September 17, 2018 by Jason Contant
Brokers interested in selling marine insurance should target coverholders and managing general agents (MGAs) in Canada rather than going straight to the London market, advises Capt. John Hosty, national director of marine services at ClaimsPro.
“There are a lot of MGAs and coverholders in Canada, and if brokers are selling marine, that’s where they should be selling. If you try to go straight to the London market, you’re probably going to get rebuffed, even by London brokers.”
Canada is currently a very attractive marketplace for Lloyd’s. “I think the attraction is that the risks are better managed in Canada than they are in the United States,” Hosty says.
Insurance risk management in the marine business is generally based on an actuarial approach, as opposed to a scientific approach. “So if the losses exceed a certain value, [carriers] pull out of that market, at least for a while,” Hosty explains.
Specifically, certain underwriters and their MGAs have reportedly pulled out of the pleasure craft business “because they took such a heavy hit down in the Caribbean last year,” Hosty reports. Hurricanes Harvey, Maria and Irma all tracked through the Caribbean before hitting the United States in 2017, ultimately causing estimated total insured damage losses of roughly $US85 billion.
Other insurers have pulled out of the cargo market because they sustained heavy losses on container ships, including due to container ship fines. “I’m sure they’ll re-enter the market eventually,” Hosty predicts.
Hosty is aware of other London-based underwriters, syndicates and insurers “that are moving towards cancelling, or certainly they are no longer issuing policies and they’re not renewing.” At the same time, he adds, at least two syndicates, and maybe three, “are putting out the feelers in Canada. Of those, two for sure will be doing something in 2019.”
Two trends in the market include: