Diminishing Capacity should be wake up call for UK Marine Market, writes Fiducia’s CEO Gerry Sheehy
The decision by a number of Capacity Providers to walk away from the UK marine market may have come as a surprise to many.
But those who have been working in the sector for some time are fully aware of the pressure underwriters have been under as margins continue to be squeezed.
Indeed in many cases it is the clients rather than their broker that one needs sympathy for. For too long demands for excessive levels of commission have been a contributory factor in the demise of a number of these carriers with instances of brokerage nearer 40% representing the norm rather than the exception.
The Lloyd’s and Company market have been toughening their stance on poorly performing business and the marine classes have been at the forefront of those efforts.
We are aware that some national deals with a number of carriers have earnings which are in the form of commission/overriders/service agreements with payments approaching 50%. As a company Fiducia has been vocal about the fact that these levels of payments to brokers are unsustainable.
But it is not a one-way street, Underwriters have to take their share of the blame for the state the market currently finds itself in.
There is a clear responsibility and burden on those underwriters who simply failed to stand up and resist the brokers’ demands.
The days when the market has been writing for volume at any costs have gone. Marine underwriters are fighting their corner with their underwriting peers in other classes for capacity and the result for those who failed to deliver a sustainable pricing and underwriting profit is now clear for all to see.
The new reality is a market where capacity is scarce and there is now a realisation that if you do not fight your corner in a hardening market then your future is likely to be short-lived.
As a business Fiducia has said from the outset of our formation that we would not look for distribution from brokers with excessive commission requirements or alternative payment requests in the form of over-riders or within service agreements. We are happy to work with most brokers on our rather than their terms but brokers generally need to consider the underwriters position or they will have no access to capacity.
Our door is always open but there has to be a realistic expectation on both sides to ensure that the relationships we build with both brokers and their clients are sustainable in the long term.
For more information please contact one of our Cargo Underwriters
Angela McCluskie firstname.lastname@example.org
David Heeney email@example.com
Jim Moore firstname.lastname@example.org
Lance Carter email@example.com
Mark Kraushar firstname.lastname@example.org