The US inland marine line is rebounding from pandemic obstacles, according to AM Best’s new market segment report.
This, the company finds, is due to a strong increase in top line premium and a decline in the loss ratio.
The property insurance market for inland marine insurance, typically among the most profitable of property/casualty lines, has hardened, resulting in the first double-digit, year-on-year change in direct premiums written (DPW) in almost a decade.
The sector faced additional challenges with the onset of the COVID-19 pandemic in 2020. Costs to settle damaged cargo claims increased, as did contingency claims from event cancellations.
If the US economy avoids a prolonged recession, inland marine premium should continue to grow, Best says.
However, if the US does move toward a recession, lower shipping activity may result from ongoing inflationary pressures.
Most inland marine segments (goods in transit, travel insurance, construction projects) experienced declines, reducing premium. These factors led to the inland marine line’s worst loss ratio in 12 years, even higher than the industry’s overall loss ratio.
From 2011 to 2019, inland marine DPW grew an average 8% per year, fuelled by steady economic growth. The pandemic changed that dramatically, as travel, construction, and transportation came to a grinding halt, resulting in a 2% drop in inland marine DPW, the first in many years.
Inland marine premiums rebounded 15% in 2021, due to the lifting of COVID-19 restrictions, and the general hardening of the commercial insurance market.
The US Freight Transportation Index, which is based on the amount of freight carried by for-hire transportation industry, provides a reasonable indicator of the premium growth of the market. In 2021, shipping activity rebounded from its low in April 2020, although not quite returning to the highs of 2019.
The growth in pet insurance was strong in 2021, a rare beneficiary of the pandemic and increased rates of home working. In fact, the inland marine writers generating the greatest amount of DPW growth were pet insurance specialists.
