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Read the first part of this story here.
Bates also stresses the need for inland marine protection in any industry heavily reliant on technology. “Particularly with company hardware,
companies need to make sure their limits include the cost of any cabling and installation, as well as the actual computers,” she says. “When we’re talking about software, that really is a company’s biggest resource, next to their employees.”
Bates adds that companies must have adequate disaster recovery plans with respect to their data, including regular backups of computer programs and a strategy to reinstall the data in question.
“If they can’t reproduce the data, there will be no insurance coverage because it just covers the cost to reproduce,” she says. “The company must be able to get that data from somewhere, and the insurance will pay for the cost to re-enter it.”
Small and medium-sized businesses can present another challenge to brokers, Oleskiewicz says.
“Many small to mid-sized policies written by standard markets generally offer a broad property enhancement endorsement that provides sub-limits for several inland marine exposures, such as transit, property off premises, fine arts, accounts receivables and valuable papers,” he says. “While this may satisfy most clients, simply adding this endorsement without a sufficient review of potential or real inland marine exposures may leave an
insured without adequate limits to cover a loss.”
Oleskiewicz adds that it’s also a mistake for an underwriter to assume a property enhancement endorsement is sufficient to protect the insurer’s interests.
“For example, an underwriter providing a transit sub-limit without underwriting the risk may not know whether the exposure warrants additional premium or perhaps different terms and conditions,” he says.
Because the market has so many coverages and so few standard forms, “the broker really needs to dig into the insured’s business and make sure they’re getting the right coverage and policy limits to mitigate their potential liability,” Bates says. “Regardless of the type of transportation, shipment or storage that the insured is involved in, many businesses require inland marine insurance to protect them against unforeseen risks.”
The future for inland marine
Looking forward, there’s little doubt that the Internet of Things will substantially impact inland marine coverage, as it will a host of other product lines.
“Connectivity is definitely going to present challenges impacting exposure, especially with regards to risk and pricing, and particularly for data transmission, data capture and also data storage,” Bates says. “It’s just not clear at this point to what extent.”
As an example, she says, “if we think about driverless trucks, they have the potential to dramatically reduce motor vehicle accidents that are caused by human error. As such, motor truck cargo claims caused by collision could be reduced significantly, which is the top cause of claims in motor truck cargo insurance. Clearly there’s a lot of research going on. It would only serve, from our point of view, to improve the risk by reducing the claim payments.”
Oleskiewicz also highlights the increasing use of data and analytics in insurance. “Underwriters are becoming – or have become – very dependent on technology and analytics to understand their business exposures and how their clients’ exposures will impact insurer results,” he says.
But no matter what the future holds, Bates and Oleskiewicz both point out certain attributes that separate the best inland marine products from the rest of the pack.
“Most companies utilize either ISO or AAIS coverage forms. Some companies will use these as a base to develop their own proprietary forms with enhancements,” Oleskiewicz says. “Companies that allocate resources to analyze segments of the inland marine market, work with knowledgeable
producers that specialize in that segment, and then design a coverage form for that segment … will differentiate them[selves] in the market.”
Bates emphasizes the need to obtain products offering broad coverage from A or higher-rated carriers with good financial strength, who also have experience and longevity in the field of inland marine.
“I think applicants need to select companies with a track record in the class, rather than a new entrant who may decide to withdraw from the market because they dabble in it, and subsequently decide it’s not within their appetite,” she says. “It is an important line of business handling very unique risk exposures,” Oleskiewicz adds. “As such, it requires underwriters who can think outside the box and be flexible to new opportunities.”
