Supply and demand

This will shock you. This will turn you white. Marine insurance underwriters are complaining that rates are becoming unsustainable and that, if things don’t change, they will stay as they are.

This argument has been running longer than The Mousetrap. And the thing that keeps it running is the fact that underwriters keep on writing business at very low rates.

The brokers, on the other hand, don’t agree that rates are low, and are determined to find even lower ones. Some were seen only this week.

What is the answer? (Please use both sides of the paper). Underwriters are perpetually heading for a disaster which is always just around the corner. Brokers are always looking to shave off a bit more than the next man. The only logical outcome is that rates will always go down, and the only logical winner is the shipowner.

Underwriters could help themselves a bit more. They could find a spokesman to replace Tony Nunn, for a start. Half the underwriters quoted in the paper these days are not really underwriters at all. They are just people photographed coming in and out of Lloyd’s.

Asked if he genuinely believed that rates would go up this year, one underwriter said, “I live in hope”. Interviewed for a response, a broker replied, “I live in Crawley”.

chris@merlinco.com