Most Cargo policies fall into one of two categories: transit policies, which cover the goods only while in transit, and stock throughput policies, which cover the goods both while in transit and while in storage at a storage location.
Large losses, both Cat and non-Cat, continue to impact the Cargo market. Cat is modelled on storage exposures but does not consider goods in transit or in port. Meanwhile non-Cat losses, given their less predictable nature, cannot be modelled effectively, but more can be done to provide underwriters with the tools to understand the exposures within their complex portfolios.
Quest Marine Cargo uses external shipment data to provide new insights into cargo exposures, and supports the use of an organisation’s storage location data to help visualise storage exposures in new ways.
Accessing data in Quest Marine Cargo
Digital environments give anyone in the market access to a growing wealth of curated third-party data. To make accessing the relevant data quick and easy, data on relevant organisations can be linked or ‘matched’ to an account. Underwriters and Brokers can easily select one or more entity from a vast pool of data through a simple search. Quest Marine Cargo then automatically populates features using data related to those organisations.
Fig1: Account matching in Quest Marine Cargo
Quest Marine Cargo uses detailed external shipment data in several ways, providing Underwriters and Brokers with:
- visibility over policyholders’ trading patterns
- peak port and vessel exposures
- portfolio level port and vessel accumulations (combined assessment of all policy holders)
More detail on the identification of port exposures and accumulations at account and portfolio level is outlined below.
Port exposures at account/policyholder level
Understanding the chance of a large loss in port is critical to managing exposure. To help manage the visibility of risk in port, Quest Marine Cargo calculates the top ten ports with the highest monthly peaks of exposure over a chosen period (up to 5 years). It does this by using granular shipment data to place individual shipments at certain ports at a given point in time.
Fig 2: Port accumulation graph in Quest Marine Cargo
The variance in monthly peaks gives a strong indication of whether an incident might result in a large loss:
- If peak exposures are consistently high, any major event at that port is likely to result in a large loss.
- If peak exposures are rare, then the likelihood of a major event coinciding with a peak in exposure is less, lowering the probability of large loss.
This view can be particularly useful when matched with other seasonal data, such as weather events, to predict the likelihood and severity of future claims.
A broader range of data is available as a list highlighting all port exposures, from largest to smallest, within the chosen time period.
Port accumulation at portfolio level
Improved visibility of peak exposures and associated trends at portfolio level ensures the potential for large loss is understood across all accounts. Quest Marine Cargo applies the insurer’s share to cargo values before combining them to provide an accurate view of portfolio exposure. When viewed as a list it provides a breakdown of all the accounts for a comprehensive understanding of each peak. This includes:
- 100% cargo value
- Signed line
- Share values (which contributed to each accumulation)
As a graph, the top 10 ports with the largest accumulations are displayed in the same way as they would be for an account. It highlights:
- Seasonal trends
- Frequency of large exposures
Fig 3: Port accumulation at portfolio level in Quest Marine Cargo
Understanding where your highest value storage locations are, and whether there’s any accumulation across multiple locations helps define regional exposure. Quest Marine Cargo’s storage location mapping tool turns what can be a time-consuming task into a simple one. Insured storage locations are displayed on a map and colour coded relative to their total value. Quest Marine Cargo takes location addresses, finds the relevant coordinates, and plots them on an interactive world map which can be used to view storage exposures either at policyholder or portfolio level.
Fig 4: Storage location details as they appear in Quest Marine Cargo’s map view
Fig 5: All storage locations for an account with relative risk indicator
Storage Exposure Overview
Understanding storage exposures in a complex Cargo portfolio can be challenging. Detailed storage location information is available on each policy, or at company level as part of the Cat modelling process. Rarely is this information readily available to Underwriters in a way that allows for a detailed view of storage exposures across all locations within the portfolio.
Quest Marine Cargo captures the location information contained within the storage statement of values (SOVs), as well as policy information, to provide Underwriters with flexible tools that allow them to see their storage exposures in new ways. The Storage Exposure Overview considers the relationship between stored values and attachments points for each location, while also being filterable by type of good or location type. Clearly pharmaceuticals pose a different risk than machinery, and retail locations are different to open vehicle lots. These factors are of course considered by Underwriters at policy level, but in a portfolio containing thousands of covered locations, having visibility over the wide range of exposures requires new tools that help Underwriters in their analysis.
Fig 6: Storage exposure overview as seen in Quest Marine Cargo
For Underwriters that only write primary stock, the table view shows the distribution of storage locations across different value bandings. This shows:
- How many locations in their portfolio expose the Underwriter to different potential losses, and
- Ensures that location breakdown is in line with the underwriting strategy
For more on our approach to Cargo insight, download our white paper:
To see how our platform, Quest Marine Cargo, can help your business, get in touch:
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