During the first quarter of 2018, we didn’t see much reaction in terms of premium movement from the Fine Art, Jewellery, Specie and Cash in Transit Insurance market place. We had anticipated some changes in certain segments and territories following the hurricanes of last year. Then in March, it was announced that AXA will purchase XL Catlin, a major syndicate within the specie market. This was big news! We haven’t seen the proposed purchase of XL Catlin having a direct impact on the prices in the market, but changes are beginning to occur.
In mid-July, there was also the announcement of a potential merger of two Lloyds’ syndicates, Advent and Brit. Both are owned by the private equity firm Fairfax Financial Holding who appear to be consolidating their underwriting platforms within Lloyds. Again, it is too early to state the impact on the market. We will be monitoring the effect of these mergers and acquisitions and the effect on the marketplace.
The Specie market continues to have plenty of capacity; however some of the syndicates are starting to look a lot harder at the underwriting that is taking place, particularly in respect to Cash in Transit and the Jewellers Block sector.
Performance by Sector:
The market remains in a stable condition; however during 2018 we have continued to see significant losses within the Cash in Transit sector. Latin American and South Africa are the dominant territories in respect of these losses. Underwriters are paying particular attention to the performance of the Cash in Transit carriers, with a focus on the investment in the security measures, coupled with employment procedures and the use of technology to assist in these protections.
Within the Jewellers business, infidelity of third parties remains the area of focus due to a steady flow of losses. Insurers are paying a lot of attention to the quality of the information provided along with the security checks and controls that are in place when dealing with memorandum exposure.
The Fine Art market has recently experienced an upward trend when it comes to defective title losses, many of which can be somewhat controversial, quite often making multiple headlines. With technological advances allowing data to be shared more efficiently, gaps and inaccuracies regarding the provenance of an artwork are emerging. Whilst this is great progress for the art world in general, particularly for the victims who have had their collections illegitimately taken from them, generous defective title limits previously offered by underwriters are beginning to drop, with the premiums going the other way.
While the sectors discussed are having a gradual impact on the marketplace, we note that bullion dealers, safety deposit box companies and financial institutions are having less notable loss activity at this time. In summary, we are seeing gradual changes in the marketplace, sector by sector, risk by risk, but certainly not a wholesale change of environment.
When the market is going through a period of change, one aspect that you can control is your risk and how you represent it. An underwriter will evaluate your company’s overall operations and how you plan on mitigating the risk, along with the time and investment you make to reduce your exposed risk.
By effectively managing your risk profile, you will give yourself the opportunity to create a robust protection at a cost effective price.
With the above in mind and the constantly evolving risk components, it remains extremely important to work with a broker that holds deep specialist knowledge of your sector and the insurance market. Starting your renewal process early remains key to deliver the best possible result.
For further information or to discuss your specific risk exposure, please contact the JLT Fine Art, Specie and Logistics team:
Phone: +61 2 9290 8068
Phone: +6 2 9290 8058
Phone: +6 8 9426 0465
This document is compiled for the benefit of clients and prospective clients of companies of the JLT group of companies (“JLT”). It is not legal advice and is intended only to highlight general issues relating to its subject matter. Whilst every effort has been made to ensure the accuracy of the content of this document, no JLT entity accepts any responsibility for any error, or omission or deficiency. The information contained within this document may not be reproduced. If insurance and/or risk management advice is provided, it will be provided by one or more of JLT’s regulated companies.