IMIA INDEX SURVEY 2017

Transcription

1 IMIA INDEX SURVEY 2017 September 2017 Stephan Lämmle

2 Agenda 1. IMIA Mission 2. Introduction to the IMIA Engineering Index Survey 3. Presentation of the IMIA Engineering Index Survey Format 4. Presentation of the IMIA Engineering Index Survey Results 5. Next steps 2

3 IMIA - forum for promoting understanding and best practice in the field of Engineering Insurance IMIA Strategic pillars and Initiatives Risk Management and Governance Network & platform Knowledge Antitrust Annual Conference IMIA Academy Executive Committee & Secretariat Participations in WG papers Statistics & country reports Constitution & 47 years of experience IMIA Web & New Sheet Working Group Papers Page 3

4 IMIA Today and outlook Today s base Aspirations Enormous knowledge and expertise Geographical diversification Tradition and strong foundations Covering entire value chain Increased demands for membership Profound understanding of Engineering lines Solid financial structure Continue to extend our foot print internationally Maintain Quality and proximity among members Dedicate more attention to claims Reinforce Underwriting guidance & best practices by WG Improve quality of data & figures Develop more commitment from all delegates Maintain sponsoring in Gentleman boundaries

5 The IMIA Engineering Index Survey - Objective Objective The IMIA Index will be a standard indicator, annually published, for engineering insurance rates It will allow insurers to keep track of current pricing trends, compare them with past levels, and use the information to complement or fine-tune available rating tools It also serves as an indicator to steer portfolio strategy and risk appetite decisions 5

6 The IMIA Engineering Index Survey - Methodology Methodology 1. Rates in the Index will be based on a significant number of standard risk profiles 2. IMIA members will be asked to provide information about rate changes of risks 3. Data provided should come from policies that have similar characteristics (e.g. standard wording, low NatCat, specified technology, etc.) 4. All data will be compiled ANONYMOUSLY, abnormal results will be doublechecked and eventually a market trend for each type of risk will be obtained 5. Aggregated - it will deliver an INDEX 6. Results are NON-BINDING RELATIVE rate change indications AGAINST A BENCHMARK YEAR for selected typical industry and object codes 6

7 The IMIA Engineering Index Survey Data Segmentation Size of portfolio Position in a placement Location of insurance company Territorial scope of business Construction & Erection Projects / Operational Risks - Selected Industry / Object Types 7

8 The IMIA Engineering Index Survey Data Segmentation Class of Business & Risk Type: Projects Ops CAR EAR Operational Civil / Infrastructure "Building" Civil / Infrastructure "Road Erection / Power Plant Oil & Gas Industry Power Plant Heavy Industries 8

9 The IMIA Engineering Index Survey Compliance Association work In the BER, the European Commission exempted specific forms of cooperation between insurers from the cartel prohibition; in practice, these activities are often coordinated by associations In general, except for activities of this kind that are expressly permitted and that are described below, the work of an association may not be used to coordinate competitive behaviour with other companies or to exchange sensitive information on business policies. In the BER (Insurance Block Exemption Regulation ), the European Commission exempted a) Joint calculation of claims expenditure statistics The BER permits the joint calculation of statistics claims expenditure statistics based on claims experience, mortality tables, similar tables and studies. The basic rationale behind the exemption is that the specific forms of cooperation between insurers from the cartel prohibition; in practice, these company should be allowed to establish the risk development as a basis for costing. At the same time, the calculations should not lead to standardised business policy on the part of the individual member companies. The business policy activities of individual companies are often must coordinated not be identifiable when by associations compiling the statistics. In other words, it should not be possible to identify specific insurers. Furthermore, cooperation is only permitted to the extent necessary to achieve the necessary objectives. It is consequently prohibited to prepare The BER common permits statistics on the gross joint premiums, calculation since these also of statistics encompass company-related or claims expenditure factors and expectations statistics that must be to allocated establish to the area of business policy. It is permissible to prepare claims the expenditure risk development statistics, i.e. based as on a net basis premiums, for that costing describe the average expenditure to cover a precisely defined risk in the past, and to prepare tables, provided the following details are not included: safety loadings The business policy of individual companies must not be identifiable income from reserves (run-off results and interest payments) administrative and sales expenses It (including is permissible internal claims settlement to costs) prepare claims expenditure statistics, i.e. based on net premiums taxes and duties investment proceeds and expected profits It is prohibited to prepare common statistics on gross premiums non-mathematically derived specifications results of studies relating to statements about the future, e.g. GDV (German Insurance Association) studies on the future trends for loss events. These studies may be published in a written document, but must be shown in a properly separated form. The exemption criteria must not be circumvented by having other agents calculate the average operating costs for several companies and then factoring these into the recommended rates, or by printing standardised rate forms. Claims expenditure statistics may specifically include the following: a period set for their calculation the number of loss events in the specified period the number of single risks insured in the observation period in each risk year statistical distinguishing features from which risk groups are formed that contain identical or comparable risks (with as much detail and differentiation as is appropriate and necessary for insurance statistics, and employing the necessary actuarial adjustment methods) the total amount of payments made or owed during this period based on the loss events that occurred the total amount of sums insured per risk year during the selected observation period As well as the calculation of claims expenditure statistics, it is generally permissible to carry out joint studies and to announce the results of these. Studies of this kind are often forecasts of the probable effects of general circumstances beyond the scope of influence of the participating companies, and are concerned with the frequency or scope of future claims in relation to a specific risk or risk category, or deal with the revenue from different types of investment. Claims expenditure statistics and studies, however, can only be exempted on the condition that the participating companies cannot be identified; they are published with a note emphasising their non-binding nature; the companies do not agree to comply strictly with the statistics and studies and any insurance companies that request a copy of the statistics and studies are provided with one under reasonable and non-discriminating conditions. 9

