Underwriters taking more differentiated approach based on portfolio mix, exposure changes and loss record, but not cutting rates
Car carriers still a concern after Golden Ray grounding in 2019, but focus has switched to boxships in wake of Ever Given casualty. UNDERWRITERS across marine liability classes have made clear that premium reductions are virtually excluded in the current market, mainly on account of large losses sustained in the past year, a leading broker has claimed.
The comments come in a market update from Miller Insurance, and are applicable for January 1 renewals and the coming P&I renewal round, which culminates on February 20.
Accordingly, the impact will be felt not just by buyers of P&I cover but those taking out port/terminal liability, marine general liability and umbrella liability cover as well.
“Underwriters persisted with messaging their belief that fundamentally, there is not enough premium in the system to pay for claims, with a particular focus on the charterers/non-poolable market,” said Miller.
Following a number of large losses and deteriorations on back-year claims throughout 2021, this viewpoint has only intensified. The severity of claims is also up, thanks to social inflation and increased indemnity awards in certain jurisdictions.
Unlike the broad-brush approach seen in 2021, there were signs of increased differentiation on January 1 accounts, with underwriters taking portfolio mix, exposure changes and loss record into consideration when offering terms.
“However, it is clear that pure reductions are still not possible in the current market,” Miller added.
Attention has turned to the pricing of layers that were previously considered ‘capacity’ plays, with excess of $50m now thought to be a more active layer, requiring higher premiums.
Unlike marine mutuals that are happy with combined ratios of 100% or even above, commercial underwriters see a CR of 60-70% as breakeven.
Four of the last seven years have come in close to or above this point, with the outcome for 2021 still to be calculated.
While a hardening marine market has seen to influx of new capacity, notably from ‘class of 2021’ providers such as IQUW, Inigo and Navium, these underwriters tend to be more cautious about taking leadership positions, preferring to follow the market trend on pricing