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Hungry Dragon: Asian Marine Market's Growth Spurt Threatened by Expertise Shortage

 

LONDON, 5 December 2006 – Asia’s marine market is rapidly establishing clusters of insurance excellence and becoming a competitive global force, according to Aon’s Marine Market Review 2006, launched today. However, the future expansion of the region is threatened by a major challenge – a shortage of marine experts.

While London remains the largest single market for marine insurance, the Asian markets are emerging and eager to take advantage of opportunities in line with increasing global trade.  To compete, several Lloyd’s, London and overseas insurers have established a presence in markets such as Singapore and Hong Kong.  Shipowners and decision makers have been drawn to regional insurers by improved professional standards and the appeal of dealing with insurers in their own time zone. Yet as the market expands, the “hungry dragon” is experiencing a shortage of marine expertise from experienced insurance professionals.  

Increased trade with Asian neighbours will result in exponential growth in tonnage in China, particularly in the north east region of Bohai Rim, the Yangtse River Delta in central China and the Pearl River Delta in South China. However, this expansion brings challenges for insurers as competition grows in correlation with appetite. Aon’s report highlights a tendency to prioritise cost-driven competition at the expense of a risk management conscious approach to underwriting.

The report also finds that the Asian market is witnessing an increase in capacity for liabilities and cargo with Singapore now able to provide up to US$180 million in local hull and machinery capacity. Consequently, the Asian markets can compete for more local, regional and global business yet larger, more complex risks still rely on the London and Norwegian markets.  Singapore has also established itself as a player in the hull market. It is now a hub for writing sizeable risks without the need for insurers to refer to their parent companies.

In response to this increased confidence, London based syndicates such as Ascot, Kiln and Alba have recently joined the established players in Singapore including Catlin, Groupama, RSA and AXA. The syndicates are now also reinforcing their Asian capabilities by appointing local marine hull claims specialists to service their clients even better.

Tom Helleboe, regional director for marine at Aon in Singapore, said: “The expansion in capability and capacity of the Asian markets presents a challenge to the well established marine markets of London and Norway, which is forcing them to review their trading practices.  The “hungry dragon” is developing a strong insurance infrastructure in which overseas insurers and brokers want to play a part, as its global role looks set to increase in the future.

“However, if Asia is to establish itself as an insurance hub, the industry must fill the shortage of local marine expertise. There is no use providing the capacity and high level manpower if the long term solutions are not addressed by focusing more on education and recruitment of local marine insurance practitioners as a part of the package. Resolving this shortfall and acknowledging the importance of delivering effective risk management solutions to their shipowners will place Asia and China in a very favourable position for growth.”  

Notes to editor:


About Aon

Aon Corporation is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 46,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

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