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Survey Report

Insurance Marketplace Realities 2022 – Marine cargo

Marine
N/A

November 15, 2021

Rate increases have decelerated compared to what buyers saw from 2018 through 2020, largely thanks to renewed competition in the marketplace.

Rate predictions

Rate predictions: Marine Cargo

 
Trend Range
U.S. market
Transit only - Good loss experience
Increase (Purple triangle pointing up) +5% to +10%
Transit only – Marginal to poor loss experience
Increase (Purple triangle pointing up) +15% or more
Stock throughput – Good loss experience
Increase (Purple triangle pointing up) +7.5% to 12.5%
Stock throughput – Marginal to poor loss experience
Increase (Purple triangle pointing up) +15% or more
London market
Transit and stock throughput - Good loss experience
Increase (Purple triangle pointing up) +2.5% to +7.5%
Transit and stock throughput - Margnal to poor loss experience
Increase (Purple triangle pointing up) +10% to +20% or more

Key takeaway

The hard market continues, but rate increases have decelerated compared to what buyers saw from 2018 through 2020, largely thanks to renewed competition in the marketplace.

Underwriting discipline persists. Insurers remain focused on bottom-line profitability, with continued scrutiny of insuring terms and conditions and capacity deployed.

  • Rate movement has stabilized.
  • Clients can anticipate a more predictable approach from cargo insurers at renewal. The hard market cycle has inched premiums closer to technical pricing requirements, while also pushing deductibles upward and tightening coverage terms. These actions have had a positive impact on underwriting results, lessening the need for drastic remediating action by carriers.
  • Certain business segments and exposures are subject to more scrutiny than others, such as temperature sensitive products, pharma, automobiles and high-hazard cat exposures.
  • Detailed exposure information and differentiation from peers remain crucial for insureds looking to secure favorable terms and conditions.
  • Analytical tools should be employed to optimize insuring structures (with a focus on retention, cat limits, aggregates, etc.).
  • Once again, most insurers have met or exceeded growth targets heading into Q4, leaving insurers more selective about new opportunities.

Vulnerabilities throughout the supply chain were made more apparent during the COVID-19 pandemic.

  • Notable maritime events, such as the blockage of the Suez Canal, have highlighted potential choke points throughout the global supply chain, e.g., the Strait of Gibraltar, Cape of Good Hope and Panama Canal. 
  • The Suez Canal blockage, while a notable event, was a near miss for cargo & marine insurers. If the Ever Given had suffered damage to its hull the consequences could have been catastrophic.
  • A global shortage of available vessels and containers has created an accumulation of values throughout the supply chain. We recommend insureds regularly review the adequacy of policy limits to ensure larger consolidations are accounted for.
  • Vessel scarcity has led to a substantial increase in full containers shipped on a single sailing, leading to several incidents of containers lost overboard.
  • The introduction of autonomous vessels into the shipping lanes will create new challenges for clients and insurers and require innovative solutions to manage new risks.
  • Geopolitical instability causes uncertainty when certain trade lanes are used — another risk to keep an eye on.
  • Cyber events remain a looming threat to maritime trade.

Cargo and stock throughput markets are challenged by catastrophic losses.

  • Large industry losses have occurred as a result of mis-declared cargo, causing concern for insureds and insurers. In some cases, shipowners have declared General Average.
  • The 2021 Atlantic hurricane season has been as active as the 2020 season, placing goods in transit and static risks in peril.
  • Cat management continues to be of concern for insurers as they seek to increase deductibles and reduce cat limits deployed. Additional attention is being paid to cat definitions, especially regarding occurrence definitions and fire-following buybacks. In addition, insurers continue to seek the inclusion of straight-line wind in the windstorm definition. 

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. 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 advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

Contact

Anthony DiPasquale
Marine Practice Leader, North America

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