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Global marine insurance report
Astrid Seltmann, IUMI F&F vice chairman, Analyst/Actuary @ Cefor, the Nordic Association of Marine Insurers
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (Market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
_____________________________________@ www.iumi.com : Premiums by country & Loss ratios triangulations (tables) 2
MARKET CHALLENGES
Economic & political environment
Oil price
Weather / climate
Technological development
Trading areas
Volatility in all areas
Identify – and quantify! – impact on world
trade, fleet, safety, …, and consequently
the insurance industry (volumes, values,
income, claims). Ideally proactively. 3
THE GURU APPROACH?
TRADEWINDS 18 SEPTEMBER 2015
4
DATA CHALLENGES:
DATA CHALLENGES
Data changes retrospectively!
Missing and double-reported data.
Exchange rates
Volatility (what is ‘real’ change?)
Inconsistent application (as of which date)
What the hell is a loss ratio triangulation?
Consistent global data: impossible!
The guru challenge:
5
Derive meaningful
insight & messages!
6
THE GURU APPROACH –
RECEIVING DATA & INSIGHT
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
7
25.0%
52.9%
7.1%
15.0%
2015
Global Hull
Transport/Cargo
Marine Liability
Offshore/Energy
MARINE PREMIUM 2015BY LINE OF BUSINESS
Total: 29.9 USD billion / Change 2014 to 2015: -10.5%
NB: Strong USD «reduces» premium in USD as compared to local currency!
Share of offshore energy down 2%.
8
50.4%
27.1%
9.8%
5.9%6.8%
2015Europe
Asia/Pacific
Latin America
North America
Other
Total: 29.9 USD billion
Relative impact of Europe somewhat decreasing
(EUR-USD effect?)
MARINE PREMIUM 2015BY REGION
9
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
2008 2009 2010 2011 2012 2013 2014 2015
Europe
Asia/Pacific
Latin America
North America
Middle East
AfricaLatin America, Middle East, Africa:
complete data
MARINE PREMIUM 2008-2015DATA AS REPORTED AS OF 2016
UK-IUA
New data
survey
2010: non-IUMI Asia
2014: 33.4 USD bill. / 2015: 29.9 USD bill.
Strong USD «reduces» income in most currencies!
Currency effect –
Example Germany
Real change: -2%
(Hull: -12%, Cargo: 0%)
Change in USD: -12%
(Hull: -20%, Cargo: -11%)
10
Singapore extends
scope of reporting
50%
70%
90%
110%
130%
150%
170%
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
CNY (China)
JPY (Japan)
EUR (Euro)
NOK (Norway)
GBP (UK)
BRL (Brazil)
USD EXCHANGE RATE 2005-2015 AGAINST SELECTED CURRENCIES, INDEX, 2000=100%
Exchange rates not
necessarily correlated.
2014/15: strong USDMany currencies with double-
digit % devaluation.
Source: Norges Bank exchange rates, as of December each year. 11
50%
70%
90%
110%
130%
150%
170%
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
CNY (China)
JPY (Japan)
EUR (Euro)
NOK (Norway)
GBP (UK)
BRL (Brazil)
USD EXCHANGE RATE UNTIL 2016AGAINST SELECTED CURRENCIES, INDEX, 2000=100%
* 2016 rates as of July
More chaos in
2016 ahead.
Brexit-effect.
Some strenghtening
of EU currencies.
China? Brazil?
12Source: Norges Bank exchange rates.
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
13
62%
30%
6% 2%
UK
Nordic
Japan
US
Calls 2015:UK: 2.16 Nordic: 1.03Japan: 0.22US: 0.08Total: 3.50 (USD billion)
P&I CLUBS INTERNATIONAL GROUP GROSS CALLS (PREMIUM) 2015 – OPERATIONAL LOCATION
Slightly down (-0.19)
48%
19%
13%
11%
7% 2%
BermudaUKLuxembourgNordicJapanUSby country of registration
14
0
500
1000
1500
2000
2500
3000
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Tota
l Cla
im (
US$
mill
ion
s)
Nu
mb
er
of
Cla
ims
Pool Claims by Policy Year
Total claim on Pool Total claim on ELR Number of claims
Source: IG P&I Annual Review 2015/2016
P&I POOL CLAIMS BY POLICY YEAR
15
“Fourth consecutive year of reduced frequency of claims impacting on
the Group pool and General Excess Loss reinsurance programme.”
