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Survey Report

Insurance Marketplace Realities 2020 Spring update – Marine

Marine
COVID 19 Coronavirus

May 7, 2020

The marine market continues to harden, with underwriters looking to quickly recover historical market losses without regard to individual loss records.
Rate predictions
  Trend Range
Hull and machinery, good loss records Increase (Purple triangle pointing up) +5% to +10%
Hull and machinery, poor loss records Increase (Purple triangle pointing up) +20% to +30%
Primary marine general liabilities Increase (Purple triangle pointing up) +5% to +10%
Excess marine liabilities 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 +5%

Key takeaway

The marine market continues to harden, with underwriters looking to quickly recover historical market losses without regard to individual loss records. Early renewal discussions and a willingness to potentially end long-term underwriter relationships are a must to achieve optimal results.

Changes in capacity are impacting the U.S. market.

  • One major player has stopped writing hull and liability policies and two major players are reducing participation on many accounts.
  • Fewer underwriters are offering cover for certificates of financial responsibility (COFR) business.

Underwriting in the current environment will be more demanding.

  • Underwriters are requiring substantially more data for renewals as they are subject to in-house, computer-driven review of quotes.
  • Underwriters on subscription policies are much more sensitive to fellow market underwriters’ criticism. As a result, we see reduced willingness by underwriters to act independently and aggressively.
  • Underwriters are subject to closer scrutiny by their senior management, who have become much more involved in the process. This negatively impacts the renewal process from the buyer’s perspective.

More rough waters are ahead.

  • Most large U.S. marine insurers are part of property underwriting units and thus under pressure to deliver premium increases, albeit to a lesser extent than property underwriters. Underwriting capacities are also being reduced.
  • Cyber exclusions are becoming more prevalent and must be looked at closely in conjunction with primary and excess placements.
  • The cruise ship industry has clearly been impacted by the COVID-19 pandemic. Most cruise vessels are insured by the International Group of P&I Clubs for legal liability to crew and passengers for illnesses on board. It is still premature to predict the effect on U.S. marine insurers who provide similar cover, particularly for crews on vessels, but increases in premiums or limits could be coming.

Disclaimer

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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