A large vessel carrying what looked to be hundreds of cargo containers was docked in the San Diego Bay during the first day of the National Association of Professional Surplus Lines Offices convention.
In a conversation at the convention, Donald Harrell, senior vice president of marine for Liberty International Underwriters, said a new line of "supertankers," set for launch next year, could be the next opportunity in the marine-specialty market.
On these new vessels could potentially be billions of dollars in risk—from the cargo being shipped to the value of the vessel.
"You have to wonder if there is enough capacity in the market to handle the risk," said Harrell—a big statement to make during a time of such excess capacity.
But with these supertankers, "there is a huge potential for loss," he noted, pointing out that they are hundreds of yards long and a hundred yards wide—with the capability of transporting more than 15,000 containers.
The surplus industry will be contemplating how to handle the total accumulation of losses in a worst-case scenario: Think of the business interruption as well as the contract liability floating along the seas, along with the various goods.
"In terms of cargo, there could be thousands of policies on one ship," Harrell pointed out. "Maybe one company has 100 clients with 100 different limits."
The new risk is likely a "much bigger reinsurance accumulation issue" in order to fill in the gaps at the top of the risk transfer, he said.
However, the new risks associated with these supertankers could breathe some new life into a segment of the specialty market that has been mired in a decade of stagnant growth.
Harrell says there have been "the same number of vessels" and writing the line has been "fairly straightforward."
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