Over the past several quarters, the overall cargo insurance market has been on a hardening trend. Not much has changed recently, and those in the industry continue to face the same challenges they did a year ago. Below are three perspectives on the current cargo insurance market:
The cargo insurance market remains hard with not a lot of change in trends from last quarter. Even with no reported losses, companies are seeing rate increases of up to 10%. For policies that do experience losses, those rate increases could be closer to 20%, depending on the loss ratio. Certain commodities also continue to be extremely difficult to insure, including cell phones, laptop computers, automobiles, pharmaceuticals, and any temperature-sensitive commodities. The overall appetite underwriters have for new cargo policies is still much smaller than what we saw a couple years ago, and markets continue to be picky with what they choose to write.
Stock/CAT (catastrophe) Coverage:
Pricing for stock coverage remains very volatile. We have seen average rates on non-CAT business increase between 75% and 100% over the last two years. Stock with CAT coverage is coming in even higher, depending on geographic location. Catastrophe modeling is being consistently used, with stringent review for coverage in flood and wind zones. CAT deductibles have increased $100K - $250K depending on market and location. While the market appetite for stock-only policies is extremely limited, stock throughput policies are still an option in most cases due to the transit portion of that business.
The appetite in the London market is growing from what it was last year. There is some more capacity entering the market, but rates and minimum premiums are still very high depending on commodity. Syndicates are typically requiring $25K minimum premiums, which in turn drives up overall minimum premiums on coverage that requires the support of multiple syndicates. As with the overall market, single location stock is a challenge in London as well. Stock throughput policies, with multiple locations, can be more competitive, however.
While the cargo insurance market continues to be challenging, your cargo insurance services do not have to be. At ECIB, our cargo insurance brokers help our clients navigate market conditions to not only place coverage, but also provide end-to-end service throughout the policy period. Learn more at www.ecibglobal.com, or contact our experts today.