Claims Surge and Market Contraction Send Owners Premiums Soaring

The abrupt rise in insurance costs this year has come as a nasty shock to shipowners, after the traumas of the Gulf crisis. In many cases, premiums for both hull and liability insurance have shot up by well over 100%, and not just for the high risk owners with “rust buckets.” Reputable companies with strong fleets and sound credentials are also being hard hit. For example Troodos Shipping, one of the world’s largest and most respected tanker owners, is paying an additional $7m on its entire fleet. With 40 ships, the additional cost per ship is $175,000. Director Polys Haji-Ioannou told Marine Money that the company’s insurance premiums have risen by 100% during the current year.

Most of the renewals on the Bergesen fleet are not due for about another year, as Norway’s premier tanker operator has negotiated long term cover. However, the company is bracing itself for hefty price increases. Its premium calls from P&I Clubs have risen by up to 100%, and a spokesman for the company told Marine Money that, if present trends continue, insurance could be the biggest component of operating costs in the near future. At present, crewing accounts for the largest proportion. One owner contacted by Marine Money said that people were lucky to get away with 100% rises, and that 150% was commonplace.

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