spRING 2011 GlobAl MARKETs INTERNATIoNAl - Willis

marIne
CaRgo
In 2009 our message was simple: it’s a buyer’s market but clients
should not be drawn into compromises on quality, service and
financial security. This did not change in 2010. The economic outlook
has seen a return to growth, greater profitability and increased cargo
shipments. There is some optimism in the market, but the recovery
looks to be tentative.
Competition in the global Cargo insurance market remains fierce. The
same activity which has dominated the market for the past couple of
years remains: increased capacity, greater competition, new entrants
and reduced rates. This new global capacity means further appetite for
underwriting new business at competitive levels.
ClaiMs
In 2010 there were no significant claims; good news for buyers of Cargo
insurance. The hurricane season did not impact the market greatly,
with Hurricane Earl only causing minor damage along the eastern
seaboard of the USA. We did however see a major catastrophe in the
Gulf of Mexico, which may have a long-term impact. This could become
apparent for 2011 reinsurance renewals, however the current thinking is
that limited change is expected.
eleCtRoNiC iNFlueNCes
Buyers of Cargo insurance continue to look for greater operational
efficiencies through the use of technology. Lloyd’s, through Xchanging,
are streamlining claims processes to speed up settlements from
syndicates. This is being piloted in the Marine Hull and Energy markets,
with planned introduction (if successful) to the Cargo market.
Clauses
After the introduction of the new cargo clauses in January 2009, the
Joint Cargo Committee (JCC) has been working on updating the
specialised clauses (Frozen Food, Frozen Meat, Coal, Commodities,
Bulk Oil, etc). We expect to see the first draft of these at the beginning
of 2011. The changes will replicate the general cargo clauses and will
clarify the wording and coverage provided. Revised Incoterms are
also expected to be released shortly. However, it appears that a year
after their introduction, the Rotterdam Rules are still some way from
achieving the 20 signatures required for implementation.
In summary, it remains a buyer’s market for global marine Cargo
insurance. With no major cargo-related catastrophe in 2010, and with
increased capacity, a downward pressure on prices is expected.
36 | Willis | Mining Market Review 2011