Market conditions

With large incidents such as Ever Given, X-Press Pearl, Seacor Power and Symphony, and development in prior year losses, such as Flaminia, continuing to impact the market, the general consensus around pricing remained unchanged. Commercial (re)insurers still believe premiums are at unsustainable levels and price rises continue to be necessary. Notwithstanding this viewpoint, there has certainly been a slowing in pricing momentum and a flattening of rate rises, accompanied with some segmentation within different areas of marine liability. 

The marine property market, which began hardening earlier, is to a larger extent starting to slow with rises of 12.5%, whereas other areas are still acquiring 15% plus rises on renewals with clean loss records and flat exposure. 

However, there is a genuine feeling that clients are getting premium fatigue with the sustained increases being pushed by the market over the last 24 months. Longer-term clients with business that is already rated adequately and with acceptable loss ratios are demanding to be differentiated rather than have the market apply a broad-brush approach to their portfolios. We have negotiated strongly with the market on this point and have found that insurers are more amenable to considering smaller rises where the business has been rated more recently and perhaps requires less remedial action. 

Following the Q1 renewals, we engaged with a number of markets regarding their appetite and it is clear there are two ends of the spectrum, with the majority of markets falling somewhere in between:

• pushing for higher retentions across marine reinsurance placements, moving away from an attritional level of losses
• comfortable with the majority of attachment points, but more focussed on achieving a more sustainable (higher) level of premium.

We need to access a mix of different appetites in order to complete large capacity placements, and our continuous dialogue with the market ensures we are able to utilise capacity to the maximum benefit of our clients. 
 
We are still seeing a slightly disjointed marketplace where increased management oversight means some markets are having to act on management instruction and not what is happening in the rest of the market, a function of still working remotely the majority of the time. We are using our understanding and reach to advise markets when they are an outlier. 

Market capacity

During Q2, new capacity players ERS (IQUW), Inigo and Navium commenced underwriting. 

• ERS (Equity Red Star) was historically a Lloyd’s motor syndicate that recently branched out into specialty classes, with Head of Marine and Energy, Phil Furlong (ex Hiscox). They have now re-branded as IQUW.
• Inigo is a new start up, having acquired the StarStone management agency. James Power (ex AxaXL) is leading Marine and Energy, with Allie Edge (ex AEGIS).
• Navium is an MGA, headed by ex-Beazley underwriter Clive Washbourn who is joined by Oliver Clark (ex Atrium). It is backed by Fidelis, the Bermuda based specialty insurance and reinsurance company.

Exclusions

The marine liability market continues to require the JL2021-014 clause (Communicable Disease exclusion following a public health emergency of international concern) on new and renewing policies. 

At Miller, we continue to investigate the availability of buy-backs for the exclusion as well as working to negotiate wider coverage, meaning we are well placed to keep our clients up to date and advise the market’s stance as soon as it becomes known. 

Ways of working

In May, Lloyd’s re-opened its underwriting room, applying a class of business rota during the week. Wednesdays was designated to the marine market, however both underwriters and brokers are also able to make an appearance on Mondays and Fridays when the room is open to all classes. Whilst footfall was slow at first, in recent weeks there has been an increased buzz and a sense that the market is moving back to the face-to-face environment we all knew pre-pandemic.