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For two hundred years, the modus operandi of the insurance industry has been to follow the status quo. Today, protecting and growing your business demands a new perspective. It is time for a different way of looking at risk.
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Cargo and transit insurance, often referred to simply as cargo insurance or marine cargo insurance, is a specialized type of insurance coverage designed to protect goods and merchandise while they are being transported from one location to another, whether domestically or internationally.
Types of Policies:
Cargo and transit insurance policies can vary in scope and can be tailored to suit the specific needs of the shipper or cargo owner. Common types of policies include:
All Risk: This provides the most comprehensive coverage, protecting against a wide range of perils, with certain exceptions clearly specified in the policy.
Named Perils: These policies cover only specific risks that are explicitly listed in the policy. Common named perils might include fire, theft, collision, and certain natural disasters.
Inland Transit Insurance: Designed for goods being transported within a country, this coverage typically includes both land and waterway transportation.
Ocean Marine Insurance: Primarily focused on goods transported by sea, ocean marine insurance is crucial for international shipping.
Additional Considerations
Cargo and transit insurance is a crucial safeguard for businesses involved in the movement of goods, whether domestically or internationally. It provides protection against a wide range of risks that can occur during transit and ensures that businesses can recover financially in the event of loss or damage to their cargo.
The intricate field of insurance is often challenging for businesses to navigate. The emergence of Insurance Risk Purchasing Group (IRPG) or more commonly known as Risk Purchasing Group (RPG) offers a collaborative approach for organizations to streamline their insurance procurement processes.
According to a Moody's Ratings survey, reinsurance buyers are showing a strong preference for catastrophe bonds, with over 80% expecting to use them in the coming year, marking the highest demand in four years. Sidecars are also expected to see elevated demand, while collateralized reinsurance remains attractive but slightly less preferred than the previous year. Despite the shift toward alternative capital markets, buyers still value long-term relationships with traditional reinsurers.
Fitch Ratings expects strong growth in the alternative reinsurance capital market, particularly for catastrophe bonds and other insurance-linked securities (ILS), into 2025, unless significant catastrophe losses occur in the second half of 2024. Investor demand remains high due to attractive returns and limited recent loss activity, with a growing interest in private ILS and collateralized reinsurance.
The insurance-linked securities (ILS) market set new records in the first half of 2024, driven by strong demand from investors and robust catastrophe bond issuance, with over $12.3 billion issued across 49 transactions. Despite heightened catastrophe activity and significant insured losses, the ILS market remained resilient, with minimal impact on outstanding bonds. Swiss Re notes that the cat bond market continues to offer attractive relative value, with strong returns reflecting sustained investor confidence.
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