After several years of post-pandemic recovery and trading uncertainties, the beginning of 2025 has seen an increase in market participants that has led to insurance capacity reaching an all-time high. This comes despite ongoing challenges in the broader economic and geopolitical landscape.
The combination of increased market capacity and the absence of a market-changing loss event has caused the London Cargo Market to soften at a faster rate than anticipated.
The Freight and Logistics market is expecting a sustained period of growth as the transportation industry continues to expand; however, insurers are keen to maintain current rating levels.
The Livestock and Aquaculture market remains healthy, with rating remaining flat. There is strong demand for disease coverage, particularly due to outbreaks of Avian Influenza, but insurers’ appetite for this risk is waning.
Changes in Policy Terms and Conditions
There are currently no major changes in terms and conditions, but some insurers are submitting creative responses to accommodate specific risk exposures. Overall, coverages and deductible structures seem stable, with competitive tension currently centered around rating/premium spend.
Notable Claims
Underwriters within the cargo market are currently reporting good levels of underwriting profitability. While there have been few large-to-medium-sized losses, events such as the Los Angeles wildfires, the Francis Scott Key Bridge collapse, and Hurricanes Beryl, Helene, and Milton have kept insurers mindful of the need to maintain underwriting discipline.
Geographic/Sector Differences
Some sectors, including retail (Stock Throughput (STP)), tobacco, mobile phones, and auto, are traditionally less popular with underwriters due to historically adverse underwriting results. Nevertheless, we are noticing more carriers willing to broaden their general appetite to these challenging segments since underwriting margins have improved and insurers are eager to grow their overall portfolio size.
New Solutions
Lockton has recently launched SupplySure, which will offer a combined solution for STP and Product Recall coverage and provide a package discount for clients purchasing both coverages. This solution is particularly useful for the Food and Beverage and Automotive sectors. Cargo underwriters are receptive to creating bespoke coverages on a case-by-case basis.
Our Livestock specialists have also released their new Feedlot Program, with a particular focus on Oceania.
Outlook
We are expecting rate reductions to be a feature of accounts during 2025. Profitable business—particularly if it hasn’t been remarketed for several years—may attract rating reductions of up to 10%. The renewal outcome will be highly dependent on the individual risk, strength of the loss mitigation management, the variation of insured values, and the extent of natural catastrophe exposure.
New entrants that joined the insurance market in 2020/2021 have grown in size and confidence and are now seeking leadership positions. Furthermore, new entrants that have set up in 2024/2025 are adding additional capacity as a "follow market." This is challenging the status quo and is helping to create firm competitive tension. Loyalty has clear client benefits, but the increased market competition offers buyers alternatives that should be considered.
Expected Capacity Change
London Market capacity is at an all-time high and will increase further. We estimate the London Market primary and excess capacity to be in the region of USD 1.5 billion, cementing London’s position as the global cargo market leader. This capacity will continue to increase as new entrants become established.
Expected Coverage Change
London Cargo market appetite and capacity have been growing for several years and have now reached an all-time high. In the absence of a market-changing loss event, there is no indication that this will subside in the near future.
For further information, please contact a member of the team or visit our Cargo and Logistics page (opens a new window).
