Insurance Marketplace Realities 2023 Spring Update – Marine cargo

Rate predictions: Marine cargo

	Trend	Range
U.S. market
Transit
Good loss experience		+2.5% to +7.5%
Marginal to poor loss experience		+10% and higher
Stock throughput
Good loss experience		+5% to +10%
Marginal to poor loss experience		+15% and higher
London market
Transit and stock throughput
Good loss experience		Flat to +5%
Marginal to poor loss experience		+10% and higher

The Russia and Ukraine conflict continues to be a focus for marine insurers. During the 2022 calendar year, Russia, Ukraine and Belarus were addressed differently on an insurer-by-insurer basis. However, as we head into the 2023 calendar year, we are seeing a more consistent approach by insurers, whereby they are excluding these countries and in some cases expanding to include the Black Sea and Sea of Azov.

Following a challenging treaty reinsurance negotiation, reinsurers had imposed the 5 Powers Exclusion clause on insurers. As a result, this exclusionary wording has been or is anticipated to be included. 

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 for accounts with favorable to moderate loss experience.
• 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 differentiating insureds from their peers remain crucial to securing favorable terms and conditions.
• Analytical tools should be employed when available to best position clients to optimize their insuring structures (with a focus on retention, CAT limits, aggregates, etc.).

Navigating supply chain challenges post-COVID-19

• Deglobalization: Near shoring, “friendshoring” and increased risks of political instability
• Digitalization: Use of telematics/IoT to have better insights into the supply chain
• Inflation: Supply chain costs, including raw materials, labor and transportation and putting increased pressure on suppliers and vendors
• Labor shortages: Aging populations, skill gaps and strikes ensuring continued labor shortages
• Sustainability: Extreme weather making some raw materials harder to harvest or access; floods, fires and storms also impacting logistics chains, while companies under pressure to take ESG into consideration in supply chains
• Geopolitical instability: May cause uncertainty when certain trade lanes are used
• COVID-19: While many businesses are back to near normal operations, COVID-19 still a real threat; any potential new variant possibly resulting in more lockdowns and restrictions that could threaten supply chain

Cargo and stock throughput markets are challenged by catastrophic losses.

• As we approach Q2 2023, as a result of the property market, stock throughputs are being consistently explored. However, to perform a successful and strategic marketing effort of a stock throughput program, the marketing effort must be well-orchestrated in conjunction with the property program.
• Large industry losses have occurred due to mis-declared cargo causing concern for clients and insurers. In some cases, shipowners have declared general average.
• CAT management continues to be a focus of concern for insurers as they seek to increase deductibles and reduce CAT limits deployed. Additional attention is being paid to CAT definitions, especially with regard to occurrence definitions and “fire following” type 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).

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for losses relating to the Ukraine crisis. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include coverage relating to the Ukraine crisis. 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 and/or other professional advisors. Some of the information in this publication may be compiled by third-party sources we consider reliable; however, we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. The Ukraine crisis is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.