The marine insurance market in Singapore needs to ‘substantially improve its efficiencies to continue writing business at a profit’ as margins are squeezed by the current soft market, according to a prominent broker.
Andrew Brooker, founding partner of marine specialist Latitude Brokers, told Insurance Business that the marine market faces a tough challenge to improve efficiency as competition remains high.
“I think the market needs to substantially improve its efficiencies to continue writing this business at a profit,” Brooker said.
“We are seeing some markets, and I actually support this, saying if you can do this without the administration behind it then I will happily write it but with the administration it is just too costly for me and I don’t want to do that.”
Brooker gave an example of cargo policies which are still put together on a declaration basis, using thousands of lines of spreadsheets with no automation which adds burdens to firms in the market.
“That inefficiency means I have got to have more people in my office to handle that business and the underwriters, equally have to have more underwriters in their office, and that is additional cost in a time where we are seeing continuing reductions in rates,” Brooker continued.
As marine comes under strain from current soft market conditions, Brooker said that the industry as a whole needs to develop frameworks that will benefit all parties involved.
“The problem is the way in which the distribution chain of that insurance through the client, to a broker, to a cedent, to a reinsurance broker to a wholesale broker to the reinsurance market to the nine or ten different markets on it, it is too diluted for these things to be dramatically improved," Brooker said.
“We as a business have a challenge ahead of us to make sure that we continue to look very closely at those efficiencies and at the business that we can do so that in two years’ time we are not overloaded with staff because we are handling thousands of policies which is just too inefficient for us.
“The cost of that business is just too high and we have to look very carefully at that and I think that is a challenge, not just for brokers, but the market as a whole and that goes across multi-national brokers and the largest insurance companies.
AM Best reveals the largest insurance companies in the world based on NPW and non-banking assets. Find out where your insurers rank.
“It is the same problem that we have all got.”
Across the insurance industry, technology has been used to drive efficiencies and Brooker said that while this could be the case in marine, it will take a whole industry approach to see an impact.
“There is already technology answers to this, that already exists but the problem is everyone is competing and the industry isn’t saying ‘this is what we need, we need one column platform, we are all going to sign up for that and we are going to drive that through the brokers, through the cedents into the assureds everywhere.’
“That is not in existence yet, there are too many stakeholders involved in it that are not talking the same language yet unfortunately.”
Related stories:
ArgoGlobal acquires renewal rights to Allied World’s Asia marine hull business
No safe harbor: World’s riskiest ports are in Japan and China
‘Very competitive’ marine market presents ‘huge opportunities’ in region
