Pet Insurance Outperforms Travel, Other Domestic Maritime Coverages Cuts By COVID: AM Best
The US domestic marine insurance segment saw a “significant decline in profitability” in 2020, its loss ratio deteriorating by almost 16 percentage points amid the COVID-19 pandemic, according to a report by AM Best.
Best’s market segment report, “Significant Impact on Profitability of Domestic Marine Insurers from COVID-19,” notes that any outcome in the domestic shipping line, which has consistently outperformed the rest of the US P&C insurance industry , has fallen behind the industry as a whole. in 2020.
The segment also experienced its first decline in direct written premiums for over a decade in 2020. Premiums decreased 2.6% compared to 2019. Nonetheless, the amount of premiums was higher than observed in 2018 and is expected to increase. resume when economic activity returns. at a normal level.
The report says the COVID-19 pandemic has affected the segment in two main ways – through contingency losses on events and productions scheduled before the pandemic, as well as a drop in new events and travel plans.
Domestic marine insurance is made up of a very diverse group of coverages, including freight, communications equipment (e.g. cell phones), event cancellation, fine art, personal watercraft and l health insurance for pets, among others.
Among the coverages, pet health insurance was a positive point in 2020. It helped mitigate part of the decline in segment premiums. AM Best expects the pet health insurance market to continue to grow and maintain a relatively stable loss ratio.
Travel insurance (ie Trip Cancellation) is also an important segment of the domestic shipping line. The number of passengers fell in March and April 2020. Despite some recovery, air travel during the second half of 2020 and through 2021 still represents just over 40% of those in the same period in 2019. This decline led to loss payments on insurance policies against canceled trips scheduled before the pandemic, as well as the decrease in the number of new trips, which reduced direct written premiums for travel insurance.
Overall, the decline in contingency coverage (i.e. travel, film production) and the overall impact of the economic downturn on freight outpaced increases in pet insurance and spending. of construction. However, given the volatility of emergency demand due to the pandemic and the growth in consumer purchases of pet health insurance, AM Best said he expects a further spread of the inland maritime premium on the market.
Source: AM Best
COVID-19 AM Best
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