Angela McCluskie of Fiducia pushes against creeping commoditisation in marine cargo and tells brokers there are opportunities for the taking in this complex market.
The issue for many when it comes to marine cargo insurance has been the creeping moves by most insurers towards greater commoditisation of policy coverage and online trading. Marine cargo is complex and as such requires experience and expertise to identify the risks that a shipment can face and to accurately rate that risk.
In many ways this move to a more commoditised and e-tradeable approach flies in the face of the fact that few if any cargo risks are identical. Can different risks truly benefit from a generic rating, cover and wording?
We have seen many online risks set up on completely the incorrect basis due to incorrect information being inadvertently entered on to an electronic system.
Discussion
As brokers there is an opportunity to deliver the product that best meets your clients’ needs. With pressure on rates and on the economy the cost of cover is always a core buying decision but the flight to a cheap and cheerful commoditised approach does nothing for the wider insurance sector, especially when claims start to fall into the growing cracks in the coverage.
What’s required is the ability to proactively discuss with underwriters the areas where providers are able to extend policy coverage to the benefit of your client on a risk by risk basis.
The issue of commoditisation is being raised at an international level with the International Union of Marine Insurers warning against the threat posed by such a move.
It has cited recent research that has found that while the cargo needs to be moved from point A to point B the complex nature of global logistics will see the cargo or container travel by anything but the most direct route and can often see multiple stops and multiple transfers from vessel to vessel.
It leaves the cargo owners facing risks which may well not be immediately apparent when considering the trip that cargo looks to undertake and as such it needs a more bespoke solution and cover that better reflects the risks.
For instance, would a cover which cites protection from UK to and from points across the world be more appropriate rather than one which limited itself to and from specific countries?
Demands
The issue of storage outside the ordinary course of transit (stock throughput) has also been a topic that continues to generate much debate. It is not about seeking to bolt-on additional cover simply for the sake of it but more a case of ensuring that the client’s cargo is protected for all reasonable eventualities.
The need for a more bespoke approach is as valid for climate controlled goods whilst in a refrigerated or temperature controlled container or vehicle. Delay can be critical for such cargos and as such this needs to be properly reflected in the policy’s terms and conditions.
Put simply brokers need to become more not less demanding and take the view that the client will pay for a cover that is actually fit for purpose.
They should be questioning their underwriting partners on whether they have the ability to adapt and redefine their offering to ensure that it is fit for purpose on a risk by risk basis and whether they adopt a “can do” approach to the underwriting process.
You as brokers not only have the opportunity but also the duty on behalf of your clients to play your part in engaging with underwriters to provide clients with the tailored cargo coverages that best meet their needs.
Angela McCluskie is an underwriter at specialist MGA Fiducia.
