Cargo: each risk is unique

The Joint Cargo Committee has recently reviewed the Institute Cargo Clauses and will be recommending the introduction of the Institute Cargo Clauses 2009. The last major review was in 1982, which is 27 years ago. It seems that cargo insurance is not reinvented very often.

Why? The product works. It must, or else by now we would have had a radical new form of cover to revolutionise the way in which cargo business is underwritten. It has not happened and I do not hear of anything on the horizon; insurers are essentially all offering the same product.

The cargo market is facing a difficult time. The country is now in recession and if we see the predicted fall in high street sales over Christmas and January then we can expect to see falling volumes of imports throughout 2009. No sales means that there is no longer any need to import and so the reduction in demand for cargo insurance could be considerable.

However, it is certain that insurers are still going to want their slice of the cargo market cake. To quote some brainstorming cliches: what is going to be the 'valued added' or the 'unique selling point' to differentiate insurer from insurer? I hope that insurers do not resort to offering brokers just two factors to attract business - those of price and commission.

Cargo insurance is not an homogeneous product and each risk has its own requirements. I believe that brokers still need cargo underwriters to provide cover for and evaluate individual risks. They are all different, from destinations to subject matter, to packing and so on. Without doubt, where a client's business is reliant upon transporting goods, an experienced cargo underwriter is a significant resource for a broker.

I hope that brokers and the cargo underwriters can navigate through these difficult times together and reach happier waters in the very near future.

- Mike Ayres, director, Lonham Marine Underwriters.