Sea of opportunity in the ocean marine market

Agents should know that coverage is often overlooked because most general policies exclude vessels and boats

How big is the United States ocean marine marketplace?
The U.S. ocean marine market is quite large and diverse; the 2005 American Institute Report puts it at $2.83 billion. Most U.S. E&S carriers don’t participate in this class and many that do, support a specialty managing general agency program granting limited underwriting authority. There are several E&S carriers in the U.S. that have an in-house ocean marine staff, of these Markel Corp., through its Essex Insurance Co. and Markel American Insurance Co., is one of the largest.

Is the ocean marine market national, regional or seasonal in scope?
The market is national, indeed international, in scope, and there are, of course, regional variations. A good example is the private pleasure yacht market, which is seasonal in nature.

Why should agents be aware of this coverage?
This exposure is so often overlooked it’s often not properly covered, as most general liability and property policies exclude vessels and boats. Retail agents should be aware of this gap.

What risks are eligible?
Ocean marine is un-filed and, therefore, infinitely flexible, which means all risks are “eligible.” However, many marine underwriters follow set underwriting guidelines and, therefore, find it easier to decline a risk than offer a flexible coverage approach. Ideally, ocean marine should be handled by niche E&S carriers who are accustomed to unique and difficult risks.

What is a typical risk?
There really is no typical risk in terms of size, attribute or number of employees. Everyone from Exxon to Joe’s Bait and Tackle may have a marine exposure.

What is a typical premium?
That depends on whether you are Exxon or Joe! But while there is no standard size, just like any other line of insurance there are more small risks than large or jumbo-sized ones.

What is the commission range?
Generally, 7.10 percent for a less desirable class like Jones Act P&I, to 20 percent to 25 percent for some private pleasure yacht programs.

What are the typical exposures that are covered?
Vessel (both private pleasure and commercial) physical damage and liability; coverage on international shipment of goods; coverage on marine property such as piers and wharves; care, custody and control liability for vessels and cargo; coverage for war risks; coverage on offshore platforms; coverage for marine contractors and artisans. Any exposures that involve water may be eligible.

What are key features of coverages?
No one set of features applies here. Because exposures vary so greatly, each exposure has different key features.

What are optional features?
There is very little that cannot be added to or designed by a flexible and creative marine underwriter.

What factors do underwriters consider in selecting risks?
Some of the questions we ask that will determine pricing and selection have to do with navigation; trading area, ownership and experience; prior loss history; age condition; geographic location (whether exposed to tropical storms); terms and deductibles requested.

What are the preferred risks and what risks should agents avoid?
Preferred risks for ocean marine are about the same as in other lines: experience, reputation, ability to pay and honesty. Agents should avoid insureds they don’t know or haven’t previously dealt with. For example, someone you don’t know who has a boat that needs coverage right now; that’s a likely loss for your company, and may stick you with the premium as well.

How can an agent access the ocean marine market?
Agents can access the ocean marine market either through admitted agency companies that have an ocean marine specialty unit, or through the many wholesale agents who represent a carrier that specializes in ocean marine.

John Grossenbacher is vice president of Excess Ocean Marine for Essex Insurance Company, based in Richmond, Va. He can be reached at (800) 963-7739 or jgrossenbacher@markelcorp.com. For more on Essex Insurance, visit www.essexinsurance.com.