- Marine Protect
How marine cargo underwriters are working towards better profitability for the market
The cargo insurance market has seen significant change over the past year. Growth in global trade, exchange rate fluctuations, the USA/China trade war, and now the COVID-19 crisis, have caused significant disruption and further fears for the global economy.
At the same time the cargo insurance market has continued its trend of unprofitability and with the challenges the global economy is facing many are wondering how to address the uncertainty.
NTI’s Cargo Product Manager, Daniel Morrison, explains how our underwriters are working to address these unprecedented disruptions and take action on unprofitable results in the insurance industry.
“On a global basis the cargo line is unprofitable and has been for a number of years. Premiums have not been technically adequate to cover losses and expenses and, as such, have not delivered an acceptable return for capital providers. We are seeing reinsurance markets reducing their appetite for certain risks and charging more for reinsurance protection which is putting more pressure on insurers profitability.
“Now with COVID-19, it has become more challenging than ever and underwriters need to take action,” says Daniel.
As a result, underwriters are addressing their portfolios with urgency and reviewing technical rate adequacy, terms and conditions, deductible levels, and capacity/limit deployment.
“COVID-19 has caused weaker economic projections and concerns over trade wars have dampened expected growth, placing a greater focus on commitment to business, stability and capabilities to ensure underwriters deliver a stable offering that can be robustly delivered, “ notes Daniel.
In addition to the traditional cover of goods in transit, the marine cargo market insures a significant amount of property contents storage under Warehouse/Storage Endorsements and ‘Stock Throughput’ policies.
The current soft market has increased this risk profile as underwriters have been offering broader terms, higher nat-cat limits, lower deductibles and more competitive prices than their property counterparts would provide.
As the property market hardens customers may look to cargo insurers to provide support as they have done in the past. However, the terms and conditions may be more restrictive or the cover no longer available in the cargo market, as cargo only covers physical loss and damage, whereas property can include business interruption.
“In addressing these issues cargo insurers are encountering old and new challenges. These include compliance, sanctions, war and SR&CC, emerging risks and new coverage requirements. With each cargo insured loss there are related uninsured losses.
“These might include business interruption due to supply chain issues, trade disruption, or loss of market. Emerging technologies may provide tools and capabilities to enable the development of new products,” says Daniel.
“To meet these needs our cargo underwriters are working tirelessly to ensure they’re in a position to capitalise on future opportunities. It is certain that exposures will continue to increase in size and complexity for the cargo underwriter and this will require a sustainable approach to insurance to meet the demands of the present and the future,” he adds.
This includes looking beyond the price of a premium. NTI’s underwriters always look to provide customers a holistic solution and experience so that a premium is worth it, no matter the state of the market.
Here at Marine Protect, our underwriters are market-leading and we pride ourselves on providing a market leading proposition to our customers. If you’d like to discuss our policy offerings or have queries regarding COVID-19, contact your local NTI office or speak to one of our experts on 1800 684 669.