Global Marine€¦ · •Global marine insurance market •P&I •Offshore energy •Cargo •Hull...

Global Marine Insurance Report

Astrid SeltmannVice chair, IUMI Facts & Figures CommitteeAnalyst/Actuary, The Nordic Association of Marine Insurers (Cefor)[email protected]

mailto:[email protected]

Contents

• Stockholm feeling!

• Global marine insurance market

• P&I

• Offshore energy

• Cargo

• Hull

• What now? The 2020 oracle

Typical inhabitant

Foto: Astrid

Seltmann

Typical Swedish Lifestyle

Swedish coffee break (for ‘Hygge’)

LAGOM = “just enough”Not more than necessary.

Foto: Astrid SeltmannFoto: Astrid Seltmann

Typical Swedishvessel (?)

Foto: Astrid Seltmann

Contents


• P&I

• Offshore energy

• Cargo

• Hull


Please note & Disclaimer

Figures reflect the 2020 state of reporting. Figures will change retrospectively. Some figures are estimates.Figures are reported to the degree possible according to the IUMI definitionsbut may not be fully consistent for all countries.

For comparison of years, compare the updated premiums and loss ratio! (download from www.iumi.com )

All information given is of informational and non-binding character.

Figures related to the marine market’s performance reflect market averages. They do not disclose single company’ or local markets’ results. As with all averages, individual underwriting units may out- or underperform compared to the average.

IUMI’s aim is to provide information as available and raise consciousness for the importance of a fact-based evaluation of the risk exposure covered –and inspire everyone to do their own critical evaluation of real and seeming facts!

http://www.iumi.com/

Marine Premiums 2019 by line of business

Total estimate 2019: 28.7 USD billion / Nearly stable from 2018 to 2019 (-0.9%)

NB: Exchange rate effects!

24.1%

57.5%

6.8%

11.7%

2019

Global Hull

Transport/Cargo

Marine Liability

Offshore/Energy

Premium shares 2016-19

Share and volume of cargo premium increased 2016-2018. Some decrease 2019.

Combination of various effects. Increase in world trade volume, market conditions and exchange rate influences.

Hull premium stable despite growing world fleet. 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2019201820172016

Transport/Cargo

Hull

Offshore/Energy

MarineLiability

0

2

4

6

8

10

12

14

16

18

2019201820172016

Absolute premiums (USD million)

Transport/Cargo

Global Hull

Offshore/Energy

Marine Liability

Marine premiums 2019by region

Total: 28.7 USD billion

46.3%

31.8%

10.3%

5.3%6.3%

2019Europe

Asia/Pacific

Latin America

North America

Other

Premium (USD) by region 2010-19Data as of 2020

Europe share decreasing, Asia increasing.

Various influences. Market conditions, exchange rates.

2019: 28.7 USD bill. 2018: 28.9 USD bill.

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

2012 2013 2014 2015 2016 2017 2018 2019

Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

USD Exchange rates 2005-2020Index 2000=100%, against selected currencies, as of Dec. each year (2020 as of July)

USD premium amounts in this report influenced by exchange rates!

Premium trends may differ in local currency, especially for cargo.

40%

60%

80%

100%

120%

140%

160%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

CNY (China)

JPY (Japan)

EUR (Euro)

NOK (Norway)

GBP (UK)

BRL (Brazil)

Contents


• P&I

• Offshore energy

• Cargo

• Hull


P&I International Group – Income Gross calls 2019 (premiums) – by operational locationSource: International Group of P&I Clubs

62%

30%

6% 2%

UK

Nordic

Japan

US

Calls 2019:UK: 1.82 Nordic: 0.87Japan: 0.18US: 0.07

Total: 2.95 (USD billion)

P&I premiums down for 5th year in a row

-5.4%

46%

19%

15%

12%6%

2%

BermudaUKLuxembourgNordicJapanUS

by country of registration

P&I Pool claims by policy yearSource: International Group of P&I Clubs, claims as of end June 2020

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

0

5

10

15

20

25

30

35

40

45

50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020*

Tota

l Cla

im (

US$

mil

lio

ns)

Nu

mb

er

of

Cla

ims

Total claim on Pool (*includes AAD amounts) Total claim on ELR Number of claims

End 2019 / 1Q 2020:A number of severe casualties end period of low major claims impact.

