Attracted by the market’s hardening over the last couple of years, Rokstone has recently brought new capacity into the class, launching an $18m Global Facultative General Marine Cargo facility backed by A rated global carriers.
Speaking to Aventum Marketing Director Matt Field on the latest edition of Rokstone Explores though, Birchard explained that an influx of new capacity should not cause alarm to existing players, and would not trigger a reversal of the improving rates trend.
“Underwriters at the moment are still very disciplined in what they’re writing,” he said. “Everybody knows the downside of a soft market now, and new capacity like ourselves are certainly aware of what’s gone on in the past, and we’re there to join the market, and make some money, along with everybody else.”
Marine Cargo had produced very good underwriting results for carriers in the early 2000s, Birchard explained in the interview. Combined with the attractive short-tail nature of the class, he said this had caused an abundance of capacity to flood the market, creating a downward spiral in rates and terms fueled by a demand from management for underwriters to write for income.
Subsequent market exits and reduced capacity have taken the class away from these unsustainable soft market conditions, and towards the hardening market of the last two to three years.
And Birchard said that as long as discipline holds within the existing market, and the new players joining the market, all could continue to profit from the improved rating environment for the foreseeable future.
“Underwriters are no longer being asked to write for income,” he added. “Management now know that you’ve got to write for profit, which I know is a discipline that Rokstone always enforces, and that’s a discipline I’ve always underwritten to anyway, so we should be in a very good place for the next few years.”
The market has reacted well to the impact of the pandemic, Birchard added, with various clauses introduced to either exclude COVID-19 claims, or heavily sub-limit them. With growing income thanks to the improving rates, Birchard said that most insurers were well placed to handle any claims that do come in.
Birchard went on to discuss a range of other issues all Marine Cargo underwriters should be considering, including the impact of unusual weather patterns causing windstorms and wildfires, as well as how increasing civil unrest and riots around the world may affect losses in the class.
Listen to the full interview below to hear his thoughts on these subjects, as well as find out about Birchard’s long history in the London market, starting back in 1978.