“Severity of 2015/16 claims exceeds that of 2014/15 notifications.” Read this to
understand
complexity of
exposure
under P&I
liability!
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
16
41.3%
29.3%
12.6%
6.3%7.0% 3.6%
2015
Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
CARGO PREMIUM 2015 - BY REGION
Total: 15.8 USD billion / Change 2014 to 2015: -9.1%Reduction partly due to strong USD.
17
Belgium1.7%
Brazil5.0%
China9.0%
France4.5%
Germany6.6%
Italy2.3%
Japan8.7%
Mexico2.3%
Netherlands1.9%Nordic
1.6%
Russia1.8%Spain
1.2%UK (IUA)
4.5%
UK (Lloyds)8.8%
USA5.8%
Other34.2%
2014
CARGO PREMIUM 2015 - BY MARKETS
Total: 15.8 USD billion
18
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
China
UK (Lloyds)
Japan
Germany
USA
Brazil
France
UK (IUA)
CARGO PREMIUM 2008-2015SELECTED MARKETS
2014/15: strong USD «reduces» income of most
countries. Difficult to identify real market development.
19
0%
50%
100%
150%
200%
250%
300%
350%
400%
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
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
World Trade Values
World Trade Volume
Global Cargo Premium
CARGO PREMIUM /
WORLD TRADE VALUES & EXPORTS
Exchange rate influence
on USD cargo premium –
real change differs.
Index of evolution, 1995=100%
IMF estimate
April 2016
20
Source: World trade volume & values: IMF World Economic Outlook, April 2016
* Premium adjusted backwards
for missing historical data.
*
0%
20%
40%
60%
80%
1 2 3 4 5
2009
2010
2011
2012
2013
2014
2015
Paid loss ratio: Average development most years.
CARGO – GROSS* LOSS RATIOSPAID CLAIMS, AS REPORTED
EUROPE/USA*, UNDERWRITING YEARS 2009-15, AS AT 1, 2, 3, 4, 5 YEARS
21* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)
** Data: Belgium, France, Germany, Netherlands, Italy, Spain (until 2007), UK, USA
50%
60%
70%
80%
1 2 3 4 5
2009
2010
2011
2012
2013
2014
2015
2014: substantial increase in claims reserves (Tianjin?)
2015: starts higher than 2014.
Difficult to predict ultimate results due to untypical reserving
pattern. Differs much by country.
CARGO – GROSS* LOSS RATIOSPAID+OUTSTANDING CLAIMS, AS REPORTED
EUROPE/USA**, UNDERWRITING YEARS 2009-15, AS AT 1, 2, 3, 4, 5 YEARS
22* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)
** Data: Belgium, France, Germany, Netherlands, Italy, Spain (until 2007), UK, USA
0%
20%
40%
60%
80%
100%
120%
140%
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
2012
Sandy
peak
* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)
** Data: Belgium, France, Germany, Netherlands, Italy, Spain (until 2007), UK, USA
CARGO – ULTIMATE* LOSS RATIOSEUROPE/USA**, UNDERWRITING YEARS 1996 TO 2015
23
August 2015
Tianjin port explosion.
2014 deteriorated – but
full impact of Tianjin on
2014 and 2015 contracts
not yet materialized.
2015 Cargo acquisition cost % as
reported by some countries: 15%-20%
2015: espected to
deteriorate: Hanjin
& Amos-6 satellite
?
CARGO CONCLUSIONS
Market:
Strong USD ‘hides’ local market growth.
Market growth and results differ by region.
Results:
Full Tianjin effect on 2014 and 2015 underwriting years still
unclear (and figures do not include Asian loss ratios).
Claims:
Tianjin port explosion largest single loss event ever.
