Current Trends in Today's Cargo Insurance Market

A lot has changed in the cargo insurance market over the past few years, and 2023 is shaping up to be no different. There are several factors that affect cargo insurance underwriting and the direction the market is going as a whole.

Insurers attempt to calculate future risk exposures while considering past loss history to determine what coverage they are willing to offer, and at what price. Below are a few topics that have shaped the current cargo insurance landscape over the past 12-18 months.

Property Market/Catastrophic Risk (CAT – flood, windstorm, & earthquake)

The overall property market remains somewhat uncertain. Despite some rate decreases in 2022, the September 2022 catastrophe of Hurricane Ian has caused ripples in the marketplace that are still being felt today. This has continued a trend of increased CAT events throughout the global markets, including the more recent Tropical Storm Hilary and Hurricane Idalia, which has led to massive losses for insurers and caused high concern for property underwriters. Cargo underwriters of today follow their property colleagues closely, which has led to challenges and rate increases in stock coverage, namely in catastrophe zones. Having a complete and thorough submission with as much detail as possible is the best way to approach stock coverage to get the most favorable outcome.

Tough Commodities

The cargo market has remained slightly on the harder side throughout the first part of 2023, although the upward rate movement experienced in 2021 and early 2022 has slowed down, namely due to some additional capacity in the market. However, certain classes of business are subject to more scrutiny than others, such as temperature-sensitive products, pharma, automobiles, and consumer electronics/cell phones. While some insurers have no appetite for these riskier commodities, others are still willing to review and offer coverage. Detailed exposure information remains very important to securing favorable terms and conditions, and thorough applications are needed for underwriters to be comfortable with the coverage they are offering.

Deductibles on the rise

Historically, deductibles have provided both insurers and insureds with a certain level of flexibility when it comes to terms, conditions, and premium. While many insureds preferred keeping a low or no deductible option for transit coverage, those options are slowly starting to disappear as underwriters try to minimize the administrative effort of low-value claims. $2,500 is now a common entry-level transit deductible, with higher options for companies that have higher losses or those looking to save on premium. On the stock/warehouse coverage side, many deductibles for CAT risks have increased to $100,000 - $250,000 depending on market and location, while general warehouse deductibles for all other risks have remained fairly stable.

Today’s cargo underwriters evaluate a broad spectrum of factors when reviewing coverage submissions to ensure they have an understanding of the risk exposures. Therefore, it is important to know what to focus on when applying for or renewing a cargo policy. As a leading expert in the cargo space, ECIB knows how to approach the markets when placing each individualized piece of coverage. Contact our experts to learn more about the cargo insurance market or for a free policy review.