Global Logistics Insurance Market Overview

The Global Logistics Insurance market size was valued at USD 70.23 Billion in 2023 and is projected to reach USD 86.86 Billion by 2032, growing at a CAGR of 2.39% from 2024 to 2032.

The insurance policy that is particularly created to cover the commodities in any mode of transportation, including air, sea, land, and train, is known as Logistics Insurance. It provides coverage for cargo against a broad variety of physical losses or damages to freight resulting from external causes while in transit. The merchandise is transported around the globe via land, sea, train, or air. The likelihood of hauled items and products becoming lost or destroyed throughout the trip is very high. Cargo insurance can help in these situations by covering the loss. As no shipment is ever perfectly secure during transit and insurance is the only method to be compensated if something goes wrong, cargo insurance is crucial to the supply chain business. To handle their specific risks, the insurance sector provides logistics companies with a wide range of coverage options. These hazards vary from business to business based on factors like the mode of transportation or the kind of goods being sent. Logistics Insurance is highly robust due to regional and international mandates which force logistics companies to insure goods before transport activities and reduce the liability of goods which helps the market to grow exponentially.

Market Dynamics And Factors For Logistics Insurance Market

Drivers:

Substantial growth in International Trade

• The expansion of import-export operations among these nations is a result of the expanding trade contacts between diverse nations. Chances of physical harm to items as a result of mishaps brought on by outside sources including adverse weather, rotten goods, technical flaws, and others. Therefore, to avoid such occurrences, business owners get logistics insurance to be safeguarded against such damaged goods, which are of great worth because they are exported from several nations.
• According to United Nations Conference on Trade and Development, Global trade is predicted to expand by 23% from 2020 to reach approximately USD 28 trillion in 2021. The volume of international trade is expected to recover from the pandemic and insurance companies are expected to see an upward trend in international logistics activities which will certainly boost the Logistics Insurance Market. Apart from that, Legal and commercial concerns are the two main drivers of the need for insurance. The intermediaries' legal responsibility is restricted. Clearing and forwarding agents, carriers, port and customs authorities, and other intermediaries handle the products at different stages. They are exempt from liability if the loss occurred despite their reasonable efforts to prevent it or if the damage was caused by events beyond their control. When shipping by water, their legal responsibility is now restricted to 100 pounds per box, and when shipping by air, airlines are currently only legally responsible for USD 16 per kilogram, subject to periodic changes. It is quite usual for this level of compensation to fall short of fully covering the exporter's loss. Thus, from the individual to Enterprise level, logistics insurance plays a crucial role in the trade of goods which is expected to push the market growth.

Restraints:

Absence Of Uniformity In Insurance Coverage

• Different insurance policies will exclude coverage in different ways. There are various types of insurance policies. For instance, certain types of cargo are not covered under one policy. In some cases, only certain terminals and pieces of equipment are covered and losses brought on by specific incidents are not covered, or coverage is only applicable if a service is delivered in a specified way. Additionally, the financial liability of the majority of carriers is restricted by domestic and foreign treaty laws as well as by the U.S. Domestic Carmack Amendment. The logistic partner should always refer to a carrier's Bill of Lading, tariff, or other Terms and Conditions for particular limits of liability and should be aware that transportation companies are exempt from all types of liability. Such complexities heavily affect the logistic insurance companies which ultimately hampers the growth of the market.

Opportunity:

Integration of Smart Contracts in the Logistics Insurance Sector

• Blockchain can potentially improve efficiency in global trade by greatly reducing bureaucracy and paperwork. For example, a multi-stakeholder process with a lengthy paper trail could be replaced with an automated process storing information in a tamper-evident digital format. Automation services that currently require an intermediary such as insurance, legal, brokerage, and settlement services. Blockchain could be used to track a product’s lifecycle and ownership transfer from origin to store shelf, even as it changes hands between the manufacturer, logistics service provider, wholesaler, retailer, and consumer. It would facilitate and automate each business transaction, enabling a more direct relationship between each participant (e.g., automating payments and transferring legal ownership between parties).
• Smart contracts in International logistic insurance can play a revolutionary role to automate insurance-related rigorous paperwork. Smart contracts are blockchain-enabled products that have already made an impact on the business world. A computer program that sets the terms of an agreement, a smart contract automatically enforces the agreement when pre-defined rules are met. In logistic business, time is a crucial factor that can affect majorly to companies in a monetary aspect. Therefore, efficient insurance protocols can save major time and safeguard the goods. Moreover, blockchain technology is used by the US-based business ShipChain to create a logistics platform that supports the entire shipping process. The software enables all parties involved to follow the whereabouts of shipments at each stage of their trip. Using encrypted public ledgers, the software also updates data regarding projected delivery timings. After delivery is complete, photocopies of the documents are placed onto the platform, boosting the visibility and transparency of the products being transported. Therefore, the logistics insurance sector holds tremendous scope for integration of such technologies which can push the market growth.

Segmentation Analysis Of Logistics Insurance Market

• By Type, the Marine Cargo Insurance segment dominates the Logistics Insurance Market. The foundation of international trade and the world economy is maritime transit. More than 80% of products traded internationally are transported by sea, and this proportion is significantly higher for the majority of developing nations. A marine cargo insurance policy offers comprehensive coverage against all the potential marine-related perils that the goods are exposed to while they are in transit. Marine insurance also covers third-party liabilities arising from any loss or damage caused to the ship, port, or other transport forms from the insured cargo. This type of insurance is mainly beneficial for tankers and other heavy cargo shipments. Simply put marine insurance policy safeguards the ship. According to Statista, Transport volume from marine logistics stood at 10.65 billion tons. Such volume of trade between countries showcases the importance and utilization of the marine cargo industry. For Logistics insurance companies, the Marine cargo industry plays a major role in the growth of the insurance sector.