Auto industry major contributor to cargo/stock losses.
Risk of costly cargo claims expected to increase:
Natural catastrophes (Thailand floods, Sandy, but none 2014/15)
Increased accumulation risk (Tianjin port)
2016 potential large claims: Hanjin, Amos-6 satellite
Outlook:
Negative impact of China economy slow-down and commodity
price slide (oil, products) on world trade and cargo premiums.
Difficult to predict impact of changing economic environment. 24
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
25
48.8%
38.6%
5.6%4.4%
1.6%
1.0%2015
Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
HULL PREMIUM 2015 – BY REGION
Total: 7.5 USD billion / Change 2014 to 2015: -8.4%
26
HULL PREMIUM 2015 – BY MARKETS
27
China11.9%
France3.6%
Italy3.8%
Japan7.6%
Korea, Republic3.1%
Netherlands2.0%
Nordic9.5%
Spain1.7%UK (IUA)
6.6%
UK (Lloyds)16.5%
USA3.8%
Latin America5.6%
Other24.3%
2015Total: USD 7.5 billion
** Norway, Denmark,
Finland, Sweden **
** includes proportional and
facultative reinsurance
HULL PREMIUM 2004-2015SELECTED MARKETS
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
UK (Lloyds)
Nordic
China
Japan
Latin America
UK (IUA)
Before 2010: only Mexico and/or Brazil
From 2012: extended data survey
28
Exchange rate effects, but difficult to
specify due to global nature of portfolio.
50%
75%
100%
125%
150%
175%
200%
225%
250%
275%
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Gross tonnage(> 300 GT)
Av. insured vesselvalue (Renewals &newbuilds - Cefor)
Global Marine HullPremium
No. Ships (> 300GT)
* Global premium adjusted
backwards for missing data.
Insured vessel values: Cefor NoMIS data as of June 2016. No. Ships & tonnage: ISL Bremen, January 2016.
HULL PREMIUM / WORLD FLEET INDEX OF EVOLUTION, 1995 = 100%
World fleet continues to grow, especially in tonnage.
Hull premium deteriorates in line with ship values – not only exchange rates.
29
*
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6
2010
2011
2012
2013
2014
2015
* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)
** Data: Belgium, France, Germany, Italy, UK, USA
Costa
Concordia peak
HULL – GROSS* LOSS RATIOSPAID+OUTSTANDING, AS REPORTED
EUROPE/USA**, UNDERWRITING YEARS 2010 TO 2015
30
2014 deteriorated more than average –
major claims in 2015 attaching to 2014!
2015 starts off high compared to 2013/14.
0%
20%
40%
60%
80%
100%
120%
140%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2013/2014 profited by low number of major losses in 2014 – but 2014
deteriorated above average (2015 major losses).
2015: impacted by 2015 major losses and deteriorating premiums.
* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)
** Data: Belgium, France, Germany, Italy, Spain (until 2007), UK, USA
Costa
Concordia
peak
HULL – ULTIMATE LOSS RATIOS*EUROPE/USA**, UNDERWRITING YEARS 1996 TO 2015
31
2015 Hull
acquisition cost
% as reported by
some countries:
12%-18%
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
32
HULL CLAIMS TRENDS
© Astrid Seltmann (MS Midnatsol in Bodø)33
0.0%
0.1%
0.2%
0.3%
0.4%
in % of Vessels in % of GT
TOTAL LOSS FREQUENCY 1999-2015TOTAL LOSSES AS % OF WORLD FLEET, VESSELS > 500 GT
Source: Lloyds List Intelligence (Casualty stats) & Clarkson Research (World Fleet)
Long-term downward trend,
but some increase in 2015.
34
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
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
partial claims (left axis)
TLO claims (right axis)
Source: Cefor Nordic Marine Insurance Statistics as of 30 June 2016.
CLAIMS FREQUENCY AS OF JUNE 2016
All claims: Downward trend continues.
Total losses: Long-term positive trend.
Continues in 2016 after 2015 increase (?).
