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Market Update
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Marine Cargo - International
Printable Version
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The London Cargo Market
The Cargo market continues to experience difficult trading conditions, with rates
softening further during the last year. Competition from overseas markets is
fierce, but renewal success is high and appetite for new business remains strong.
As has traditionally been the case, the more complex business is where London
is strongest, but with a growing number of syndicates prepared to provide their
capacity to overseas agents, the smaller accounts are also increasingly finding
their way to London.
Rating is unlikely to harden in the coming year, as capacity, both here and
abroad, remains high.
Stock Throughput
There is still good interest in these risks, and underwriters are keen to retain and
win accounts.
Rating has generally softened over the past 12 months, although not significantly
so. This trend is likely to continue for at least another year; spurred on by
aggressive underwriting by domestic markets and recently benign hurricane
seasons. A difficult hurricane season this year would undoubtedly slow this
trend.
London remains particularly strong on the higher risk accounts, either through
the type of goods involved or the catastrophe nature of the locations insured,
such as earthquake and hurricane exposure.
Lockton has dedicated facilities for this class of business, creating a market that understands and is willing to accept these
risks.
Cargo War on Land
The London Cargo War on Land market continues to see steady growth in the number of syndicates and companies offering
products, although overall capacity in this area remains limited. We have seen a gradual softening of rates in both Iraq and
Afghanistan since 2006, and this has, to some extent, continued; however, in comparison to the general cargo market, rating
remains elevated.
In the forthcoming 12 months, we would expect to see rating plateau and we watch, with interest, the U.S. Government’s
strategy in Iraq and ISAF deployment in Afghanistan, with any significant deterioration in the security situation quickly
reflected in rating.
Lockton has seen its portfolio grow significantly in the previous two years and is recognized as a market leader in this sector.
Equipment All Risks
Premiums have reduced for some accounts in this class; however, rating remains buoyant in catastrophe exposed areas, such
as the Gulf of Mexico, and reductions in this region have been more modest. Increased capacity in the short-term continues
to be a threat and the U.S. market seems to have resumed interest following its substantial withdrawal, due to losses sustained
form hurricane Katrina and Rita.
We would envision a continued, but steady, reduction in rates, but the ever-present threat of windstorm will likely prevent a
dramatic fall. London capacity remains high, but specialist knowledge remains restricted to the acknowledged leaders.
Lockton remains strong in this sector and generates the largest book of business into the London Cargo market.
Underwriting
Cargo capacity has grown further during the past 12 months, with last year’s new entrants doing good business.
Larger syndicates and companies are increasingly pushing for leadership positions and a larger share of favoured risks.
Certain European markets are looking to increase their role in London brokers’ business, with interesting results, especially on
the more difficult types of exposure.
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Please contact your Lockton Representative for further information regarding any information contained in this
market update.
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