Prices will continue to increase due to growth in demand and labor and overhead costs, but the overabundance of suppliers will limit price growth
Los Angeles, California (PRWEB) March 09, 2015
Marine insurance has a buyer power score of 3.2 out of 5, indicating buyers and suppliers have equal leverage during negotiations. According to IBISWorld market research analyst, Kayley Freshman-Caffrey, "Low market share concentration and low price volatility are the primary factors strengthening buyer power." On the other hand, price growth has weakened buyer power.
Marine insurance providers have been raising prices in response to large losses from 2011 to 2014. "The effects of MV Rena, Costa Concordia and Super Storm Sandy have caused billions of dollars in losses for insurance suppliers," says Freshman-Caffrey. However, price growth has been hampered by an overabundance of suppliers, which has diluted market share concentration. Low barriers to entry have also contributed to low market share concentration. As such, buyer power has strengthened because of intense competition among suppliers, which pressures suppliers to keep their annual price increases within market norms. This low price volatility allows buyers to enter into short-term contracts without substantially increasing their insurance costs. Additionally, buyers can leverage competition among suppliers to receive better premiums. Major vendors in the market include Allianz SE, ACE Group Holdings and Zurich Insurance.
A low availability of substitutes also weakens buyer power. If a buyer wishes to protect their vessel, they have no choice but to purchase marine insurance. Thus, buyers are unable to leverage the existence of alternative services to negotiate more favorable premiums.
Buyers can use several strategies to improve their negotiation position. Suppliers are often willing to maintain a fixed premium rate if a buyer is willing to commit to a long-term contract. This strategy helps protect buyers against future price growth by keeping premium rates constant. Furthermore, buyers that transport cargo or have specialty risks can bundle their cargo insurance and marine excess liability insurance with their marine insurance. Such buyers are more capable of negotiating discounts because they have made themselves a bigger and more important account for their supplier. For more information, visit IBISWorld’s Marine Insurance procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of marine insurance, which includes hull and machinery insurance as well as protection and indemnity (P&I) insurance. Marine insurance provides financial protection against collision, loss or damage to a marine vessel, and bodily injury and property damage from owning or operating the vessel. It can also include pollution and piracy protection as well as other specialty liabilities. Buyers include marine transportation and services companies. Suppliers are insurance carriers as well as agents and brokers, which are intermediaries between insurance carriers and buyers. This report does not include inland marine insurance, cargo insurance, onshore or offshore property insurance (e.g. vessel terminals) or recreational marine insurance.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.