35
CLAIM COST PER VESSEL (USD)ESTIMATED ULTIMATE CLAIM COST
Including total losses
Excluding total losses
36
-
20,000
40,000
60,000
80,000
100,000
120,000
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Ultimate claim cost per vessel incl. IBNR
Ultimate partial claim per vessel incl. IBNR
Source: Cefor Nordic Marine Insurance Statistics as of 30 June 2016.
Total loss impact as well as partial claim cost per vessel
substantially reduced in first half year 2016.
CLAIM COST PER VESSEL: QUARTERLY DEVELOPMENT, BY ACCIDENT YEAR
0
20,000
40,000
60,000
80,000
100,000
120,000
1 2 3 4 5 6 7 8 9 10 11 12 13
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Cefor Nordic Marine Insurance Statistics as of 30 June 2016.
37
2015 relatively high cost due to major claims impact. 2016 starts low.
HULL CLAIMS TRENDS
Claims frequency: Long-term positive trend.
Total loss frequency: Long-term positive trend,
continues after (intermediary?) recent increase.
Repair cost: Stable to positive trend. Positive
influence of strong USD? (yards in non-US areas)
Major losses: Volatile with strong impact!
2012: very strong impact
2014: Exceptionally few major claims.
2015: Increased impact – back to expected level.
2016: Exceptionally few as of 30 June. Rest of 2016?
2017: ?
38
HULL PORTFOLIO TRENDS
39© Astrid Seltmann (Regal Princess in Oslo)
5.9% 5.7%
2.0%
8.2%
4.2%
-15.0%
-8.2%
-3.9%
-7.1%-6.1% -6.2%
-9.3%
-5.6%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Cefor Nordic Marine Insurance Statistics as of June 2016
Some reduction
expected due to
aging of vessels.
CHANGE IN VALUES ON RENEWAL = VALUE ON RENEWAL / VALUE PREVIOUS UW YEAR FOR SAME VESSELS
Financial
crisis effect
40
BULK & SUPPLY/ OFFSHORE
Source: Cefor Nordic Marine Insurance Statistics as of June 201641
23
.3%
9.8
%
3.8
%
32
.4%
11
.7%
-31
.0%
-7.5
%
-5.9
%
-11
.2% -6
.2%
-5.3
%
-13
.6%
-12
.6%
0.8
%
6.7
%
4.0
%
22
.5%
18
.1%
-11
.7%
-2.1
%
2.3
%
-3.5
%
0.3
%
-6.0
%
-19
.0% -1
2.1
%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Bulk
Suppl/Off
STRONG DROP IN VALUES ON 2015 AND 2016 RENEWALS!
0%
1%
2%
3%
4%
5%
6%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
> 300 MUSD
100 - 300 MUSD
Source: Cefor Nordic Marine Insurance Statistics as of June 2016
THE RISK EXPOSUREPORTFOLIO SHARE OF SHIPS WITH VALUES XS USD 100 MILLION
Inflow of high-value vessels continues.
42
HULL PORTFOLIO TRENDS
World fleet
Growth continues, but slowing down.
Insured vessel values
Renewals: strong reduction on supply/offshore and
bulk vessels 2015 and 2016.
New builds: Inflow of high-value vessels continues,
outweighs value reduction on renewals.
Global Hull premium
Deteriorates in line with values, not only strong
USD effect.
43
ISSUES TO MONITOR (AND PRICE)
High-value risks
Arctic risks
© Astrid Seltmann
© Astrid Seltmann
© Astrid Seltmann
Navigation
Oil price, fuel quality,
effect of ECA’s?
New technology
Climate changes
Law and liability changes
The human factor/
Qualification
Dagfinn BakkeAccumulation
44
HULL CONCLUSIONS
Claims
Repair cost: stable to downward trend.
Total losses: (intermediate?) increase in
2015, else long-term downward trend
Major losses: Volatile!
Impact differs substantially between years.
Potential risk must be taken into account.
Premiums deteriorate in line with values.
Exposure increases. New risks.
For sustainability: All risk aspects must be
taken into account!
