Marine Cargo Insurance
Marine cargo insurance prices are declining slightly, even though the claim payments insurers had to make are at the same level as in previous years. However, even in an environment that is difficult for insurers, customers can choose from a large number of risk carriers. Hence, price increases or a shortage of capacities are not expected in the near future.
Market Situation
The flows of goods from and into Germany are constantly on the rise. In 2017, German exports exceeded the EUR 1 trillion barrier at an earlier stage in the year than ever before (Source: German Federal Statistical Office). Nevertheless, the expenses incurred by the German economy for marine cargo insurance, after a brief high in 2016, fell back down in 2017. However, this decline by approximately 4 per cent is not because less insurance compensation than in the previous year had to be paid; it is roughly on a par with last year's level. Rather, the German economy is following more international practices, with a trend towards higher deductibles in the case of loss. Moreover, by taking out longer-term insurance policies with annual premiums that are fixed for two or three years, companies have managed to ensure that the prices for their insurance cover are independent of the increasing flows of goods.
In 2017, there was no claims situation where many organisations were affected by one and the same loss ("market loss"), something which, given the insurance compensation paid, might have had a general impact on insurance premiums. Based on the average of the past five years, GDV, the German Insurance Association, has calculated a projected loss ratio of 94 per cent.
German exports …
… from 2012 to 2017
* Preliminary indications
Source: Statista
Trend in premiums and losses …
… in marine cargo
Source: GDV
Outlook
The price which purchasers of marine cargo insurance have to pay takes into account the individual risk conditions within an organisation and the resulting use of insurance indemnification. There is nothing to indicate a general trend towards premium increases for all or individual industry sectors.
Insurance purchasers strive for high planning certainty, which is why they request longer-term contracts with premiums that, even in the case of sales increases, will not change. This interest runs counter to that of the marine cargo insurers who aim to align their premiums with economic trends.
Technical services provided to customers by insurers (such as loading and unloading checks, advice in connection with the development of packaging as well as logistics optimisation support), are becoming increasingly relevant in active risk management. This is why many organisations choose their risk carrier not only on the basis of premiums, but also in consideration of the above mentioned factors and any willingness on the part of the insurance providers to meet the insurance purchaser's interests.
Market Trends
In the current market environment, insurance purchasers can choose from a large number of insurers. Neither a shortage of providers of insurance coverage nor a shortfall in capacities is expected.
Sanctions which change at increasingly shorter intervals remain a major challenge. The decision of the U.S. government to pull out from the nuclear agreement with Irandeserves particular mention here; from 4th November 2018, once the 180 day deadline has elapsed, sanctions will be imposed, among other things, on the provision of insurance payments, insurance policies and reinsurance policies.