Reporting backlog: Claims for youngest years not yet fully reported.

P&I is a complex business with high liabilities!

Impacted by COVID-19.

More information at www.igpandi.org

http://www.igpandi.org/

Contents


• P&I

• Offshore energy

• Cargo

• Hull


Offshore energy premiums 2019Total estimated: 3.35 USD billion / Change 2018 to 2019: -1.4%

UK (Lloyds), 44.6%

UK (IUA), 17.6%Mexico, 8.3%

Japan, 4.3%

Brazil, 3.9%

Malaysia, 3.5%

Nigeria, 3.3% Nordic, 2.7%

Italy, 2.5%

Egypt, 2.5% India, 1.6%USA, 0.4%

Other, 4.7%2019

Offshore energy premium 2012-2019

IUMI: Premiums reported by associations. Some double-reporting

due to global nature of business.

=> Overestimation of global premium.

Willis approach: Lloyds premium triangulation (risk codes EC, EN, EM,

EY, EZ). Grossed up to 100% by assuming Lloyd’s represents 70%.

=> Underestimation of global premium

Strong decrease from 2014, has flattened out.

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,00020

12

2013

2014

2015

2016

2017

2018

2019

Other

USA

India

Egypt

Nigeria

Italy

Nordic

Japan

Brazil

Malaysia

Mexico

UK-IUA (2012)

UK-Lloyds

Willis estimated upstream

premium (ajdusted retrospectively)Kazakhstan and some other countries: no data available.

Offshore energy premiumEnergy mobiles, day rates, oil price (as of August 2020)Index, 2005 = 100%

50%

100%

150%

200%

250%

300%

350%

400%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Average Day Rates

Global Offshore Energy

Premium

Oil price, Brent Crude

No. Contracted Rigs

2019: Some increase in activity.

Drop in oil price was followed by drop in premium. 2020:

Oil price down due to oversupply. OPEC cuts. Uncertainty remains.

Sources: Average Day Rates, No. Contracted Rigs: Clarksons Research, Oil Price: World Bank commodity price data, Premiums: IUMI

Average oil price per month (USD/bbl)Source: World bank commodity price data, January 2005 – August 2020

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

20

05

M0

12

00

5M

03

20

05

M0

52

00

5M

07

20

05

M0

92

00

5M

11

20

06

M0

12

00

6M

03

20

06

M0

52

00

6M

07

20

06

M0

92

00

6M

11

20

07

M0

12

00

7M

03

20

07

M0

52

00

7M

07

20

07

M0

92

00

7M

11

20

08

M0

12

00

8M

03

20

08

M0

52

00

8M

07

20

08

M0

92

00

8M

11

20

09

M0

12

00

9M

03

20

09

M0

52

00

9M

07

20

09

M0

92

00

9M

11

20

10

M0

12

01

0M

03

20

10

M0

52

01

0M

07

20

10

M0

92

01

0M

11

20

11

M0

12

01

1M

03

20

11

M0

52

01

1M

07

20

11

M0

92

01

1M

11

20

12

M0

12

01

2M

03

20

12

M0

52

01

2M

07

20

12

M0

92

01

2M

11

20

13

M0

12

01

3M

03

20

13

M0

52

01

3M

07

20

13

M0

92

01

3M

11

20

14

M0

12

01

4M

03

20

14

M0

52

01

4M

07

20

14

M0

92

01

4M

11

20

15

M0

12

01

5M

03

20

15

M0

52

01

5M

07

20

15

M0

92

01

5M

11

20

16

M0

12

01

6M

03

20

16

M0

52

01

6M

07

20

16

M0

92

01

6M

11

20

17

M0

12

01

7M

03

20

17

M0

52

01

7M

07

20

17

M0

92

01

7M

11

20

18

M0

12

01

8M

03

20

18

M0

52

01

8M

07

20

18

M0

92

01

8M

11

20

19

M0

12

01

9M

03

20

19

M0

52

01

9M

07

20

19

M0

92

01

9M

11

20

20

M0

12

02

0M

03

20

20

M0

52

02

0M

07

Brent

WTI

2020: strong drop followed by some increase. Still low level.Uncertainty remains.