45
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: Challenges (market & data)
P&I – Income & claims
Cargo – Market & results
Focus: Accumulation claim effect (Tianjin)
Hull – Market & results
Focus: 2015 versus 2016 claims & exposure
Offshore Energy – Market & results
Focus: Low oil price and no remedy.
46
UK (Lloyds), 48.7%
UK (IUA), 23.5%
Brazil, 2.8%
Nigeria, 1.6%
Mexico, 4.7%
Malaysia, 3.5%
Nordic, 2.1%
Japan, 3.5%
Egypt, 1.9%India, 1.8%
Italy, 1.8%
USA, 1.1%
Other, 3.0%
2015
OFFSHORE ENERGY PREMIUM 2015
No data: Kazakhstan.
*
* incl. proportional and
facultative reinsurance
Total: 4.5 USD billion / Change 2014 to 2015: -20%!(major part written in USD – no big USD rate effect)
No data: Kazakhstan.
47
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Other
USA
Nordic (2011)
Nigeria (2008)
Mexico (2010)
Malaysia
Japan
Italy
India
Brazil
UK-IUA (2012)
UK-Lloyds
OFFSHORE ENERGY PREMIUM
2004 – 2015
Nordic, Nigeria, Mexico: no data available before indicated year;
UK- IUA: from 2012 extended data survey; Kazakhstan: no data available;
48
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
500%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Average Day Rates
Global Offshore EnergyPremium
Oil price, Brent Crude
No. Contracted Rigs
OFFSHORE ENERGY PREMIUMENERGY MOBILES, DAY RATES, OIL PRICE
Index of evolution, 2000 = 100%
Source: Day rates, contracted rigs: Clarkson Research
49
* Global premium adjusted
backwards for missing data.
*
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
500%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Average Day Rates
Global Offshore EnergyPremium
Oil price, Brent Crude
No. Contracted Rigs
OFFSHORE ENERGY INTO 2016ENERGY MOBILES, DAY RATES, OIL PRICE
Index of evolution, 2000 = 100%
Source: Day rates, contracted rigs: Clarkson Research
50
* Global premium adjusted
backwards for missing data.
*
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
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
2005
Katrina & Rita
2004
Ivan
2008
Ike
2009-15 no major
hurricane activity
Offshore Energy – Loss Ratios (incl. liability)
Underwriting years 1996 to 2015 / data from UK, US and Nordic
As of December 2015
51
Strong increase in
2014 loss reserves.
Both 2014 and 2015
expected to deteriorate
substantially.
OFFSHORE ENERGY – AS OF 2015
Substantial drop in premiums in 2015.
May decrease further when projects not realized.
Hurricane/weather impact little in recent years(Gulf of Mexico)
Series of high-profile losses in 2015
(7 > USD 100 million / 2 > USD 400 million)
& 2016 Tullow claim
Recent years still develop until cost is fully known.
52
OFFSHORE ENERGY – 2016
Strong drop in premiums continues into 2016
Under current market conditions no chance to
continue positive results of years 2011-2013.
The oil price drama!
Downturn in activity / many mobiles currently idle
Costly new projects postponed (deep-water, Arctic)
More risk retained in captives
Low interest rates / stock market instability
Weather: Not the main challenge currently - but a
single event can produce significant losses.
53
• Hull and cargo
2014 results deteriorated substantially and above average.
Deterioration expected due to severe 2015 claims affecting 2014 – and
2015 – underwriting years.
• Offshore energy
Extremely demanding market environment (oil price). No end in sight.
• Market environment
Low interest rates / stock market volatility.
Political uncertainty in many areas.
Difficult to predict.
Increasing exposure (high values/accumulation), new technology,
Arctic risks, climate,…
GENERAL CONCLUSIONS – OUTLOOK 2016
54
End of 2016 guru oracle. Comments?
Astrid Seltmann, Analyst/Actuary @ Cefor
(The Nordic Association of Marine Insurers)
astrid.seltmann@cefor.no, www.cefor.no
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 adjustment expenses = 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’s system. 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 year 2006. 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 will change 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 the figures 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.
EXPLANATION OF TECHNICAL TERMS
56
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