Change or no change? (How) did the financial crisis affect hull claims trends?

Transcription

1 Change or no change? (How) did the financial crisis affect hull claims trends? International Maritime Statistics Forum May 2010, at EMSA, Lisbon Astrid Seltmann, Cefor The Nordic Association of Marine Insurers

2 Contents - Overview Cefor and NoMIS database - Hull Claims trends - Changes in the global marine environment 4Q Change in claims trends (cost / frequency) - Analysing the impact of certain factors on claim trends The Nordic Association of Marine Insurers 2

3 Cefor The Nordic Marine Insurance Association - Trade association for Nordic marine insurance companies - 15 members in Nordic countries - Cefor members insure the following risks: - Hull and machinery (H&M) - Protection and Indemnity (P&I) = shipowner s liability - Cargo - Energy/offshore - War risk - Legal defence The Nordic Association of Marine Insurers

4 Cefor Core Activities - Nordic insurance conditions / legal issues - Statistics - Framework conditions for the marine insurance industry - Education Cefor Administration Managing director Helle Hammer - Analyst/Actuary Astrid Seltmann - Legal counsel Viggo Kristensen - Executive Secretary Hilde Spro The Nordic Association of Marine Insurers

5 The Cefor Hull market in the global context Distribution of Global Marine Hull Premium 2008 Rest of the World 29.1% UK (IUA) 4.8% UK (Lloyd's) 10.0% Gjensidige 5.9% If NEMI 3.9% 5.1% Norwegian Hull Club 18.8% Nordic (Cefor) 16.3% Gerling 7.0% Swedish Club 7.4% USA 5.4% Spain 5.1% Korea 5.4% Japan 10.4% Italy 6.5% France 7.1% Gard 29.7% Codan 10.51% TrygVesta 6.7% Bluewater 5.0% World Cefor Source of global premiums: IUMI Global Marine Insurance Report, by Astrid Seltmann, published September 2009

6 Nordic Marine Insurance Statistics Database No. of Vessels per Underwriting Year NoMIS fleet in % of world merchant fleet xs 300 GT: 15-25% of no. of vessels 30-50% of tonnage 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Vessels with IMO-number, as of December 2009

7 Claim cost per vessel as at December 2008: soaring claim cost Ultimate claim cost per vessel (USD) 120,000 by date of loss 100,000 80,000 60,000 40,000 20, Ultimate claim per vessel excluding total losses The Nordic Association of Marine Insurers 7

8 and a substantial increase in claim frequency 0.30 Claim Frequency - as reported per 4th quarter of each year, by date of loss Date of loss The Nordic Association of Marine Insurers

9 Claim cost per vessel as at December 2009 much improved? 120,000 Ultimate partial and total claim cost per vessel (USD) by date of loss 100,000 80,000? 60,000 40,000 Long term average (excl. total losses) 20, Ultimate claim per vessel incl. IBNR Long-term average, excl. total losses Date of loss Ultimate partial claim per vessel incl. IBNR The Nordic Association of Marine Insurers

10 .. as well as the claim frequency? Claim frequency, claims in excess of a certain amount by date of loss? All claims incl. IBNR (left axis) Claims > 10,000 USD incl. IBNR (left axis) Claims > 500,000 USD (2nd axis) Claims > 2 MUSD (2nd axis) The Nordic Association of Marine Insurers 12

11 2009 trend shifts? The Nordic Association of Marine Insurers

12 Factors with impact on hull claims: - Steel prices - Repair yard capacity - Spare part availability - Strain on vessels (high/low utilization rates) - Good/bad maintenance - Vessels in lay-up - Seafarer qualification - Vessel values (total losses) - Lag effects of shipbuilding boom - Exchange rates (insurance policies in USD, repair costs incurred in Asian/European currencies) - Slow steaming - Major claims - Insurance deductibles - Vessel types The Nordic Association of Marine Insurers 14

13 Factors under control : - Steel prices - Repair yard capacity - Spare part availability - Strain on vessels (high/low utilization rates) - Good/bad maintenance - Vessels in lay-up - Seafarer qualification - Vessel values - Lag effects of shipbuilding boom - Exchange rates - Slow steaming - Major claims - Insurance deductibles Let s look at the as-if effect of some factors! The Nordic Association of Marine Insurers 15

14 16 Predicting the future can be difficult...

15 Values drop since 4Q % Average change in Sum Insured for all renewals in respective month, compared to previous underwriting year In 2009, vessel values down 14% compared to % 110% 100% For certain vessel types drop values up to 30%. 90% 80% 70% Effects: Reduced cost of total losses (= insured value) But: More constructive total losses (xs 75 % of value) & Income reduction (premium rate = % of insured value)

16 Deductibles increase In 2009, the standard insurance deductible increased by nearly 10% or USD 10, , , ,000 Average Standard Deductible Development All business, 100%, in USD Effect: -> Reduction in reported claim cost and frequency. 100,000 50,000 With 2009 deductibles, the 2008 claim cost would have been 5% less The Nordic Association of Marine Insurers Average Std. Deductible Av.Std. Ded. <= 500,000 USD

17 Major claims a fortunate year: No claim in excess of USD 30 million in 2009 In 2009, no major claims exceeding 30 MUSD. Effect: Less impact of major claim cost reduces overall claim cost. But: Great volatility in occurence of major claims: lucky year rather than trend. The Nordic Association of Marine Insurers

18 Claim cost per vessel in bands of claim size Annual cost compared to 5-year average Claim per vessel (USD) by date of loss Claim per vessel 5-year-average (USD) by date of loss 120, , , ,000 IBNR 80,000 60,000 40,000 20,000 IBNR >= 30 MUSD MUSD 5-10 MUSD 1-5 MUSD <= 1 MUSD 80,000 60,000 40,000 20,000 >= 30 MUSD MUSD 5-10 MUSD 1-5 MUSD <= 1 MUSD 0 0 Date of loss Date of loss The Nordic Association of Marine Insurers 20

19 Claim cost as at December 2009 As-if effect for - lay-ups, - absence of large claims - drop in values - deductible increase: 120, ,000 80,000 Ultimate partial and total claim cost per vessel (USD) by date of loss? 2009 cost level probably on par with 2007/2008 level. 60,000 40,000 20,000 Long term average (excl. total losses) Ultimate claim per vessel incl. IBNR Long-term average, excl. total losses Date of loss Ultimate partial claim per vessel incl. IBNR The Nordic Association of Marine Insurers

20 and the Individual claim cost by claim type: No trend shift for costly Fire/explosion and collision/grounding claims 3,000 Average USD claim amount per type of casualty by date of loss 2,500 2,000 1,500 1, Collision, Contact, Grounding Engine Fire/Explosion Heavy Weather Ice 0 Date of loss The Nordic Association of Marine Insurers

21 Conclusion... drop in average claims cost expected, but no trend shift...claims costs still at very high level

22 Cefor Nordic Marine Insurance Cefor Annual Report 2009, page The 2009 Cefor NoMIS Report & The 2009 Cefor NoMIS COASTAL Report Claims Update Fact Sheet (as of June each year) All Cefor statistics are available for download from the statistics section of the Cefor website: Other marine insurance statistics: IUMI (International Union of Marine Insurance): Statistics issued by IUMI s Facts & Figures