WELD Upstream Energy losses 2000-20 versus estimated Upstream premium incomeSource: Willis Towers Watson

Benign claims environment continues, while offshore premium remains depleted with latest upswing in 2011.

0

2

4

6

8

10

12

14

16

18

20

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020(to

date)

Upstream losses excessUS$1m

estimated worldwideUpstream premium (US$)

Source: WTW/ WTW Energy Loss Database as of June 24 2020 (figures include both insured and uninsured losses)

US$bn US$bn

Offshore energy gross loss ratiosUnderwriting years 1996-2019 / incl. liability / data from UK, Nordic, some US/ as of Dec. 2019

0%

50%

100%

150%

200%

250%

300%

350%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

outstanding

paid 10th year

paid 9th year

paid 8th year

paid 7th year

paid 6th year

paid 5th year

paid 4th year

paid 3rd year

paid 2nd year

paid 1st year

Youngest underwriting years still develop, deteriorate over time.

2020 Hurricane Laura: Near half of the rigs and platforms in the path of Laura were evacuated (ca. 15% of US oil production). About to reactivate.

2005Katrina & Rita

2004Ivan

2009-16 no major hurricane activity2008

Ike2017-19 hurricaneimpact modest

2020Laura

Offshore Energy – as of 2019

Market conditions• Oil price was recovering since 2016, with some variation. Uncertain future (trade war).• Downturn in activity started to reverse, but slowly. Historically 18 months time lag

between improved oil price and authorisation for expenditure. • More risk retained -> Mismatch between capacity and insurable objects. • Risks and claims potential arising from unit reactivation an issue.

Income• Strong drop in premiums following oil price reduction, flattening out since 2016.

Claims• Recent years moderate claims impact. • Weather impact (hurricanes) reduced since 2009.

Offshore Energy – 2020

COVID-19• COVID-19 reduced demand. Overcapacity lead to new drop in oil price. • New projects put on hold.• Degree of inactivity / lay-ups increased again.

Non Covid• Hurricane Laura impact?

(near half of offshore rigs and platforms evacuated before Laura)• Fragile balance between low premium income and modest claims impact in recent years.

Contents


• P&I

• Offshore energy

• Cargo

• Hull


Cargo Premium 2019 – by regionTotal estimate: 16.5 USD billion / Change 2018 to 2019: -1.5%Exchange rate effects strongest on cargo premium.

38.7%

34.9%

12.0%

5.2%6.3% 2.9% 2019

Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

Cargo Premium 2019 – by marketsTotal estimate: 16.5 USD billion

Belgium1.9%

Brazil5.3%

China11.3%

France4.7%

Germany7.2%

India2.3%

Italy2.3%

Japan9.3%Mexico2.8%Netherlands

2.0%

Nordic1.4%

Russia2.1%

Singapore3.0%

Spain1.4%

UK (IUA)2.8%

UK (Lloyds)6.9%

USA4.5%

Other29.0%

2019

Cargo premium 2012-19Selected markets

2016-2019: Adverse developments. Growth China, Japan,Stagnation/drop otherregions.

Various influences. Upswing in trade, exchange rate effects, other market conditions.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,00020

12

20

13

2014

20

15

2016

20

17

2018

20

19

China

UK (Lloyds)

Japan

Germany

USA

Brazil

France

UK (IUA)

India

2014-15: strong USD «reduces» income of most countries. Difficult to identify real market development.

From 2017 several currencies strengthened against USD.

Cargo Premium versusWorld Trade Values & Volume Index, 2005 = 100%

Cargo premium follows world trade values but lagged behind in recent years.

COVID-19 renders world trade forecasts uncertain (IMF did not publish regular 2-year forecast in 2020)

Extended risk covers and the increasing risk of event losses (risk accumulation) need to be taken into account in pricing.

Source: World trade volume, values: International Monetary Fund. In 2020 only trade volume scenarios published, no regular forecasts.