• By Coverage Type, Cargo Insurance dominates the Logistics Insurance Market. The most common kind of insurance used to protect shipments from physical harm or theft is cargo insurance. The value of the objects is guaranteed against damage that occurs during transport due to a well-protected cargo insurance policy. Because there is never an assurance that the goods won't be damaged, cargo insurance is crucial. In general, shippers must establish and record the worth of every piece of cargo in case there are any losses, damage, or dispute claims. Both domestic and international shipping and transit are subject to cargo insurance. Although it can be challenging to regulate and standardize coverage in another nation. According to the carrier liability doctrine, logistics and transportation providers are legally required to maintain a certain level of insurance protection while products are being sent and delivered. Therefore, the Cargo Insurance segment is expected to grow substantially during the forecasted period.
• By End User, the Enterprise segment dominates the Logistics Insurance Market. Generally, special insurance coverage is made on the bulk cargos which are made by large enterprises for the long-haul transportation for an end to end coverage of their goods. Due to the high volume of goods, the risk of losses is greater and companies and trading enterprises are highly unlikely to neglect such risk. Therefore, logistics insurance has a large clientele that deals with bulk cargo and high volume intercity and cross-border trade. Also, the International mandate restricts enterprise-level businesses to transport goods without insurance to safeguard buyers and sellers to mitigate any possibility of dispute. The maritime association states that the goods must be insured against FoB value and shall be stated in the bill of lading. Therefore, the Enterprises segment most likely dominates the end-user segment. However, Individuals are also subject to mandatory logistics insurance if the amount or category of the goods falls under the regulation subject to country of origin and destination. The individual segment holds a substantially lower share of the market and is expected to follow the lead of the Enterprise segment in the Logistics Insurance Market

Regional Analysis Of Logistics Insurance Market

• The European region dominates the Logistics Insurance Market.  The presence of a solid logistics infrastructure and the growing use of digital insurance are the main elements supporting this region's dominance. Automating compliance with regulations in the area is also likely to promote regional growth. The pricing of policies is significantly influenced by government regulatory actions, which are anticipated to have a substantial impact on the sector as a strong driver. Also, Europe is the major hub for global cargo transportation due to the existence of major ports. In 2021, Rotterdam's overall cargo throughput increased 7.3% to 468.7 million tonnes. Because more commodities were purchased during the epidemic, the number of containers grew by 6.6% to 15.3 million TEU in 2020. The economic recovery increased the throughput of crude oil and oil products in liquid form. Logistics Insurance mandates in European ports are strict and heavily enforced. Due to that, major insurance companies have created a base in Europe by recognizing the growing opportunity. Due to Such factors, European Market is expected to dominate the Logistics Insurance Market.

• The Asia Pacific is the fastest growing and second largest region in Logistics Insurance Market. Due to top manufacturing countries like China, India, Japan, and South Korea, the logistics and cargo transportation sector have been on a rise with constant global demand from these countries which evolved into a high-functioning logistical ecosystem. According to data from the China Federation of Logistics and Purchasing, the logistics performance index, which measures business volume, new orders, employment, inventory turnovers, and equipment utility rates in the industry, reached 49.3% last month, an increase of 5.5 percentage points from the month before (CFLP). Additionally, according to the federation, during that time the index monitoring China's warehouse storage industry returned to the expansion range of 50.2%. The index for e-commerce logistics activities had a business relaunch in May, increasing 2.1 points from April to 104.3 points. With massive international trade and prominent domestic market conditions, Logistical insurance has a massive growth opportunity in top manufacturing countries in the Asia Pacific.

Top Key Players Covered In Logistics Insurance Market

• Marsh McLennan
• Zurich Insurance Group
• Lockton Companies
• Allianz Global Corporate Specialty SE
• NFP
• Arthur J. Gallagher Co.
• HDI Global
• AIG
• BMS Group
• Hub International
• Liberty Mutual Insurance
• Willis Towers Watson
• AXA XL
• Chubb
• Aon

Key Industry Development In The Logistics Insurance Market

• In September 2024, Marsh McLennan announced on Monday that it had reached an agreement to acquire McGriff Insurance Services for $7.75 billion. The acquisition, made through Marsh McLennan's Agency business, was expected to enhance its capabilities in commercial property and casualty, employee benefits, management liability, and personal insurance. The deal came as businesses increased spending on insurance due to wage growth and an improving economic outlook. Analysts viewed the transaction as a strategic expansion of Marsh McLennan’s successful middle-market insurance business.
• In July 2024, Cowbell secured $60 million in Series C funding from Zurich Insurance Group to scale its operations and enhance global SME cyber adoption. The investment supported Cowbell's efforts to expand into new markets, launch innovative products, and strengthen cyber resilience services. By leveraging AI and GenerativeAI, Cowbell aimed to improve decision-making for policyholders and brokers. Zurich's investment emphasized its commitment to advanced cyber protection and resilience solutions, particularly for SMEs facing increasing cyber risks.