Marine Cargo
New business appetite for cargo risks at record levels
Insurers are currently reporting good levels of underwriting profitability. The beginning of 2025 has seen an increase in market participants that has led to insurance capacity reaching an all-time high.
New entrants that joined the insurance market just a few years ago have grown in confidence and having now established a critical mass, are now seeking more prominent leadership positions.
The combination of increased market capacity and the absence of a market-changing loss event has caused the London market to soften at a faster rate than had perhaps been anticipated.
Renewable, Energy Transition, and Clean Energy risks
The World’s push towards sustainable renewable energy, especially in developing economies, has led to an abundance of opportunity for the London Market and, with such risks performing especially well in recent years, there is significant appetite as insurers compete increasingly aggressively for new business.
Oil, Gas and Petroleum Products risks
Oil, Gas and to a lesser extent petroleum products accounts have been some of the best preforming accounts from an insurer’s perspective and with increased capacity comes increased competition for those accounts.
Persian Gulf War rates have dropped to their most competitive levels since the attack on the Front Altair initiated the call for additional premiums back in 2019.
The activities of the Houthi rebels in the Red Sea region continue to give the greatest concern from a cargo underwriting perspective. Until recently their activities have been curtailed because of their stated aim of supporting the middle east peace process. However, while the idea of writing Red Sea exposure may give some cargo insurers cause for concern there exists a strong appetite from the specialist War markets.
Insurers are currently reporting good levels of underwriting profitability. The beginning of 2025 has seen an increase in market participants that has led to insurance capacity reaching an all-time high.
Project Cargo / Delay in Start Up risks
There are now three London market consortia specifically targeting Project Cargo / Delay in Start Up business. A consortium is a contractual arrangement under which multiple insurers delegate authority to another insurer to enter into contracts of insurance on their behalf. In practice, the consortium leader applies a single stamp that automatically binds all consortium members.
This has created greater competition in the market on small to medium sized projects with all three aggressively seeking new business and has led to other traditional market leaders deploying larger line sizes in response.
In addition to these new consortia the general increase in capacity in the wider market means that it is now possible to find increased capacity for large projects at competitive terms where that greater capacity may only have been available at a premium in the past.
Notable claims
While there have been few large losses, events such as the Los Angeles wildfires, the Francis Scott Key Bridge accident and Hurricanes Beryl, Helene and Milton, have kept insurers mindful of the need to maintain underwriting discipline.
Changes in policy terms and conditions
There are currently no major changes in terms and conditions, but some insurers are providing creative responses to accommodate specific risk exposures.
Increasingly, manufacturers or other third parties are taking responsibility for providing cargo insurance on project critical equipment, loss or damage to which may result in a delay to the start-up of the project and a consequential financial loss for the project principal. In such circumstances, London market insurers can provide wrap around coverage for such “contingent” exposures, which cannot be insured under third party insurances and may historically have resulted in a gap in coverage.
However, coverages and deductible structures seem stable, with competitive tension currently centred around rating / premium spend.
London market capacity is at a high and in the short to medium terms it is anticipated that will continue to increase as new entrants become established.
Expected Outlook
Appetite and capacity has been growing for several years and has now reached an all-time high. In the absence of a market-changing loss event(s), there is no indication that this will subside soon.
We are expecting more competitive rating to be applied to new Project Cargo opportunities during 2025. Underwriting discipline in the shape of strict risk management and survey warranty controls will continue giving underwriters the confidence to continue to offer capacity at more competitive terms.