Marine insurance players have a lot to ponder during their two-day risk forum in Bermuda this week. For a starter how to make a profit from the sector.

The hull insurance market, which deals with physical damage to a ship, has not presented a profit for 10 years according to Fred Robertie, president and CEO of American Hull Insurance Syndicate.

He is one of the speakers at the TradeWinds Marine Risk Forum which started yesterday and continues today at the Fairmont Hamilton Princess Hotel when the focus will shift from hull insurance to protection and indemnity (P&I) insurance.

Most of the delegates represent those in the insurance market with an interest or presence in the marine industry.

Apart from the hull insurance profitability question, shipping companies have their own concerns regarding policy terms such as a desire to see a return to multi-year contracts as opposed to one-year deals and extensions to the insured coverage time needed because of the longer delays now experienced waiting to get into a shipyard for repairs following an accident and time taken to secure spare parts.

On the subject of insurance premiums there are higher risk factors today, explained lawyer Mikael Livijn, head of insurance for Wallenius Marine.

Because of the growth of the shipping industry there is now a lack of "spare" capacity which has resulted in more sub-standard vessels being chartered on the high seas, he said.

Older ships that would normally have been scrapped remain in operation and shipowners are under pressure to postpone putting their vessels into dock for repairs and maintenance.

On top of this comes the need to operate to tighter schedules, placing an emphasis on the speed a ship can get from one location to another. This in turn carries inherent risks, not least the added stress under which a ship's crew operate.

"Insurers are unwilling to offer lower rates or contracts longer than one year. There is no sign of a hardening of the market," said Mr. Livijn.

In the aftermath of the 9/11 terrorist attacks marine insurance premiums went up, but then flattened out. Mr. Livijn attempted to find an answer to the mystery of why the hull insurance market is, has been for a number of years, "soft" and whether that would change.

Identifying factors that should keep premiums high include the fact that, although there are now fewer claims the insurance claims made tend to be a lot more expensive; the cost of ships is increasing; the US dollar is weak and there are stricter legislation and higher liabilities for ship operators.

The factors that argue for lowering of premiums are the "fairly high" cost of premiums at present, new insurance capacity and the emergence of new insurance players who have not suffered hard losses in the marine industry and are prepared to enter the market.

American Hull Insurance Syndicate's Mr. Robertie noted the lack of profit in the hull insurance market for the past 10 years. Insurance capacity exists, as even the priciest vessels such as the new generation of $1 billion cruise ships, have been able to secure coverage.

But Mr. Robertie added: "At the same time the market has not been very profitable and has not provided the capital providers with the returns. There needs to be a change but there does not seem to be any."

The AHIS president has not seen an insurance market so flat for so long as the hull market has been in recent years.

Speaking from the point of view of a shipping investment company Dr. Andreas Opatz, managing director of Germany's Konig & Cie, spoke of the "14/90/90" insurance liability formula that gives annual insurance coverage for two accidents per year with a maximum of 90 days insurance for loss of use of a vessel for each accident. The "14" relates to the 14 days of excess that is paid.

"The 14/90/90 is not sufficient now. We face major challenges when it comes to availability of repair dockyards and the timely availability of spare parts," said Dr. Opatz.

The longer waiting period to get into a repair yard and the extended time needed has resulted in Konig & Cie concluding that the 14/90/90 formula is no longer sufficient and it has adopted an extended version that gives coverage for the newer vessels in its fleet of up to 150 days of dockyard time and 180 days for older vessels.

Touching on the issue of terrorist risk, Dr. Opatz gave a run down of eight such incidents since the attempted sinking of USS Cole in 2000 and said: "We all have to live with that and we have to ensure we have insurance for those things."

He warned that there are differences in interpretation of what constitutes a terrorist act as opposed to a piracy act in insurance clauses and this has led to conflict between shipowners and insurers, particularly where the English version of marine insurance is in operation as opposed to the German and Norwegian marine insurance plans.

The TradeWinds Marine Risk Forum concludes today with a focus on the P&I market.