80%

100%

120%

140%

160%

180%

200%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

World Trade Values(Goods) - IMF estimationof 2019

World Trade Volume(Goods) - optimisticscenario 2020

World Trade Volume(Goods) - pessimisticscenario 2020

Global Cargo Premium

IMF forecast of 2019

Cargo Loss ratios


Gross* loss ratios cargo – Europe (& partly US)Underwriting years 2010 to 2018, as reported at 1, 2, 3, 4, 5 years, Gross premiums, paid+outstanding claims

2014, 2015, 2016: Change in typical pattern: extraordinary increase in loss ratios.

2017, 2018 started near 70%. More ‘normal’ (flat) developmentpattern.

2019 starts slightly above 60%, seeming improvement.

50%

60%

70%

80%

90%

100%

1 2 3 4 5

2011

2012

2013

2014

2015

2016

2017

2018

2019

Ultimate gross* loss ratios – Cargo Europe (& partly US)Underwriting years 2005 to 2019, gross premiums, paid+outstanding claims

Recent years strong impact by outlier& Nat-cat event losses:2015: Tianjin port explosions2016: Hanjin, Amos-6 satellite2017: Hurricanes / Nat Cat2018: Mærsk Honam / Hurricanes(2017/18 little US data: loss ratios may not reflect full hurricane impact)

2019: Fires on container vessels, Golden Ray capsize2020: Nashville TornadoBeirut port explosion, Hurricane Laura, Typhoon Haishen probably less impact oninsured values.

Increasing expenses a concern.* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)**Data included from: Belgium, France, Germany, Netherlands, Italy, Spain (until 2007), UK, some US data

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

reported IBNR Estimate (10 year pattern)

Cargo loss ratios accounting year – Cargo Asia*Gross premiums, paid claims

Stable 40-45% until 2014.

From 2015 loss ratios increasing. Probable impactby Tianjin port explosions & Nat Cat.

2019 some improvement.

* China, Japan, Hong Kong

Singapore not included, because only incurred (paid+outstanding) claims figures available, for other countries only ‘paid’.

0%

10%

20%

30%

40%

50%

60%

70%

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Gross premiums Paid claims Paid loss ratio

Gross loss ratios accounting year – Cargo Latin America*Gross premiums, paid claims

Stable around average 50-55%.

Peak in 2015 related to major claim impact in one country.

*Figures included from: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica (from 2010), D. Republic (from 17), Ecuador, El Salvador (from 14), Guatemala, Honduras, Mexico, Panama, Paraguay (from 14), Peru, Venezuela (until 14).

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


Cargo – as of 2019

• Some improvement in loss ratios across markets.• Increase in fires on container vessels a concern, especially fires in cargo area.

• Risk of large event losses (Nat Cat and man-made) substantially increased. • Increasing value accumulation on single sites/vessels .

• Covered risks represent increasingly stock exposure rather than transit exposure.• Trade growth was accelerating recently but disruption in 2020.

• USD premium influenced by combination of market conditions and exchange rates. • Market trends and results can differ substantially by region/unit.

Cargo – 2020

COVID-19 impact• Unusual port and vessel value accumulation (congestion of vessels in certain areas,

cargo accumulation due to delays in delivery)• Cargo damage caused by delays/longer storage (e.g. refrigerated goods)• Short-term contraction of global trade, uncertainty about speed of recovery• Fluctuations in insured values• Change in trading patterns? (alternative suppliers/markets)

Persisting issues• Fires, especially on container vessels, but not only, continue to be a concern• Misdeclared cargo• Risk of large event losses (Nat Cat and man-made) substantially increased. • Value accumulation on single sites/vessels.• Geopolitical tensions (sanctions, US-China trade war).

Contents


• P&I

• Offshore energy

• Cargo

• Hull


Hull Premium 2019 – by regionTotal estimate: 6.9 USD billion / Stable from 2018 to 2019 (+0.2%)

46.9%

41.6%

6.5%

4.0%

0.4%0.7% 2019

Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

Hull Premium 2019 – by marketsTotal estimate 2019: USD 6.9 billion

China11.5%

France4.2%

Italy4.0%

Japan7.4%

Korea, Republic2.4%

Netherlands2.8%

Nordic12.9%

Singapore12.5%

Spain1.8%

UK (IUA)5.0%

UK (Lloyds)10.2%

USA3.2%

Latin America6.5%

Other15.7%

2019

Hull Premium 2012-2019Selected markets

Explanation?

