As construction projects and the transportation of goods begin to ramp up again as the economy improves, insurers in the Inland Marine market are beginning to benefit.
Transportation and Construction are Inland Marine's largest lines; together, they account for approximately 50 percent of the commercial Inland Marine market.
In the Construction sector, Michael Berg, global Inland Marine product leader for Allianz Global Corporate and Specialty, has seen increased interest in Builder's Risk: Demand has been steadily improving for a year now, he says.
"Builder's Risk [volume this year] is up about 20 percent over 2011," Berg says. And the 2011 figures were up 14 percent over 2010, he adds.
Chubb Marine Underwriters is also seeing improved submission activity in both its Builder's Risk and Contractor's Equipment lines, says Robert Opitz, Chubb's Worldwide Inland Marine product manager.
"These [lines] tend to trend along with the economy and are positive indicators for the overall industry," Opitz says. As building picks up, especially commercial construction, so do equipment purchases and leases, he explains.
In Transportation, meanwhile, one emerging trend is some carriers "have begun specializing in the sector by the commodity" being shipped, says Kevin O'Brien, president and CEO of the Inland Marine Underwriters Association (IMUA) in New York.
Those focusing on the food-and -beverage sector, or writing a lot of coverage for it, need to be especially alert for losses due to robberies.
"Food has gotten to be one of the big targets" of thieves, says Berg, with meat, seafood and alcohol topping the list.
Other desirable commodities among crooks: auto parts (including tires), clothing and pharmaceuticals.
Partly because theft is such a significant peril in this class of business, the loss ratio in Transportation lines is significantly higher than Inland Marine in general, "probably by 10-15 points on a combined-ratio basis," says O'Brien.
SOLAR, WIND POWER GET ENERGIZED
Two other Inland Marine exposures where business is growing: solar and wind-power energy.
"We're seeing some more of these exposures as the economy rebounds and they come back," says O'Brien.
Solar "is a growing segment for Inland Marine insurers," agrees Rich Soja, chief marine underwriter of U.S. Marine for Aspen Insurance. "We see more of that out in the marketplace now than we ever have."
Aspen is a new entrant in the Inland Marine sector from a U.S. standpoint, although its parent company has been providing coverage in the United Kingdom since 2004.
TRENDS IN PRICING
On the rate front, Transportation is beginning to see some traction.
"In Transportation we actually are seeing some upward rate movement," says Soja at Aspen Insurance. For example, he's seeing some rate increases in Motor Truck Cargo Legal Liability insurance.
Adds Berg at Allianz, "We're certainly getting rate increases on much of our [Transportation] business, in areas like Motor Truck Cargo. It's one of the places where we can start to get some improvement on rate adequacy."
IMUA's O'Brien says he expects "some modest improvement" overall in 2012 pricing and is hopeful for further movement in 2013: "It looks like rates are actually firming and creeping up a little, which is another good sign of recovery across the board."
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