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MARINE | Latin America In association with Liberty Specialty Markets
Tide turns on Latin America’s marine market
Arturo Posada, Senior Vice President, Head of Marine, Latin America, Liberty Specialty Markets, reviews the impact and implications of the recent hardening in the Latin American marine insurance market
What is the most painful task on your current to-do list? Perhaps it’s a challenging piece of writing, a difficult conversation with a stakeholder, or a project that you know will take weeks to complete. As someone who’s worked in the marine insurance industry long enough to witness quite a few pricing cycles run their course, it has been fascinating to observe the current hardening of rates in Latin America’s marine sector. The question is whether we can maintain this momentum on rates and what impact will it have on the marine market in this part of the world. The Marine Insurer Americas Edition | June 2021
LOSS-MAKING BEHAVIOUR The first signs in this region that the market for marine risks was hardening became apparent two to three years ago. Since then, those indicators have intensified. On the hull side, we’ve experienced increases of 30–40%. Stock throughput programmes (STP), which protect businesses engaged in importation, exportation and distribution of goods, including the stock exposure in the ordinary course of transit have experienced similar rises. The reasons behind these rate adjustments go back several years. Back then, many new entrants into the Latin American marine market needed to grow their books of business and market share. Capacity in the insurance market internationally was plentiful so marine business was a prime target for that capital. New entrants piled in and, in response, underwriters cut rates to maintain their portfolios, ultimately to levels that would prove unsustainable. While the Latin American market was not impacted by any high-profile or large claims, low rates and soft underwriting conditions meant that premium volumes were no longer sufficient to support the day-to-day attritional