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,0002

012

20

13

20

14

20

15

20

16

20

17

20

18

20

19

UK (Lloyds)

Singapore

China

Nordic

Japan

UK (IUA)

Latin America

Korea, Republic of

Hull - Portfolio trends

Some vessels keep going…


Average gross ton, age & vessel valuesIndex, 2005 = 100%

Since 2014 increasing gap between average vessel size and insured value.

Some correction in 2020, but far from closing gap

Average vessel age increasing (less new builds).

80%

90%

100%

110%

120%

130%

140%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Index Average Sum Insured Index Average gross ton Index age

NoMISNordic Marine

Insurance Statistics

Change in insured vessel values on renewal2019 versus 2020 Index, 2005 = 100%

2019 renewals showed a parallel development for all vessel segments with some variations.

Renewals in 2020 reflect COVID-19 impact on different vessel segments, with strong variations.

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2019 2020

Bulk

Car/RoRo

Cargo

Chem./Prod

Container

Passenger

Suppl/Off

TankNoMISNordic Marine


Hull Premium versus World FleetIndex of evolution, 2005 = 100%

World fleet continues to grow, especially in size.

Downward trend in global hull premiumstopped but gap between world fleetgrowth and hull premium/vesselvalue evolutionremains.

50%

75%

100%

125%

150%

175%

200%

225%

250%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gross tonnage(> 300 GT)

No. Ships (> 300 GT)

Global Marine HullPremium

Av. insured vesselvalue (Renewals &newbuilds - Cefor)

Hull – Claims trends

Repairs getting delayed…


Hull – Claims frequency (H&M)

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

19

96

19

97

1998

1999

20

00

20

01

20

02

2003

2004

20

05

20

06

20

07

2008

2009

20

10

20

11

2012

2013

2014

20

15

20

16

2017

2018

2019

20

20

partial claims 75% SI (right axis)

Claims frequency (all claims)Long-term downward trend.Strong drop in 2020 (COVID-19 impact related to large degree of inactivity).

Total lossesLong-term downward trend. Lowest level in 2020. NoMISNordic Marine


Claim cost per vessel (H&M)in bands of claim cost, by accident year, in USD

* Figures do include total losses and represent H&M insurance. Builder’s risk not included (i.e. 2018 Lürssen fire)

Major lossesUnusually few 2016-18, returned in 2019. Very few in 2020.Volatility by (non-) occurrence ofcostly losses.Risk of major losses withunprecedented cost remains(increasing vessel sizes, accumulation, new risks & trading areas).

COVID-19 impact: Reduction in claims cost, especially ofcostly claims.

Cefor claims trend report June 2020: https://cefor.no/statistics/nomis/2020/2020-cefor-june-hull-trends-report/

0

20,000

40,000

60,000

80,000

100,000

120,000

19

961

997

19

981

999

20

002

001

20

022

003

20

042

005

20

062

007

20

082

009

20

102

011

20

122

013

20

142

015

20

162

017

20

182

019

20

20

> 50 MUSD

30

Special issues of concern

Secret crew change in COVID-19 times?


Special issues of concern

• Fires! – not only on container vessels Do not show reduced frequency in 2020 (contrary to other claims types) 2 severe fires in 2020 as of 8 September (Car carrier, VLCC)

• Casualties in Mississippi and Paraná river persist

• COVID-19 impact on hull trends

Analyses by the Nordic Association of marine insurers (Cefor):https://cefor.no/statistics/analysis-with-special-focus/

Cefor Hull trend report as of June 2020:https://cefor.no/statistics/nomis/2020/2020-cefor-june-hull-trends-report/


https://cefor.no/statistics/analysis-with-special-focus/https://cefor.no/statistics/nomis/2020/2020-cefor-june-hull-trends-report/

Hull – Loss ratios


Is there any hope?

Gross* loss ratios – Hull Europe** (& partly US)Underwriting years 2010 to 2019, as reported at 1, 2, 3, 4, 5 years, gross premiums, paid+outstanding claims

2019: some improvement in ratio between premiums and claims.

2018: Impact of 2019 major losses (fires, other) against eroded premium base.

