deirdre Littlefield, president of IUMI. Since 2002, the volume of goods transported by sea has risen by 50% while the value of these goods has risen by more than 110% , according to IUMI.

IUMI predicted that the upward trend in shipping losses would continue in 2008


A total loss occurred last week when the Alaska Ranger, a fishing vessel owned by the Seattle-based Fishing Co. of Alaska, sank about 120 miles off the cost of Alaska, killing at least four crew members. The American Steamship Owners Mutual Protection & Indemnity Assn. Inc. provided insurance coverage for the vessel, but the extent of coverage is unclear.

Rising shipping losses, though, are happening at a time when the marine insurance market extremely competitive and premiums are flat, Ms. Littlefield said.


“Underwriters are struggling to obtain realistic increases in their pricing of risks”, she said in a statement “Risk calculation, not risk taking, must be the underwriter’s primary concern.”