Republished with the kind permission of Insurance Day
After two costly, unforeseen loss events in the space of three years, the marine cargo insurance market understands a change is needed in the way it prices and manages its catastrophe exposures
The explosion at the port of Tianjin on August 12 was a significant event for the marine re/insurance industry in a number of respects. The disaster, which is set to become one of Asia’s largest manmade losses, is also highly likely to be the biggest loss for the industry this year.
And, as with the sinking of the Costa Concordia, the nature and the extent of the losses suffered by the market as a result of the Tianjin explosion have caused some in the industry to question the market’s ability to understand and manage its exposures
As Suki Basi, managing director of the Russell Group, explains “an important part of the problem is cargo insurance is a “mass-market” product and typically a very efficient one, where underwriting limits are set and delegated across different regions of the world.” The problem is, Basi says, that the information flow of what is underwritten – the values at risk, at what location and at what time – is not as efficient. Indeed, it is mostly inconsistent and sometimes missing all together.
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