2016 to 2018: Few major losses, but 2017 impacted by hurricane yacht damage.Change in loss ratio pattern: strong increase 2nd year.Attritional losses increasingly eroded hull premium, after a constant decrease in premiums relative to the risk (fleet). * Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)

** Data included from: Belgium, France, Germany, Italy, Nordic (Cefor), UK, USA

40%

50%

60%

70%

80%

90%

100%

110%

1 2 3 4 5

2011

2012

2013

2014

2015

2016

2017

2018

2019

Recent uw years: strong increase 2nd year

2014: impact from 2018 major claims (German yard fire) on long term policies

Ultimate gross* loss ratios – Hull Europe** (& some US)Underwriting years 2005 to 2018, gross premiums, paid+outstanding claims

2014-18: Unsustainable level.

Overcapacity, dropping vesselvalues and reduced activityinfluenced income negatively.

Yacht damage (hurricanes) impacted 2016/17.

Few major claims, but attritionallosses erode (reduced) income.

2019 uw year some improvement.

2019 major losses impact partly attached to 2018 uw year.

*Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)** Data included from: Belgium, France, Germany, Italy, Nordic (Cefor), Spain (until 2007), UK, some US data

2014 strong major loss impact (fire at German shipyard)

2016-17 influenced by yacht damage

(hurricanes)

0%

20%

40%

60%

80%

100%

120%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

reported IBNR estimate (based on 10-year pattern)

Gross loss ratios accounting year – Hull Asia*Gross premiums, paid claims

After an increase 2015-2017, loss ratios sligthly improved.

Relatively stable annual claimspayments and since 2017 increasing premium volume.

NB: accounting year: claimsattaching to uw year are paidover several years.

* China, Japan, Hong Kong

Singapore not included due to different data base. Singapore reports incurred (paid+outstanding) claims figures, the other countries only ‘paid’.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Gross premiums Paid claims Loss ratio - paid claims

Gross loss ratios accounting year – Hull Latin AmericaGross premiums, paid claims

After worsening loss ratios 2011 to 2016, some improvement in last three years.

*Figures in graph include: Argentina, Bolivia, Brazil, Chile (from 2012), Colombia, Costa Rica (from 10), D. Republic (from 17), Ecuador, Guatemala, Honduras (08-16), Mexico (from 12), Panama (from 10), Paraguay (14-16), Peru, Venezuela (until 14).

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

500,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


Hull – as of 2019Exposure• Downward trend in global hull premium stopped but large gap between world fleet growth and hull premium/

vessel value evolution remains.• Higher single-risk exposure (with inherent risk of unprecedented major claims).

Claims• Claims frequency and cost per vessel: Stable at moderate level.• Total losses: long-term downward trend. Came to a halt with fluctuation below 0.1%.• Major losses return in 2019 after unusually little impact 2016-2018 (except 2018 Lürssen fire impact on builder’s risk).

Results• 2016-18: Few major claims, attritional losses represented an increasing share of the total cost.• Income did not suffice to cover expected cost (attritional losses), no buffer for major losses. • 2019 sees some improvement across markets, but starting from very low (unsustainable) level.

Hull – 2020COVID-19 impact• Vessel segments affected differently (reflected by insured values on renewal).• Claims frequency and cost reduced in connection with increased inactivity of some segments of the world fleet.• Potential increase in repair cost for individual claims due to delay of spare parts, unavailability of crucial personnel.• Potential for unprecedented accumulation losses due to congestions of high-value vessels (inactive cruise or supply/

offshore vessels, floating storage tank vessels) in certain areas exposed to natural catastrophes (hurricanes, typhoons).• Crew changes difficult (fatigue). • Bunker analysis delays (IMO 2020 use of alternative low-sulphur fuels).• Disruption to surveys, port inspection, emergency response or maintenance.• Certificates prolonged without inspections.• H&M as of mid-year little impacted, stronger impact on LOH.

Persisting issues• Fires, especially on container vessels• IMO 2020 (scrubbers, other fuel types) – potential for increase in machinery damage• Increase in casualties in Mississippi and Paraná river (high and low water levels respectively)

Difficult to estimate combined effects on market and results. Can recovery of global hull market continue?

