Market Structure
The Nordic Association of Marine Insurers
Business modelA. Scandinavian
Ship owner/Management
company(Assured)
Broker
Claims leader
Co-insurers
CoverClaim informationClaim payment
Business modelB. Non-Scandinavian
Ship owner/Management
company(Assured)
Broker
Claim leader
Co-insurers
CoverClaim informationClaim payment
Business modelB. Non-Scandinavian
Ship owner/Management
company (Assured)
Adjuster
Claims Leader
Co-insurers
CoverClaim informationClaim payment
Survey
Business modelB. Non-Scandinavian
Ship owner/Management
company(Assured)
Broker
Claims Leader
Co-insurers
CoverClaim informationClaim payment
Adjuster
Distribution of risk
Insurer
Foreign capital
Capital / assets
BrokerShip owner
Reinsurance
Market structure - overview
Ship owner
Broker
Insurer
Reinsurer
Market structure - overview
Ship owner
Broker
Insurer
Reinsurer
Risk information
Premium and
claim payment
Terms
Syndicated risks –
• Two or more underwriters / insurers subscribe to the same risk against their portion of the premium, risk and claims = Spread of risk
• Used in• Marine, energy, transport and aviation insurance
• Reinsurance
• Larger non-marine risks
The Nordic Association of Marine Insurers
Syndicated risks
Co-insurance
• Two or more insurers each have part of the risk under a single insurance
• In practice, the insurer with the largest line acts as «lead», but the co-insurers is not obligated to follow a «lead» if they not want to
• Chapter 9 in the Plan regulates relationship between the claims leader and the co-insurers
The Nordic Association of Marine Insurers
The Global Marine Insurance Market
Premium Volume 2011 (USD billions) –
• Marine liability (non-P&I Clubs) 1.8 ( 5.7%)
• Offshore / energy 4.5 (14.2%)
• Hull & Machinery 8.4 (26.2%)
• Cargo / transport 17.2 (54.0%)
• Total 31.9
• Mutual P&I Clubs 3.4
Estimated global premium volum USD 34 billion (IUMI Sep 2012)
The Nordic Association of Marine Insurers
The Global Marine Insurance Market
The Nordic Association of Marine Insurers
The Global Marine Insurance Market
Premium Volume 2011 (USD million) – Hull & Machinery
• Nordic / Cefor 933 11%• UK ILU/IUA 294 4%• UK Lloyd’s 1243* 15%• China 932 11%• Japan 697 8%• France 512 6%• Italy / US / Netherlands 361 each 4% each• Korea / Spain 300 each 3% each• Rest 2,167 26%
8,400*incl fac reinsurance premium
The Nordic Association of Marine Insurers
The Global Marine Insurance Market
Premium Volume 2011 (USD million) – Cargo / transport
• Japan 1.961 11%• China 1.548 9%• Germany 1.204 7%• UK Lloyd’s 1.170 7%• France 860 5%• US 774 5%• Brasil 688 4%
- - -• Nordic 378 2%• Rest 8.600 50%
17.200
The Nordic Association of Marine Insurers
The Global Marine Insurance Market
Results – Gross ultimate loss ratios %
(Technical break even is achieved when the gross loss ratio does not exceed 100% minus expense ratio, usually 20 – 30%)
(IUMI Sep 2012 – Net premium vs. net claims)
The Nordic Association of Marine Insurers
Uwr yr H&M Cargo
2004 72 59
2005 71 63
2006 88 58
2007 82 76
2008 81 75
2009 76 63
2010 76 69
2011 96 73
The Global Marine Insurance Market
Premium Volume 2011 (USD million) – Offshore Energy
• UK Lloyd’s 2.615 58%• US / Brasil / Nigeria / Malaysia 210 4 – 5% each• Nordic 135 3%• Rest 945 21%
(4.500)
The Nordic Association of Marine Insurers
The Global Marine Insurance MarketClaim trends (by policy years) –
• H&M
• 2007 Starts at high loss ration level, - expected to produce technical loss, premium increases do not balance cost inflation
• 2008 Fewer major claims, but uncertainty iro the effect of change in market conditions and repair cost
• 2009 Continued improvement on major losses (i.e. fewer)
• 2010 Claim costs and loss ratio stabilize at high level
• 2011 Impact of major claims
• Cargo / transport
• 2002 – 2007 Overall stable results
• 2005 Slightly worse than average – Katrina
• 2007 Signs of worsening trend
• 2008 Worsening trend confirmed
• 2009 Impact of catastrophe losses
• 2010 Worsening trend confirmed, loss ratio stabilize at high level
• 2011 Impact of natural catastrophes and increased GA claims
The Nordic Association of Marine Insurers
The Nordic Association of Marine Insurers
The Global Marine Insurance Market
Claim trends –
• Offshore• Volatile business• Rates, terms and conditions improved after 2000 • Long time lag between accident and claim payment• No regular claims patterns• Increasing effect of single loss events• Events with high liability cost in 2009 and 2010
The Nordic Association of Marine Insurers
The Nordic Association of Marine Insurers
Market conditions mid 2013
Important issues –• Flat world / global market place• Financial crisis: Most insurance buyers are influnced by
reduced financial activity, - rebounced 2009/10 and then to cool off again, - light at the end of the tunnel?
• Amount of cargo transported is increasing but values are diminishing
• Vessel values are reduced• Offshore Energy proceeds at high pace and with new risk
challenges (more advanced tecnologies)• Capital crunch and reduced (lack of) financial income
increases focus on technical results for underwriters• Regulatory issues / moral hazards(Subjective views of the lecturer)
The Nordic Association of Marine Insurers
Market conditions going forward from mid 2013
• Important issues listed will influence the insurance market
• Survival based on long term sustained profitable underwriting
• Financial income important but not to be relied upon • Service providers vs. capital providers• Distribution
(Subjective views of the lecturer)
The Nordic Association of Marine Insurers