Hurricane and earthquake losses in 2017 have initiated a return of some underwriting discipline to the cargo insurance market, which has been absent for some time.
With underwriting discipline returning, we are now also starting to see rate increases across our renewal portfolio with an ‘as before’ renewal being deemed the new reduction, except when major policy restructuring has taken place.
We do not expect new cargo capacity to enter the London market for 2018. However, continuing insurer mergers and acquisitions may be the short-term answer to improve profitability margins.
The most recent activity saw the purchase of Lloyd’s insurer Novae by Axis in October, which followed the acquisition of Endurance by Japan’s Sompo earlier in 2017.
Despite consolidation, there is sufficient capacity for major limit-driven risks and the market remains open-minded to challenging and complex risks.
The outlook for the cargo insurance market will, however, depend to some degree on the outcome of treaty reinsurance renewals in January.
With that in mind, we would forecast a portfolio rise in premiums of around 5 per cent to 7.5 per cent in 2018.
Cargo tips for buyers
Be well prepared for the renewal process and have information, particularly regarding long-term storage risks, well documented so insurers can perform their due diligence and risk aggregation checks.
For further information, please contact Jay Payne, Senior Partner on +44 20 7466 6236 or email firstname.lastname@example.org