What AM Best Says
AM Best: Inland Marine Among Hardest Hit Lines in Quarantine
One bright spot: Pet insurance premium is up 15% this year.
- John Weber
- July 2021
Event cancellation and travel insurance saw higher claims and decreased premiums during the quarantine, said Chris Graham, senior industry analyst, AM Best.
Given the pandemic's impact on supply chains and public events, the U.S. inland marine insurance segment saw a significant downturn in profitability in 2020. Graham discussed Best's Market Segment Report: Significant Impact on Inland Marine Insurers' Profitability From COVID-19 with AM Best TV.
Following is an edited transcript of the interview.
The loss ratio, we can be pretty certain, will rebound.
The inland marine line captures a wide variety of coverages. Why is that?
Inland marine has its roots in goods in transit. Lately, it's become a catchall for new short-line coverages that don't fit anywhere else.
The report references a higher loss ratio for inland marine insurers. Is there a particular sub-line that really suffered due to the pandemic?
Contingency coverages seem to have been hit the hardest, then event cancellation, travel insurance, and even weddings. When we talk about contingency coverages, you can think of large-scale events such as the Wimbledon Tennis Championships. In the U.S. you might think of the NCAA basketball tournament.
We mentioned weddings. Also, travel insurance, so if you had a trip scheduled, and it ended up being canceled, you'd be collecting on that trip insurance you purchased. Those were the hardest hit coverages.
Were there any bright spots in the results?
Pet health insurance continued to grow. It was up about 15% in premium this year, and we expect it to continue growing. We did see an increase in pet ownership, as well as more pet owners taking up pet health insurance.
Does AM Best see the inland marine line rebounding in 2021?
The loss ratio, we can be pretty certain, will rebound. We don't expect another pandemic. New policies that are being written for contingency covers typically have pandemic exclusions or other virus exclusions, so we would expect it to settle from that point.
Anything that's written before the pandemic started would still be exposed, but that would be probably minimal. As far as premium growth, there are still some obstacles. We don't know where the economy's going, which goes a long way for the traditional goods-in-transit part.