Inland marine insurance market is rolling fast

Nothing keeps an inland marine underwriter as busy as a growing economy. The US economy has, so far, avoided recession with GDP rising 1.6 percent in the first quarter of 2024. Construction continues to grow, and trucks are rolling down highways laden with building materials, consumer goods and freight of all kinds.

It stands to reason that in my 20 years in the inland marine carrier side of the industry, I’ve never seen as many submissions flying in. We love challenges and finding solutions in our specialty inland marine team at Axis. We thrive in a high-energy market like this.

It’s also important for us and our broker partners to continuously elevate our approach to transacting business, addressing challenges in our industry and looking for ways to deliver the best outcomes for our ultimate customers.

Of course, price adequacy is always a topic of interest. The most recent data from CIAB and MarketScout shows price increases in 2023 in the mid-single digits. Our experience on recent placements shows a mix of pricing driven by the individual risk profiles and the experience of the customer. As always, thorough underwriting matters.

Let’s look at the key drivers in the inland marine market, specifically in the transportation and construction sectors, and discuss approaches to ensure success.

Stolen cargo drives increasing concern

Brokers and underwriters recognise how challenging the liability market has been in the logistics and trucking industry in recent years. Accident frequency, economic changes, and social inflation including nuclear verdicts have contributed to significant pricing adjustments in reaction to these market forces.

The inland marine transportation sector is a bit different as these market forces have less influence on overall pricing. However, we too are confronted with emerging issues including cargo theft.

Recent industry reports illustrate the issue. According to one Forbes report, the industry saw 1,183 reported cargo thefts in 2023 with significant increases in the value of the goods stolen.

The report states that electronics are the single most stolen product type, contributing to 22 percent of all incidents. Following closely is the combination of food and beverages and home and garden supplies, driving a combined 30 percent of 2023 cargo thefts.

From our experience, and according to industry experts, the sharp rise is driven by organised theft rings. Some are infiltrating organisations to facilitate theft, even learning the routes of commodities in transit.

Another industry report ranks California, Texas and Florida as the top three theft hot spots in 2023, while CNBC has highlighted that more incidents are being reported at inland logistics hubs including Louisville, Kentucky.

As underwriters, we look carefully at loss prevention and risk management practices on every risk. We are asking additional details about how our customers are addressing theft through risk mitigation techniques and supply chain monitoring.

We are taking a similar approach to warehouse legal liability coverage, asking relevant questions to understand the risk and the mitigation steps companies are taking to prevent loss. The most effective warehouse loss prevention includes background checks on staff, swift action when thefts occur, limited access to stock, and the use of innovative technology such as GPS and radio frequency identification (RFID) in trailers and inside the warehouse, adding vital layers of security.

Construction growth creates opportunities and challenges

Most segments of the construction market are seeing sustained growth. Rising interest rates have cooled residential construction, however non-residential construction spending is growing, recording a 17 percent year-over-year increase in August 2023. The American Road and Transportation Builders Association expects highway, pavement and street construction to grow at double digits in 2024, reaching $126bn.

Every sector of the construction market has faced challenges with inflation driving up wages along with the cost of materials. Shortages of experienced construction workers remain an issue, sometimes delaying projects. Theft of construction materials and equipment are often an issue for contractors and are a factor in the pricing and terms of inland marine construction sector policies.

As with both transportation and construction risks, underwriters are seeking more insight into the operations of the ultimate customer and how they approach risk.

Despite these familiar challenges, we see plenty of promising opportunities in today’s construction market for contractors’ equipment risks, equipment dealers and for mid-sized builders’ risk projects.

Axis puts a high value on organisations that take a clear-eyed approach to risk. We partner with them to offer a steady, consistent risk appetite across market cycles.

For example, we recently wrote coverage for a specialised construction firm, a known customer, frustrated with fluctuations in pricing and terms in the market.

Contractors and other insureds want an insurer that is there for the long run. They appreciate an insurance partner that can write a policy with flexibility to meet their needs so that they can operate knowing their risk transfer needs have been satisfied through the insurance transaction.

Elevating our solutions with our broker partners

Our team has always taken an old-school approach to transacting business with our strategic broker partners. In our people-oriented business, we firmly believe the best way to get a deal done is to pick up the phone or sit down face-to-face.

In my experience, there are four key approaches that distinguish elevated underwriters and effective brokers.

First is being a leading player in the market where expertise is paramount. Inland marine business is not for the faint of heart. To support customers and underwrite effectively, you must understand the drivers of their business so you can tailor coverage specifically for their operations. Brokers should also understand this specialised line of business in depth, so they can advise their customers and advocate for successful placements.

Responsiveness is critical and often determines our success in winning a piece of new business. This business moves fast, usually measured in days but frequently in hours or minutes. Elevated customer service means being available at those critical moments. Recently a broker seemed surprised when I answered my phone and commented how often calls go unanswered. Sticking to the basics and simply picking up the phone makes a difference in the opportunities we see, and it allows us to provide specialty solutions for our broker partners.

The most successful underwriters and brokers regularly reach out to expand their industry connections. The Axis inland marine team works with a focused group of specialty brokers who know inland marine and their customers well. We welcome the opportunity to meet new brokers in our industry sectors to expand our network for success.

Finally, trust is the foundation of successful broker-underwriter relationships. We can work faster and more effectively when we have all the information needed upfront and know the customer’s needs in order to provide specialty solutions for our broker partners.

In this market, our ultimate customers are best served when we look at each submission with fresh eyes and build an insurance solution that helps them grasp opportunities and make the most of today’s growing economy.

By Kristen Hunter, head of inland marine, Axis