Cargo wordings now including cyber and communicable disease addenda

Various wordings in cargo contracts were currently being looked at by underwriters, particularly in the areas of cyber  and communicable diseases, according to panel members on a discussion at Marine Insurance Americas on Tuesday June 1st.

At a panel entitled Cargo on Slow Turn to Profit?, moderated by Joseph Grasso, Partner, Wiggin and Dana, it was observed by Arturo Posada, SVP, Head of Marine, Liberty Specialty Markets – Latin America, said that wordings in LatAm were mainly based on London clauses. “However, we are seeing addendums for cyber exclusion and communicable disease exclusion. This was being put into wordings as mandatory for any new business.” He said that the LatAm cargo sector was trying to streamline the quarantine clauses, which had been the cause of some issues since the start of the pandemic.

Isabelle Therrien, SVP-Canada (IUMI Cargo Chair), Falvey Cargo Underwriting, said that Canada was seeing a tightening of wordings in cyber clauses and communicable diseases. She noted that, as part of the derisking of portfolios, underwriters were looking at clauses more carefully. Therrien observed that there were several forms in the market and that whatever underwriters, brokers and clients agreed to, it was important that all of them were “100% sure” what they were agreeing to.

Grasso observed that during the soft market there had been a broadening of terms and conditions, and that there was now a pushback on this.

David Fowler, Divisional Vice President, Great American Insurance Group, said that communicable disease and cyber exclusions were now commonplace. He also observed that delay was generally difficult to insure, but noted that definitions were being broadened in the cat space, specifically wind no longer being tied to a named storm, and wildfires now being a named peril.

Other aspects that had been “tagged on” to cargo underwriting, such as debris removal, etc, were also being looked at by underwriters and sometimes not being included as part of the policy, the panel said. This was reflective of a tightening in the market place.

Johnny McCord, CEO and founder of instech MGA Loadsure, said that the company had entered the market as it was hardening, but it did not want to be seen as just new capacity. “With the like of AI we have to make sure we have a data-driven approach. With that approach there is no such thing as a bad risk, there are only bad terms and conditions”. McCord hoped that the bad t’s & c’s would be a thing of the past.