10 The IMIA Engineering Index Survey The Lean Survey 1) General Portfolio Description 2) Rate Index Input Section 3) Transfer to Output Sheet 10

11 The IMIA Engineering Index Survey The Lean Survey General Portfolio Description Size of Engineering Portfolio: < 5 Mio 5 Mio to 20 Mio 20 Mio to 50 Mio 50 Mio to 100 Mio more than 100 Mio Company's location and Company s territorial scope of business National Regional Continental Global Typical position in a placement Follower Leader More Follow More Lead 4. For Rate Index purposes please consider the following Industry / Object Types Conditions are assumed to be - Low NatCat Exposure - Standard scope of CAR/EAR cover, Material Damage only - Typical deductibles for type of risk in question 4.1 Project Business (Construction / Erection) Civil / Infrastructure "Building", e.g. assume a 20 story office building with basements Civil / Infrastructure "Road", e.g. assume a 50 km two-lane road Erection / Power Plant, e.g. assume a 600 MW coal fired Thermal Power Plant 4.2 Operational Business incl. Machinery Breakdown Oil&Gas Industry, e.g. assume a refinery 3000 t/d Power Plant, e.g. assume CCPP with a 240 MW industrial proven type gas turbine Heavy Industries, e.g. assume a steel mill 11

12 The IMIA Engineering Index Survey KPI s 1. Index Concept introduced in Index announced in IMIA Conference Doha Index Pilot Case conducted in 2016 various revisions followed in EC meetings since 4. Index Survey sent out on July 6 th, Survey Return Ratio: 30% 6. Respondent company profiles: Size [$US ]: 5 Mio to > 100 Mio Position: Follow to Lead Territorial Scope: National & Global 7. Standarddeviations: < % (avg. 40%) (excl Heavy Industries) 2010 ff 13 32% (avg. 20%) Dear IMIA Members, As announced during the last conference, IMIA will conduct a survey reflecting the relative rate development in the engineering lines of business over the time. This is a major initiative part of our IMIA long term Roadmap and fitting perfectly to our core value: to offer a forum for understanding and promoting best practice in the field of Engineering Insurance. The IMIA Index will be a standard indicator, annually published at our annual conferences, for engineering insurance rate's variation on a world wide basis; a very useful and pertinent indicator that IMIA will consolidate for all his members. It will allow insurers to keep track of current pricing trends, compare them with past levels, and use the information to complement or fine-tune their available rating tools, their ultimate loss ratio etc. It has thus been identified as a particular valuable information and helpful to raise awareness and transparency amongst the community about the market development. Data provided should be based on standard conditions. All data will be collected completely anonymously, compiled and analysed and an average reference index will be obtained. Results are RELATIVE change indications against a benchmark year for selected typical industries or construction types. We have therefore compiled an excel template to facilitate the inquiry by completing the self-explaining questionnaire for the respective general questions. These entries will then be transformed into relative and fully anonymous date on an output sheet. No direct rate entries or company names must be returned to IMIA. As per IMIA information and confirmation of several companies who participated in a pilot case earlier the methodology applied here meets with compliance and governance requirements and represents a permissible activity for an association. However, IMIA cannot assume any liability for this. You may therefore wish to verify compliance for your own company and local regulation / legislation individually. To complete and return the questionnaire please proceed as follows: - Download file from this - complete the Questionnaire sheet - press the "F9" button for calculating the figures - press the Transfer Output button - a macro will now transfer your input values into fixed and relative values into the Transfer sheet - go to the Transfer sheet, check if the values are visible and press the Separate Sheet button a macro will now separate the transfer sheet from the questionnaire and create a stand-alone sheet. (NB: if a run-time error message occurs now, just press end ) - please attach this new standalone transfer sheet to an and return it to IMIA secretary at hhm.sec@imia.com<mailto:hhm.sec@imia.com> All in all this operation should not take more then minutes to any experienced Senior Underwriter or Line of Business Managers. Your feedback until is highly appreciated, so that we can proceed and present the results at the 50 th Conference in Munich. We count on your participation! Very Best regards IMIA EC & Secretariat Hans Mahrla and Louis Wassmer dtd. 6/7/

13 IMIA Engineering Index Survey - Analysis Result 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% today 4.1 Project Business (Construction / Erection) 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% today 4.1 Project Business (Construction / Erection) 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% today 4.1 Project Business (Construction / Erection) Civil / Infrastructure "Building" Civil / Infrastructure "Road" Erection / Power Plant 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% today 4.2 Operational Business incl. Machinery Breakdown 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% today 4.2 Operational Business incl. Machinery Breakdown 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% today 4.2 Operational Business incl. Machinery Breakdown Oil&Gas Industry Power Plant Heavy Industries 13

14 IMIA Engineering Index Survey - Analysis Result 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% 08 Ike 05 Katrina & Wilma 04 EQ / Tsunami Sri Lanka, Indonesia 12 Sandy 01 WTC 11 EQ / Tsunami Fukushima today 4.1 Project Business (Construction / Erection) Civil / Infrastructure "Building" Civil / Infrastructure "Road" Erection / Power Plant 4.2 Operational Business incl. Machinery Breakdown Oil&Gas Industry Power Plant Heavy Industries All segments show decreases Project business rate decrease seems stronger and more consistent than operational business Large events had little impact on long-term projects, some on shortterm operational 14

15 Next steps Objectives for Collect feedback and review survey format 2. Nominate survey analysis team with actuarial knowledge 3. Repeat survey 4. Motivate for a large number of participations 5. Perform segment analysis 6. Display results on IMIA members area 34 Insurance Companies 13 Reinsurance Companies 15

16 Thank you for your attention and Please respond 34 Insurance Companies 13 Reinsurance Companies 16