However, Conning notes that insurers are cutting back on in-house training programs, and professionals are finding more work on their desks as the result of widespread industry layoffs. “The need for adequate training in inland marine is exacerbated by the fact that much of the current leadership of this industry is of the Baby Boomer generation and faces imminent retirement,” Conning notes.

Compounding the talent issues, inland marine has seen many new entrants who have noted the profitability in this line and are looking for a slice of the pie. Since 2006, Conning says, 10 companies have announced the formation of inland-marine teams and launching plans to write business in this segment.

“One potential effect of the formation of the new inland-marine writers in the past half-decade is dilution of talent pools at existing inland marine insurers,” Conning says. “The high demand for insurance knowledge and industry expertise to support the many products in inland-marine underwriting, loss control and claims has created substantial demand for experienced practitioners with good track records.

Another impact of the influx of new entrants has been to heighten competition in an already-soft market.

Additionally, the available premium in the segment is shrinking due to economy-related issues affecting inland marine's two biggest lines: construction and trucking. For construction in particular, Conning notes new insurers were lured into the market during the construction boom of 2000-2006. However, the bubble-burst in 2008-2010 has left insurers battling over less premium. “Some lingering impacts of the construction boom-bust cycle on inland-marine insurers include expanded coverage grants, particularly in soft costs, hastily built structures during the boom, and increased exposures created by contractors cutting corners in post-crisis circumstances.”

Other inland-marine lines, such as fine arts and yachts, have also seen new entrants, but Conning notes that these traditionally desirable markets have faced challenges “as the recent financial crisis wreaked havoc on the high net worth sector and particularly on certain classes of luxury goods and property.

Still, even with the challenges, Conning says inland marine was still the best-performing medium-sized P&C line in 2010, with direct written premiums of $13.2 billion. Combined ratios have averaged between 10 and 15 points lower than those of the broader P&C industry “for several decades.”

One reason for the inland marine success, Conning says, is that it is principally a non-filed class, “relatively free from rate and form restrictions, driven instead by the business judgment of its practitioners.” Conning notes that inland marine is also largely a first-party line of insurance, “with greater transparency in its results, as distinguished from the uncertainty often surrounding results in third-party lines, caused by occasional revelations of loss-reserve inadequacy.”

Digging deeper into inland-marine results, Conning says the most profitable segments are for personal inland-marine products and some of the more-specialized commercial inland-marine classes. “Larger size or scale was not found to be correlated with superior performance, as many of the most successful inland-marine insurers were not in the upper tiers of the premium league tables,” Conning notes.

Conning also says there are a few “pure play” companies in the sector that specialize in only one inland-marine product, and these specialists outperformed the generalist inland-marine writers. Specialists wrote in areas that include event cancellation, fine arts and equipment breakdown warranty.

Conning cites Liberty Mutual as one company that has shown a “meteoric increase” in reported inland-marine premium over the past decade, achieved through organic growth. Hanover and OneBeacon also achieved strong organic growth over the last decade “though the rise of Liberty Mutual stands out,” Conning says.

The report cites QBE as a company that has achieved strong non-organic growth through mergers and acquisitions.