Global cargo premiums rose by 6.2% in 2023, reaching $22.1 billion, according to the International Union of Marine Insurance (IUMI).
This sustained growth reflects several consecutive years of positive market development.
Additionally, cargo loss ratios – the difference between claims paid divided by total premiums –improved across many regions.
Although loss ratios typically increase over time, 2023 began with a notably lower baseline compared with previous years but, combined with stable and relatively low claims, this has created a favourable environment for cargo underwriters.
This increase demonstrated positive market development that has been sustained for a number of consecutive years.
In general, loss ratios tend to develop (ie increase) over time but the starting point for 2023 was significantly lower than in previous years.
This, coupled with relatively low and stable claims, has created a positive environment for cargo underwriters.
“In general, the cargo market is healthy and in a good place,” said Mike Brews, chair of the IUMI cargo committee.
“We appear to be in a good part of the cycle. Losses have improved over the past five years with major losses down year-on-year. It appears that carriers and operators are focusing much more on loss prevention which is good for all concerned, particularly those serving at sea.”
Brews, however, said a number of areas required careful monitoring, notably the change in global weather patterns.
Major storms were becoming a concern for all insurance classes but with marine bearing the brunt.
Marine cargo losses due to extreme weather events were no longer localised and resultant losses were starting to increase – this included static and in-transit cargoes.
Similarly, containers lost at sea were also on the rise.
International conflict also continued to be a concern with cargoes being affected as they transit high-risk areas such as the Red Sea and the Russia-Ukraine war zone.
Hijackings were also reported to be on the increase globally.
The accumulation of risk on single vessels or in ports or other shoreside facilities was another issue underwriters needed to remain aware of.
“Multiple consignments will always gather in single locations and ever-larger vessels will always carry large high-value cargoes,” said Brews.
“But today, the market is much more aware of stocks and values and is cognizant of the potential risk. Our knowledge of the issue is so much better and so we can take steps to mitigate that particular risk.”
He added that insurance companies were paying more attention to their marine business than in recent years.
“Although marine is usually a small part of the overall portfolio, losses can be significant. Underwriting discipline is improving and companies are focusing on their loss ratios and not chasing business based on premiums alone.
“This is good news and, as a result, the market appears to be moving in a positive direction.”
