Inland marine insurance covers products, materials and equipment that's transported or stored while en route to a final destination. (Shutterstock)
Even before the world watched in horror last month as flames that may have been sparked by renovation work engulfed the iconic Notre-Dame de Paris, members of the Inland Marine Insurance Underwriters Association were concerned about how risk managers can work toward eliminating construction fires, according to IMUA President and CEO Kevin O'Brien.
O'Brien recently gave an interview to A.M. Best in anticipation of his organization's 89th annual meeting, happening May 19-22, 2019, in Leesburg, Va. He said that writing new business remains the largest challenge facing underwriters of inland marine insurance, which covers products, materials and equipment that's transported or stored while en route to a final destination, as the market is highly competitive, includes excess capital, and tends to attract new players who are eager to capitalize on a line of business that historically shows about a 10% higher profit margin than the P&C industry as a whole.
He added that a growing economy means increased exposures in the areas of transportation and cargo, builders' risk and contractor's equipment. Technology could help undercut these exposures, O'Brien continued, like the recent emergence of fire-resistant cross-laminate timber, which risk managers hope will be especially pivotal at undercutting apartment building construction fires.
As with all lines of business under the P&C insurance umbrella, O'Brien said this group of underwriters also has growing concerns about climate change and the increased losses from larger and more frequent natural disasters.
For an alternate take on the state of affairs within the inland marine insurance market, National Underwriter reached out to Sean Dalton, head of Marine Underwriting, North America, at Munich Reinsurance. Below, Dalton shares a 'boots on the ground' perspective on this evolving market.
NUPC: What are the top selling points for inland marine, and who is the ideal prospect?
Dalton: Commercial Inland Marine Insurance encompasses a large number of classes of business. Competitive advantages for underwriters vary depending on the line of business. These include, but are not limited to, the following:
- Specialized underwriting, claims and risk engineering expertise unique to the classes insured;
- Tailored products and solutions with broad coverage forms specifically designed for the property insured and use;
- Cross-sell with solutions for other P&C lines of business the insurers offer in industry practices such as Construction, Transportation, and Energy; and
- Ability to insure assets that are mobile in nature and may not lend themselves to property modelling approached for NAT CAT.
NUPC: What are the top risks associated with inland marine shipping, and what are the best ways to mitigate those risks?
Dalton: For First Party Inland Transit Insurance the top risks are theft and hijacking. This also extends to theft in the warehouse. Driver training and anti-theft devices are some of the steps companies take in loss prevention. Other issues that impact the Trucking Industry also have a direct impact on both Inland Transit Insurance as well as Motor Truck Cargo Legal Liability Insurance. These include driver shortages, driver experience, driver fatigue, distracted driving, and telematics including video.
NUPC: How has the market for inland marine insurance evolved in recent years?
Dalton: The market has drawn many new entrants as it is historically a very profitable market for insurers. Some new entrants have found the business challenging, particularly if they lack the ability to offer products on an admitted basis. There are excellent bureau products available from providers such as AAIS and ISO. When taking into account the various state filing requirements these services are of great value to insurers entering the business.
Other markets have pursued aggressive growth only to find profitability more elusive. Certain classes such as Motor Truck Cargo Legal Liability including Auto Physical Damage, certain Builder Risk segments, and stand-alone property written via MOP / COP Products have proved problematic.
Insurers that are well-established or new entrants that focus on niche segments and distribution seem to outperform the market.
NUPC: What else should today's agents and brokers know about inland marine insurance?
Dalton: Commercial Inland Marine is a specialty line of business. The insurer's value proposition should support writing these classes to properly underwrite and service the business. This is crucial for a sustainable offering.
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Elana Ashanti Jefferson
Elana Ashanti Jefferson serves as ALM's PropertyCasualty360 Group Chief Editor. She is a veteran journalist and communications professional. Reach her by sending an e-mail to [email protected].
