Madrid Marine Insurance Hub Lacks Lead-and-Follow Experience
Madrid underwriters aim to capture market share in marine insurance by offering policies tailored to Latin American risks and demonstrating flexibility during claims processing. However, the city lacks experience with a lead-and-follow capacity system, which presents a key hurdle for the Madrid Reinsurance Hub in its efforts to compete effectively with London and Miami as primary reinsurance centers.
During a session at the Madrid Reinsurance Week conference, a group of panelists engaged in a detailed discussion about Madrid’s potential advantages and challenges within the marine insurance sector. One major challenge identified is the inexperience in establishing lead positions on large programmes, a system that streamlines claims settlement by binding follow capacity to the lead underwriter’s decisions.
José Ángel Martínez Feito, transportation director at Reale, noted that London excels in this area, describing Madrid as a “young market” in this regard. While Madrid underwriters have shown flexibility in fast-changing geopolitical environments, they need to improve at making claims decisions binding on all programme participants.
Martínez highlighted that London operates a “militarised” system where one company sets the rate and others follow. In contrast, the underwriters often seek consensus, with each having their own experts. This approach can slow decision-making in large programmes due to the need for multiple approvals.
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The need for a reliable lead-follow system has grown more urgent due to recent volatility in marine insurance markets. Juan Patricio Corral, marine underwriter lead at Intact in Madrid, observed that Latin American buyers were surprised by price fluctuations linked to Middle East events, with quotes now valid for just 48 hours in conflict zones.
Martínez emphasized that while war cover remains available in London, rates can reach 4% to 6%, making it unviable for Spanish insurers. This has pushed Madrid to explore alternative methods to provide coverage. Despite these challenges, panelists noted Madrid’s flexibility as an advantage, particularly for Latin American clients who prefer working in Spanish and value collaborative agreements over rigid formulas.
“In Spain we work the same way they do in Latin America. It is a friendlier way, where we strive to build agreements,” Martínez explained. He contrasted this with London’s more normative approach based on strict rules. Madrid underwriters often operate in an adaptable approach, where policy wording isn’t always the final solution, allowing for tailored responses to client needs.
