Soaring claim costs transform marine insurance market

Hull claim insurance costs in 2007 have gone up 86% over five years, according to Norway's Central Union of Marine Underwriters' (CEFOR).

The "alarming trend" of high costs have resulted from a low US dollar, strong market conditions and the rising price of raw materials and expense increases in meeting claims such as higher towage and salvage rates, cargo values, pollution fighting equipment, replacement parts and lack of capacity in repair yards, said CEFOR. "Increased environmental sensitivity has created more complex and costly salvage and wreck removal situations," it said, adding that with claims costs likely to continue growing in the future, the industry must take further steps to manage costs without risking safety. According to the 2007 Nordic Marine Insurance Statistics (NoMIS), the average cost of a claim occurring during the period between 1995 and 2003 was $210,000. In 2007, the average claim cost rose to $386,000.

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