London leads liability, Asia yet to respond
There is no doubt that Asia is a highly competitive market for traditional marine hull insurance. We have mentioned in previous blogs how shipowners are in a good position to secure well-rated insurance from competitive Asian insurers as a way to offset the rises being sought in London.
However, in terms of marine liability programmes for large, multi-jurisdictional or complex risks, Asia has not yet responded to local demand, allowing London to continue leading the way.
Whilst small or purely local programmes in Asia can often be placed in their respective domestic insurance markets, this is generally not possible if higher limits are involved or risks are spread across multiple jurisdictions. For example, the Korean, Japanese and Chinese markets have the experience and appetite for domestic programmes, but we are unlikely to see them entering the international arena in the short to medium term.
Generally speaking, international insurers operating in Asia have not placed specific underwriting expertise for larger liability programmes in to the region, contrary to hull, cargo or P&I.
As such, these programmes tend to be underwritten via the US or London head office by an underwriter who may have less in-depth experience or knowledge of the Asian market, the particular legislative environments, or the insurance and servicing requirements of clients in Asia.
It is fair to say that Asia, apart from the developed jurisdictions such as Hong Kong, Singapore, Korea and Japan, often has relatively immature liability legislation or infrastucture. This has historically affected demand for liability insurance in the region; however, the understanding of insurance buyers in Asia is developing, creating an increasing need for liability underwriters. Furthermore, those buyers expect to utilize capacity in Asia in the same way they do for other classes due in part to the perceived servicing benefits.
Some insurers are responding. In the last two years, some Lloyd’s syndicates have sent liability underwriters to Singapore, and other insurers and syndicates are likely to provide the expertise and capacity in the near future. There is also at least one Agency market in Asia currently expanding their liability portfolio and employing underwriters who were previously based in London.
However, London continues to provide most capacity due to its historical experience in this area. It remains the leading market for a large swathe of marine liability programmes across the world.
We believe the Asian market is under-served by liability underwriters, certainly when compared to marine hull, cargo or P&I, and an opportunity exists for a leading liability market to grow an Asian book.
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