The International Union of Marine Insurance reported that its members from 81 countries across the world had seen hull premium income increased by 4% in 2009 but this was down to new tonnage and not higher rating levels.

The sector was also suffering from lower hull values and the sluggish economic recovery which while showing some positive signs for world trade levels is still not approaching its 2008 figures. Underwriters are facing an ongoing struggle with rising inflation in the costs of hull claims, impacting the underwriting performance.

Cedric Charpentier, of Axa Corporate Solutions in Paris and chairman of the IUMI Facts and Figures committee said underwriters had little to look forward too in the coming two years.

He said: “The economic recovery is at best fragile and we are seeing some growth in the emerging markets, continued problems in Europe and the likelihood of a double dip in the United States.”

He added that the new tonnage would have an impact.

“We have in the order books new tonnage which is equivalent to 40% of the current world fleet which will be delivered in the next three years,” he added. “This will drive further a market which is already suffering from over capacity and it will impact on the freight rates for the next three to four years.”

He warned underwriters needed to drive technical rates but added the chase to utilise the capacity in the market on a shipping industry which was still beset by low trade volumes could only heap further pressure on rates.

“The hope is that by 2011 the level of world trade will be back to near 2008 levels," he added.

He warned hull underwriters not to ignore the rising costs of repairs in their pricing models.

“We need better models and we cannot afford to ignore the rising costs of repairs in our calculations.”