Contents


• P&I

• Offshore energy

• Cargo

• Hull


The 2020 oracleFoto: Astrid Seltmann

2020 trends

• Disruption in global trade. Short-term strong reduction in trade volume and values. (IMF estimate between -13% and -32%).

• Some predict quick (v-shaped) recovery. Effect of government stimulus measures?• Different trades differently impacted. Can e.g. cruise recover?• Accumulation issues (both pre-COVID and new caused by COVID-19)• Cyber risk (increased use of digital means under pandemic)• Nat-cat: 2020 Hurricane Laura (US), Typhoon Haishen (Japan) • Climate change, Arctic risks• IMO 2020 (increased risk of machinery damage)• Geopolitical tensions (sanctions, China-US trade war,…)• Oil price: uncertain future development.

• Can recovery of cargo, hull continue? Started in 2019 from low (unsustainable) level.• Offshore energy fragile balance in recent years. Oil price disturbance does not help.• COVID-19 may impact both investment income and technical results.

Issues to monitor

High-value risks

Navigation

Oil price, fuel quality

Human factor/Qualification

Climate change/ Increase in Nat-cat

Changes in regulation (liabilities)

Arctic risks

Fire on RoRo & Container vessels

Value accumulation



New technology

Internet of things/complex technologies

Cyber risk





IMO 2020

Thank you!Analyst/Actuary, [email protected] Nordic Association of Marine Insurers (Cefor)

mailto:[email protected]

Technical terms

Gross premium = Premium for insurance including the provision for anticipated losses (the pure premium) and for the anticipated expenses (loading), including also commission and brokerage but excluding taxes and other contributions on insurance premiums. Before deduction of any ceded reinsurance.Written premium = Complete premium due for insurance policies which start, i.e. “are written”, in a specific year (= the underwriting year of the policy). Does not give any information on actual premium payments/instalments, i.e. the cash flow.

Paid claims = Amounts the insurer has paid for known and registered claims less recoveries.Outstanding claims reserve = Claims reserve for reported, but not yet (fully) paid claims, of which the insurer has an estimation of the total amount to be paid. Includes loss adjustmentexpenses = Sum of total claims estimates minus any amounts already paid for these claims. Total claim = Paid amounts + outstanding claims reserve for all reported claims.IBNR = ”Incurred but not reported” = additional claims reserve on top of the outstanding claims reserve, and which for claims incurred, but not yet known or registered in the insurer’ssystem. The necessary IBNR reserve is derived by statistical methods based on historical claims ladder statistics.

Loss ratio = Claims divided by premiums. Indicator of whether premiums are calculated correctly to match claims and other expenses.Gross loss ratio (in this presentation) = Sum of total claims (and IBNR reserves), divided by gross written premiums

Underwriting year basis = Insurance figures are registered with the calender year in which the insurance policy starts, and to which the covered risks accordingly attach to. Example: a policy with cover period 01.07.06-30.06.07 has underwriting year 2006. Both claims occuring in 2006 and 2007 for risks attaching to this policy are thus attributed to underwriting year2006. The underwriting year is not closed, so underwriting year figures change as long as there are payments related to policies with this underwriting year.Accident year = Claims are registered with the calendar year in which an accident happens. Claims attaching to the same policy may thus be attributed to different accident years. Example: for the policy with cover period 01.07.06-30.06.07 a claim occuring in 2007 has accident year 2007, but underwriting year 2006. The accident year is not closed, so figures willchange as long as there are claims payments related to claims occured in that accident year, e.g. a claim payment made in 2009 for an accident which happened in 2007 will be attributed to accident year 2007.Accounting year (also booking year) = Insurance figures, regardless of their original source date, are booked into that year of account which is open at the time of actually entering thefigures in the books. Contrary to the underwriting and accident year, the accounting year is closed at some point in time, usually at the end of one calendar year, such that figures do not change any more once the accounting year is closed. These give the insurance results usually published in companies’ annual reports.

Global Marine€¦ · •Global marine insurance market •P&I •Offshore energy •Cargo •Hull...

Documents

Transcript of Global Marine€¦ · •Global marine insurance market •P&I •Offshore energy •Cargo •Hull...