How tariff uncertainty affects storage and distribution in inland marine insurance

Don’t let tariffs compromise your insurance coverage. Markel’s Darren Hamman (pictured) explains the challenges, and why collaboration is now crucial.

Tariff changes, and the uncertainties they bring, have far-reaching implications for industries such as insurance, and in today’s globalised economy the effect of increases or decreases can be crippling.

In an exclusive interview with Intelligent Insurer, Darren Hamman, senior director of inland marine at Markel, explains the intricate relationship between tariffs and inland marine coverage and highlights the need for adaptability and collaboration among carriers, underwriters and clients. 

“The current tariffs situation is particularly relevant because of the import and export of product,” Hamman began. “Due to tariff changes, all those products will increase or decrease in value, and they will have a huge impact on the insurance coverage related to inland marine in today’s current marketplace.”

This volatility in product value directly affects insurance, necessitating precise evaluations of coverage needs. 

Inland marine policies, which often cover offices, maintenance buildings, warehouses and storage facilities, must adapt to fluctuating exposures, as Hamman noted: “Each of those commodities within these particular facilities could be exposed to the increase and decrease of tariffs currently taking place.”

Storage and distribution under pressure

Tariff-induced changes in supply chain dynamics can also significantly impact storage and distribution practices, and Hamman presented “two variables that show the implications of tariffs” in the marketplace.

“We’re seeing storage facilities purchase product in bulk because of the tariffs, as they can get a deal right now on certain products. But it will put strain on those warehouses.”

Conversely, a lack of demand can lead to empty facilities, creating new risks. “A product could be in demand, yet its storage could be vacant and then considered as a vacant building during the entire process,” Hamman stated. 

Increased demand for warehouses and storage facilities introduces critical risk management challenges and Hamman stressed the importance of proactive risk assessment and facility adaptation to meet evolving demands. He also raised a key concern: “If that storage facility has an increased commodity, will the sprinkler system be adequate to put out a fire if one does break out there?” 

To navigate such challenges, Hamman highlighted the pivotal role of collaboration. “It comes down to ensuring our risk engineers go out regularly to meet with the client.”

He explained how being on the ground leads to a far better understanding of the situation, enabling them quickly to address questions such as whether a facility was at maximum capacity or has an adequate sprinkler protection system in place.

“Are they able to leverage some of that exposure and set it off to a different location so they don’t have all their values exposed in one facility?” Hamman summarised.

This integrated approach enables carriers and underwriters to make informed decisions, ensuring coverage aligns with the client’s evolving risks. 

Hamman shared a recent example to demonstrate the process. A client with a builder’s risk policy requested an extension due to an increase in the project’s value. The underwriter consulted the risk engineer and Markel’s RSS team, who conducted a survey with the client to assess the implications. 

This collaboration led to tailored risk mitigation advice regarding increased materials, such as lumber or electronics, at the site. The underwriter processed the endorsement within 24 hours, ensuring the project remained on schedule.

“Underwriters needs to be expert at their trade and willing to work with the client around the uncertainty of tariffs”

Opening communication

Hamman reiterated the value of transparent communication among all parties involved, explaining: “Decisions can then be made in a timely manner.”

Such collaboration ensures clients receive the correct coverage and that adjustments can be made swiftly to address uncertainties.

Tariff uncertainties present unique challenges for inland marine insurance, but Hamman is optimistic about the industry’s ability to adapt: “People are reading news articles, listening to the media and we are still none the wiser,” he admitted. 

“From a carrier and underwriting perspective, we need to have an open relationship and understanding of the tariffs situation.”

Hamman stressed that as “each account is very different and unique when it comes to tariffs” flexibility is required, adding: “Underwriters needs to be an expert at their trade and willing to work with the client around the uncertainty of tariffs.”

The evolving tariff landscape presents complex challenges for inland marine insurance, but by maintaining open lines of communication and a commitment to supporting clients, Markel exemplifies how insurers can navigate these turbulent times effectively.

A proactive, collaborative approach – rooted in open communication and expert analysis – is essential to manage these uncertainties, and by adapting to the dynamic marketplace, carriers can continue to provide reliable support and coverage to clients during these unpredictable times.

“This is not the first time Markel has experienced uncertainty in the marketplace,” Hamman concluded. “We've always worked with our clients around difficult issues and made sure we stood out by supporting them during these uncertain times.”

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.