It was only until relatively recently that a marine trader needed to buy a plethora of insurance policies to meet their insurance requirements. Individual policies to cover Property, Legal Liability, Pontoons, Professional Indemnity and Vessels made it a complicated and, in the case of the many for whom insurance represents a grudge buy, painful and expensive.
The advent, in the late 90s of the very first "Combined" policy for marine traders began a typically (for the Insurance Industry) slow metamorphosis of insurance provision to the Marine Leisure Sector into the combined solution. This delivered several advantages to traders, insurance brokers and insurers too. Firstly, traders were spared the pain of sourcing multiple policies with possibly different renewal dates and providers and could also find some overall premium reduction. Brokers too were spared the additional work of sourcing separate policies for those elements of a trader's insurance programme that could now be incorporated into a single schedule and wording.
Insurers benefitted too, at least those that embraced the "Combined" concept. Those that did not saw their stand-alone offerings gradually become obsolete - much as the advent of the motor car rendered manufacturers of horse-pulled conveyances obsolete, the stand-alone offering has all but disappeared.
Stable Market through Crowded Market to Buyers' Market
From the very first combined marine trade insurance policy the market developed into a fairly stable state consisting of a handful of providers. However, in the last six years more capacity in this specialist market has been introduced. In 2014 alone we saw no less than 3 new insurers launch combined marine trade products and from a handful of policy wordings a few years ago we now have over a dozen significant players in the Market with others having come and gone in the same period.
The problem for the provider is now similar to that which the majority of the non-marine insurance segment faces - a perennial soft market and a race to the bottom of the premium barrel. Every underwriter has their choke point sooner or later. With a number of the larger providers competing aggressively against each other since 2010, the 2014 entry of new capacity may not see further price reductions but a further consolidation of the Market as stable. In order to succeed new entrants to the Market will need to deliver innovative programmes or services that can add real value to an insured and/or their supporting brokers.
The Future Belongs to the True Innovators
This may not be such a difficult feat with old-fashioned practices persisting amongst the established providers - the 40-page proposal form being a prime example. Real opportunity in this Market lies with the innovator. The insurer or MGA that succeeds in removing the traditional barriers to doing business and can deliver fast results will have a distinct advantage. But the provider who can address the 21st Century needs of a modern business will be the one that really thrives. Cover essential to the modern company director such as Directors & Officers Liability (still mysteriously rare in the Marine Leisure Sector), Employment Practices Liability and Environmental Impairment Liability is generally missing from combined marine policies.
A specialist broker can offer this sort of modern protection to sit alongside a combined policy but as insurers in general continue to introduce new products that fragment the Market, brokers can offer modern, relevant protection to their marine trade clients by removing cover from the marine trade combined schedule and placing it on an enhanced (and often more competitively priced) stand-alone policy.
It is already possible to deliver to the Marine Leisure Sector competitive, comprehensive insurance programmes that are comprised of stand-alone policies for property, liability and vessels but also encompass innovative products, some new, others improved, to protect the modern business and deliver greater value for the business and the business owner. New products such as Excess Protection, Computer Insurance, Pollution as well as the more robust Directors & Officers cover and revitalised Cargo/Stock Throughput and Engineering insurances can be built into a gap-free body of enhanced cover.
The implication for the long-term future of the Marine Trader's Combines policy is severe. Change is the only constant and whilst the Marine Trade Combined policy rendered the stand-alone jigsaw obsolete, innovation and fragmentation in the wider Insurance Industry is, perhaps, the start of the wheel beginning to turn again and signal the ultimate obsolescence of the Marine Trade Combined policy as it currently exists.
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