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Survey Report

Insurance Marketplace Realities 2020 – Cargo

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November 13, 2019

Increases in the frequency and severity of cargo claims over the past several years coupled with shrinkage of market capacity have resulted resulted in U.S. and London markets that continue to firm.

Key takeaway

Increases in the frequency and severity of cargo claims over the past several years coupled with shrinkage of market capacity have resulted resulted in U.S. and London markets that continue to firm.

Rate predictions

 
Trend Range
U.S. market
Good to marginal loss experience Increase (Purple triangle pointing up) +7.5% to +15%
Poor loss experience Increase (Purple triangle pointing up) +15% to +30% and higher
London market
Good loss experience Increase (Purple triangle pointing up) +15% (+20% with nat cat stock exposures)
Marginal to poor loss experience case-by-case basis
The market is currently looking for higher retentions and increased rates.
  • Risks that have minimal catastrophic exposure and plain vanilla transit risks are seeing the lower end of forecast increases, unlike those with highly exposed catastrophic-storage risks and risks in highly scrutinized industries, such as pharma/life science, food/beverage and auto.
  • Pricing for clients with poor loss history has become unpredictable. We've seen a wide range of renewal results with a few instances of triple-digit rate increases, but most are falling into the +12.5% to +25% range.
  • When marketing profitable new business, we are still securing relatively competitive pricing.
  • Virtually no buyers are seeing reductions in price.
  • Capacity is shrinking and is being more carefully deployed.
  • Excess stock capacity in U.S. market has all but dried up.
  • Structuring programs or layers as quota-shares has often become necessary, especially for catastrophic-exposed storage risks.
  • Coverage for industry segments such as pharma/life science, food/beverage and automobiles is being underwritten carefully.
  • Insurers are revisiting their underwriting strategy, risk appetite and underwriting guidelines as they look to return to profitability.
  • Detailed underwriting information and best practices for risk control are critically important for achieving the broadest coverage terms at the best price.
Broad manuscript policy terms are still achievable, but underwriters are scrutinizing the following coverages and risk factors:
  • Broad wording for spoilage, deterioration and decay
  • Broad control of damaged goods cover, including fear of loss coverage for voyage frustration
  • Coverage for processing risks
  • Highly exposed catastrophic risks for goods in storage
  • Packing, security details on loss sensitive risks and high value products
  • Logistics contract wording
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