Slow road, steady success: the beauty of inland marine is the expectation of steady profitability, but it can be a long, tortuous journey.

A rear-view mirror look at the 1990s shows that many changes and progressions occurred in the business world and in the insurance industry. We started the decade, for example, lauding the benefits of the fax machine. We ended the '90s with the fax machine gathering dust as e-mail became as commonplace as the telephone.

One of the more dubious decisions of the decade was a prevalent industry emphasis on larger premium lines of business. This lure of large premiums caused many carriers to enter new venues for new business, often seeking large casualty lines, professional liability and medical malpractice insurance. As the years went by and competition rose, the rich aroma of these large premiums often was replaced by the stale odor of claims, tails and exiting markets.

The inland marine line of business was one of the victims of this shift in philosophy. While rarely was there an overt decision to de-emphasize inland marine, the deployment of resources was to other arenas. Ironically, as many lines of business devoured the bottom line of carriers, inland marine remained steady and consistently profitable.

According to the 2003 annual report published by the Inland Marine Underwriters Association, "the adjusted loss ratio for the Inland Marine line of business over the last decade has been the model of consistency and profitability ranging from a low of 43.2% to a high of 63% in 2001 (directly impacted by the events of 9/11)."

As the world of insurance institutes a "back-to-basics" approach to underwriting, it would be prudent for carriers to revisit a line of business that has been such a steady moneymaker. However, the underwriting and pricing of this book is at least as much art as it is science.

Inland marine has a different culture than some other lines and, frankly, it is not for everyone. Here are some questions and issues a carrier should consider before entering or re-entering the world of inland marine:

Does your company's culture support the writing of this line of business? The underwriting and pricing of inland marine business is almost entirely based on the judgment of the underwriter. There are literally dozens of classes of business that are considered inland marine, and some of these classes use several different forms. In addition, many of the accounts need manuscripted forms or manuscripted endorsements. Some carriers are simply not comfortable placing this sort of autonomy onto the desks of line underwriters.

* Are you comfortable deploying resources to a line of business that may generate relatively small premiums? There are carriers that can write a single account in a class such as commercial auto or workers' compensation that will be larger than an underwriter's whole book of inland marine business. The beauty of inland is the expectation of steady profitability, but it can be a long, slow road.

* Is your company willing to pay for underwriting expertise in this line of business? This is a line of business where experience really matters. Underwriters who are experienced in inland marine expect and deserve salaries that reflect their knowledge, expertise and history of profitability. It probably doesn't make a lot of sense to hire a less experienced person to save a little money, given the immeasurable value of experience.

* Are your systems equipped to handle small accounts, accounts with high endorsement activity and manuscripted endorsements? The inland marine line of business is labor-intensive; there is no denying this fact. But experienced marine underwriters would state that it is exactly this attention to detail that allows them to remain profitable.

* Are you willing to support the line of business with qualified loss-control and claims staff? Just as a significant degree of expertise goes into the underwriting and pricing, so, too, does the need to support this business as it goes on the books as well as after the claims--which you hope are infrequent--occur.

None of the above questions are meant to suggest that having a dedicated inland marine underwriter or department is a bad idea. On the contrary, the strong history of profitability of inland marine business creates a compelling argument for placing a heavy emphasis on this line of business. In addition, an underwriter with true expertise will be considered a valuable asset to an agency's force.

The bottom line is that to properly and profitably write inland marine business, a carrier needs to make a commitment. To dabble in the line and expect profitability is probably going to be a mistake. You will be disappointed with the premiums, the losses or both.

Michael P. Egan, a Best's Review columnist, is a property officer with Swiss Reinsurance Co., Philadelphia. He can be reached at insight @bestreview.com.