Insurance Marketplace Realities 2023 – Marine cargo

Rate predictions: Marine cargo

	Trend	Range
U.S. markets
Transit
Good loss experience		Flat to +5%
Marginal to poor loss experience		+10% and higher
Stock throughput
Good loss experience		Flat to +5%
Marginal to poor loss experience		+10% and higher
London markets
Transit and stock throughput
Good loss experience		Flat to +5%
Transit and stock throughput - Marginal to poor loss experience		+10% and higher

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

• The crisis in Ukraine continues to be an area of focus for marine insurers as they look to limit or more often than not eliminate their transit and static exposures within the region.
• Rate movement has stabilized for accounts with favorable to moderate loss experience.
• Insureds 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 pressuring deductibles upward and tightening coverage terms. These actions have positively impacted underwriting results, which lessens the need for drastic remediating action at subsequent renewals.
• Rate remediation has created an attractive entry point for new and revitalized cargo underwriting operations.
• 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 risk differentiation remain crucial to securing favorable terms and conditions.
• Analytical tools should be employed when available to best position insuring structures (with a focus on retention, cat limits, aggregates, etc.).

Vulnerabilities throughout the supply chain have become apparent during COVID-19 pandemic.

• Maritime mishaps, such as vessel fires, engine failures and containers overboard, continue to plague cargo insurers, adding to an already stressed global supply chain.
• A global shortage of available vessels and containers has contributed to an accumulation of values throughout the supply chain. We recommend insureds regularly review the adequacy of policy limits to ensure that larger consolidations are accounted for.
• Vessel accumulation 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 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.
• Cyber events remain a looming threat to maritime trade.

Cargo and stock throughput markets are challenged by catastrophic losses.

• Large industry losses have occurred because of mis-declared cargo, causing concern for insureds and insurers. In some cases, shipowners have declared general average.
• Cat management continues to be a 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” buy-backs. 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 entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).