Marine Ports & Terminals

A competitive marketplace

The Marine Ports & Terminals marketplace is currently very competitive with many respected leads receptive to providing cover. New capacity has entered the marine liability market for 2024 offsetting that which pulled out of the class in 2023. Nevertheless, port assets exposed to natural catastrophe (Nat Cat) risks are still very much on insurers’ radar and underwriting discipline continues with the omnipresent background of social inflation.

Changes in policy terms and conditions

Climate change exclusion LMA5570 and the per-and polyfluoroalkyl substances (PFAS) exclusion (forever plastics) LMA5595A are being introduced by more markets.

Underwriting changes

Probitas, IQUW, the Ark Consortium, Dale, Everest Re, SiriusPoint and Sompo are looking to deploy meaningful new capacity to Marine Ports & Terminals risks as well as new leadership options into the liability market.

  • Grant Smith joined Markel from QBE
  • Ali Welchman moved from Markel to IQUW
  • Ed Abbott left The Hartford for Probitas
  • Andrew Carter moved from Markel to Dale
  • Chris Fenn left Markel for SiriusPoint
  • Maddie Morris changed from SiriusPoint to Everest Re
  • Richard Mander joined QBE
  • Nikki Miles started at Chaucer in September

Notable claims

Attritional vessel allision claims and fires are currently prevalent – some examples as follows:

  • On 8 March 2024 a fire broke out in a warehouse at the Port of Cartagena (USD> 40m)
  • On 16 March 2024 a container vessel collided with a crane, leading to the toppling of three cranes at the Evyap Port east of Istanbul
  • On 26 March 2024 the Dali allided with the Baltimore bridge – where the liability sits is currently going through the courts
  • In December 2023 an incident at the PSA Noordzee Terminal in the port of Antwerp has caused significant damage to two of the facility’s STS cranes

Geographic/sector differences

As aggregate capacity for property/equipment and business interruption is finite, ports exposed to natural perils (be that for example in Peru, Chile or the US Gulf & West Coast) should expect to see continued pricing pressure on their forthcoming renewals.

Outlook

Expected range in rate changes for the next 6 months for claims-free portfolios

The results are dependent on the extent of the specific exposure to long tail liability. Insurers will want to ensure that net premium for share is an optimal use of their capital. For clean Marine Property Cat risks insurers’ approach will be very much dependent on the specific location.

Expected capacity change in the next 6 months for claims-free portfolios

While liability capacity is less of an issue, Property/Business Interruption capacity is still challenging in certain geographies. New insurance capacity is looking to get on current programmes without materially undercutting the incumbent leads.

Expected coverage change in the next 6 months for claims-free portfolios

We expect the introduction of climate change and environmental related exclusions to continue, driven by the reinsurance markets.

The Tropical Storm Risk August forecast update for North Atlantic hurricane activity in 2024 continues to anticipate a hyper-active season. There remains a very high oceanic heat content across the tropical North Atlantic and Caribbean Sea waters, combined with cold-neutral or weak La Niña conditions which are expected to develop and persist through August-October 2024. These two factors are both expected to have a strong enhancing influence on the upcoming Atlantic hurricane season, although some uncertainties remain.

Emerging risks

Cyber is an under-purchased commodity in the Port & Terminal industry and is a risk that needs addressing.

Renewal recommendations

Insurers do require optimum data for port property accounts, including clear asset schedules, updated valuations, and risk engineering surveys. Valuations remain a significant point of discussion due to inflation and higher replacement costs. Insurers will challenge flat asset values.

For further information, please visit the Lockton Specialty page, or contact:

Michael McGratten

Account Executive

E: michael.mcgratten@lockton.com

Stuart Fraser

Broker

E: stuart.fraser@lockton.com

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