WHAT FORWARDERS CAN EXPECT FROM INSURANCE PROVIDERS IN 2021
Insurers caution international forwarders and logistics providers to brace for changes in their insurance pricing and coverage. The global pandemic follows an already unwelcome reduction in marine insurance providers resulting from consecutive years of losses, all of which is having an almost immediate and direct impact on forwarders around the world.
With reduced capacity (supply) following a significant constriction in providers at Lloyd’s, insurance pricing for many forwarders has already edged upward, some as much as 50%. Adding to the uptick in pricing and more conservative underwriting are concerns of increased pandemic-related losses, uncertainty, rising personal protective equipment theft, and cyber claims. Consequently, even highly profitable insurers have gone on the offense with pre-emptive rate rises and communicable disease exclusions.
FUTURE WORRIES & UNCERTAINTY
The insurance industry is built on the foundation of actuarial science, but COVID-19 has introduced unwelcome uncertainty around claims, litigation and the potential for new legislation. Some insurers brace for an even greater rise in theft losses fueled by mass global unemployment.
In addition, forwarder liability underwriters worry that shippers will push more liability upon their transportation intermediaries. Not helping matters, this year’s unprecedented number of storms and global civil unrest are fostering a hardening insurance market.
GOOD NEWS
The good news for forwarders is that history is certain to repeat itself. New insurers will step in to take advantage of the rising rates, which will increase competition among insurers and ultimately reduce pricing. In point of fact, there is still a plentiful global supply of insurance. The advice to forwarders is to align with insurance providers armed with multiple options and proven creative means to control pricing without compromising coverage.
As an example, WCA’s own insurance unit, World Insurance Services, expanded their number of insurance providers to four and are using their large global buying power to keep the lid on rates and coverage. This has protected members from what could have been more unwelcome news.
Greg J Kritz, CIC Executive Vice President World Insurance Services greg@worldinsuranceagency.com.