Reinsurance opportunity for marine players

While underlying economic conditions affect the marine market in certain Asian territories, players in the region are also seeing evidence of a decline in ship-building activity, Simon Saunders, division head, marine, aviation and transport for Barbican Insurance Group, told EAIC Today.

“We recently saw the Hanjin Shipping Company of South Korea, one of the largest shipping companies in the world, go into receivership,” he added.

Re/insurers operating in Asia are experiencing similar rate pressures to those experienced in other territories, said Saunders.

“These market conditions mean that margins are being continually squeezed and we have seen some instances, albeit relatively limited, of international capacity being withdrawn from the region.

“The big question is when will we see pricing in the region stabilise? There is some evidence that this is not far off, but it is very much still a watching brief and our focus is on maintaining underwriting discipline and ensuring rates and conditions are fair and sustainable.”

Given these conditions, Saunders said the general consensus is that greater potential growth opportunities presently lie in reinsurance, rather than insurance.

In recent years, a greater appreciation of the value of reinsurance in the majority of countries in the region has driven an increase in the overall sophistication of reinsurance purchasing.

“Reinsurance purchase has become much more strategic and increasingly granular, which has placed far greater demands on the analytical capabilities of reinsurers and brokers. This has also opened up significant opportunities for reinsurers and brokers to innovate and develop products to suit these increasingly sophisticated demands,” said Saunders.

This reinsurance evolution is further reflected in the increasing adoption of a far more centralised and unified approach to reinsurance purchasing. Three or four years ago the majority of programmes were designed for specific lines of business, whereas today there is a much greater focus on multiline programmes.

“This changing mindset is not only introducing greater diversification into the product mix, but is also increasing the importance of the overall client relationship in order to fully understand a client’s business objectives and thereby deliver the right products to meet those needs,” he added.