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Survey Report

Insurance Marketplace Realities 2019 Spring Update — Marine hull and liability (U.S.)

Marine
N/A

April 23, 2019

The marine market continues to harden – a trend we noted in 2018 as the first hardening in many years.

Rate predictions

  Trend Range
Hull Increase (Purple triangle pointing up) +5% to +15%
Marine liability Neutral increase (yellow line with purple triangle pointing up) Flat to +10%
Excess liability Neutral increase (yellow line with purple triangle pointing up) Flat to +10%
USL&H Neutral increase (yellow line with purple triangle pointing up) Flat to +10%

Key takeaway

The marine market continues to harden – a trend we noted in 2018 as the first hardening in many years.

In 2019, flat renewal pricing is now considered an unusual result, particularly for hull, and most markets are increasing rates for those with even perfect loss records.

We expect this trend to continue throughout the year.

  • For best renewal results, early planning and discussions are a must.
  • Clients should also be prepared to sacrifice long-term relationships with their underwriters if they want to achieve optimal financial results.

The Lloyd’s hull market is taking a tough stance on renewals, which has influenced the U.S. domestic markets.

  • The changing appetite in London and a demand for stricter underwriting discipline has encouraged the same in U.S. domestic markets.
  • While international “blue water” tonnage is feeling the strain of increasing rates, U.S. inland and coastal tonnage is still attractive to the domestic hull market, which has a robust appetite for premium.

There remains ample capacity in the marine liability market in both the U.S. and in London.

  • Most marine liability renewals are not seeing the same pressure for increases being felt in the hull markets.

Marketplace consolidation is a key factor in changing marketplace conditions.

  • The Hartford purchase in August 2018 of Navigators, one of the largest U.S. markets for marine liabilities, is set to close shortly (at the time of this writing). Thus far we have not seen any dramatic change in philosophy or appetite for underwriting.
  • With this consolidation of markets, however, we expect competitive leverage will decrease.

The London Lloyd’s market, a key player for U.S. marine risks, has recently seen several key syndicates cease underwriting.

  • The remaining syndicates were asked by Lloyd’s management to provide business plans with a strategy for profitability.
  • These developments have already resulted in a tightening of pricing, which is likely to continue into 2019.

Some underwriting capacity in the U.S. has expanded in 2019.

  • This could have the effect of creating a better marketplace for clients as a response to the consolidation discussed above.
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