In its pre-January 1st analysis of the London cargo market, broker Gallagher Specialty has said that it firmly believes “that the London market hasn’t been in a better position for over 10 years”.
Gallagher said that there would be some returning leaders into the market and that it would be “interesting to see where those that have left some seven months ago will re-appear”. Gallagher thinks that this could add a new dynamic to the market. “We will see some new entrants up to full scratch and may be in a position to offer new lead capacity”, the broker said.
Because London offers a balance between generating healthy profits, promptly settling valid claims and leveraging the expertise of market leaders and brokers, Gallagher said that “we are witnessing an increasing number of assureds turning to London for these qualities in 2024 and beyond”.
The London Marine market had given itself “a collective pat on the back” for its remarkable recovery from pre-2020. Like any market cycle this is the point at which there will be new and returning entrants into the marketplace. Gallagher said that it estimated the London market to have a capacity of $1.25bn to $1.5bn which is about 75% higher than it was three years ago.
Gallagher said that markets continued to push to maintain rating as much as possible, with many risks renewing without major changes overall. However, the broker said that there was “a noticeable undercurrent of intensifying competition escalating”.
Few in the London market can have failed to notice the number of people moves in marine this year. Gallagher believed that this movement, and the talent shortage in the market, was creating a strange dynamic. New, and some existing, markets had some aggressive targets. However, many syndicates and companies were already running at full capacity.
The market had seen a movement away from attritional claims in past years, with increased retentions for assureds. However, medium-to-large claims were still happening, and inflation in this sector had driven an increase in claims values. Increased commodity prices, repair costs, and service costs had all increased the cost of claims over the past 12 months, although Gallagher said that it did not consider this to be worrying trend overall.
Some (but by no means all) markets have once again issued notice for War coverages as a result of the Israel/Palestine conflict, in a similar way to the Ukraine / Russia conflict and for shipments through the Strait of Hormuz. Gallagher said that this was “only on limited exposure, although we are seeing markets at renewal specifically exclude some of these territories, so that they can be aware of any changes that may happen for 2024”.