Is Your Cargo Business Affected by all the Changes In the Market Place Including Minimum Premium Increases writes Fiducia’s CEO Gerry Sheehy
There has been significant change in recent months in the classes of business Fiducia writes. On the whole the industry’s past problems have arrived to impact their future approach, and for some the view is clearly that their clients should pay for the underwriter’s problems.
As a company we continue to see solid progress in the areas of business we underwrite, cargo, marine trades, engineering and terrorism, all supported by financially strong and sophisticated underwriting capacity.
Certainly, across the first two of our four classes it is an understatement to say it is an interesting time for the market.
We have seen both Aspen and Tokio Marine Kiln (TMK) withdraw from the UK cargo market. This can be seen as a testament to the issues around the ability to charge technical rates for the risks, or a decision by the global head offices that the capacity could be better allocated elsewhere. Whatever the reason it has created a situation where the market and its clients are looking for replacement capacity for those policies that will not be renewed.
That business is looking for a new home and at a time when there are risks to be placed, the market has also been compounded by the actions of some of those who remain in the class. Brokers and clients have seen some underwriters looking to push rates up by between 25% and 30%.
It seems the reason behind such a move is that the withdrawal of Aspen and TMK has also prompted other underwriters to undertake a thorough review of their operations and they have not been happy with what they have discovered. A cocktail of rising expenses and falling premium levels have created a dynamic that they are looking to quickly address. However, to increase prices by such significant levels only sends the message that they are asking their clients to pay for the issues of the underwriter and its past strategies.
There is also more bad news for brokers and their clients, with some cargo underwriters now looking to impose minimum premium levels. Talk in the market of a minimum level of £2,500 premium per case is putting pressure on smaller firms who require cover to move their products.
It is often said that where there is challenge there is opportunity and for Fiducia this is certainly the case. We have built a track record for our “can do” approach to business and the strength of the security behind our capacity has enabled us to continue to grow our business lines.
The fact that we do not look to impose minimum premium levels is a testament to the fact that our aim is to work with our brokers to meet the needs of all their clients. Our aim is look to write a broker’s account in its entirety, not simply look to cherry pick risks and leave the broker struggling to meet the needs of their clients.
Our approach fully appreciates that there will be risks that may have been subject to previous claims but that is the nature of an account and we will work with the broker to address any issues.
If you focus on the media headlines the market looks to be at a critical place for many and quality capacity looks to be scarce. However, from the day of our launch we have recognised the need to work with our partners to ensure they do have options they can provide to the clients. Not only that but backed by solid security, clear policy wordings, which allow the clients to understand what is covered and an efficient and effective claims services ensures that we can respond to brokers and their clients whatever the need arises.
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