The longer an insurance market is forgiving of little sins, the worse the day of reckoning.
More than a decade has passed since the Marine Cargo market experienced “hard” conditions. It has been arguably the most stable and accommodating line for insurance buyers for almost a generation.
Things have changed. The market is now “chaotic” according to U.S. retail brokers, a shift that took shape over the past two years in a series of actions that now threaten stability and performance metrics for insurance brokers in this critical coverage line.
The first ripples of trouble appeared after 2017, when Lloyd’s syndicates experienced oversized losses coupled with falling premiums and created an unsustainable situation. Starting in 2019, those ripples grew to be waves that crashed over a number of specialty areas as Lloyd’s syndicates pulled the plug entirely on tough lines. Marine was hit hard in this pullback, and American and Asian insurers haven’t proven able to respond quickly to fill the huge gap left in the market by the Lloyd’s juggernaut.
Cyber Risk meets Marine Cargo
Compounding the issue for brokers and policyholders is the intrusion of the Cyber peril into the risk profile for Ocean Cargo. It’s not enough that Natural Catastrophe claims have risen – now the industry must contend with ransomware attacks that can shut down logistics across the world in an instant. Carriers offering Marine Insurance have avoided specifying coverage for the results of cyber attacks in their policies. By not excluding cyber cover, they avoid having their coverage perceived as less than comprehensive, when compared with competitors. Andy by not affirmatively covering cyber, they avoid the tricky task of actually underwriting the notoriously difficult peril.
This forces insureds to contend with so-called “silent cyber” risk. Will they be covered in the event of a major disruption or data breach? Sure, they may have separate monoline cyber coverage, but in the face of a significant business interruption, the scale of claims will quickly overmatch the limits of almost any cyber policy. They’ll need their Marine policies to kick in to have any hope of mitigating costs, and without clarity, there’s no telling if they will.
What Can Brokers Do?
A hard market is a challenge for brokers, but it also provides an opportunity for them to demonstrate their value as guides to next-generation options. In our latest whitepaper, we go into detail on how this situation has arisen and provide advice for brokers on how to respond, including expert advice from brokers dealing with chaos in the market now. Download your free copy now.
With three years under our belt, the Corvus story is off to a thrilling start and 2019 was by far our most exciting chapter yet.
Mike Karbassi is Vice President and Head of Cyber Underwriting at Corvus. He specializes in Network Security, Privacy Liability, Technology E&O, Media Liability, and Miscellaneous Professional Liability. Karbassi has over a decade of experience in insurance and is a graduate of the Boston University Questrom School of Business.
Gerritt is the Chief Commercial Officer at Corvus. He has over 20 years of sales and marketing experience, primarily focused on technology and data solutions for the financial services industry.
James co-founded Corvus and is the company’s Chief Technology Officer. A 30+ year technology veteran, Jaimie most recently served as CTO of Iora Health and previously co-founded Gazelle.
Mike Lloyd is the Co-Founder and Chief Product Officer of Corvus Insurance. Previously, Mike co-founded Poncho, a personal lines agency InsurTech startup, and was a venture investor at FJ Labs. Mike has an MBA from Harvard Business School and engineering degrees from Virginia Military Institute and MIT.
Phil is the founder and CEO of Corvus. A 30+ year insurance veteran, Phil co-founded broker William Gallagher Associates (acquired by Arthur J Gallagher in 2015) and was an active leader in both the Worldwide Broker Network and Council of Insurance Agents and Brokers. Phil is the Managing Partner of Edmus Ventures where he invests in InsurTech companies including Verifly, Wellthie, Agentero, and Cover Wallet, and serves on the board of Cover Wallet.