1. Vessel value and casualty trends & the impact of sleeping beauties
Astrid Seltmann
The Nordic Association of Marine Insurers (Cefor)

2. Contents The Nordic Marine Insurance Statistics (NoMIS)
Contents
The Nordic Marine Insurance Statistics (NoMIS)
Vessel values & Age
Casualties – General trends
Claims frequency
Claims cost
Cost driving factors
Casualties – Special
Lay-ups: how do they impact claims trends?
Appendix (Definitions / disclaimer)

3. The NoMIS Fleet – No. of vessels with IMO-number
NoMIS Nordic Marine
Insurance Statistics
The NoMIS Fleet – No. of vessels with IMO-number
For statistical purposes reflect NoMIS vessel values and casualty costs always 100% of each vessel, independent of the insurers’ written share in the vessel.
as of 31 December 2016

4. Nomis Fleet as % of world fleet vessels with IMO number
Nomis Fleet as % of world fleet vessels with IMO number
NoMIS Nordic Marine
Insurance Statistics
Cefor insured vessels as % of World Fleet: Vessels > 1,000 gross ton 1)
1) “Cefor share” calculated as the number of vessels partly or wholly covered by Cefor members in underwriting years 2015 & 2016, divided by the total number of ships with registered IMO-number in the world fleet. World fleet count as according to Lloyd’s List Intelligence “World Fleet Update” as of January 2017.
as of 31 December 2016

5. Contents The Nordic Marine Insurance Statistics (NoMIS)
Contents
The Nordic Marine Insurance Statistics (NoMIS)
Vessel values & Age
Casualties – General trends
Claims frequency
Claims cost
Cost driving factors
Casualties – Special
Lay-ups: how do they impact claims trends?
Appendix (Definitions / disclaimer)

6. Average gross ton & vessel value
NoMIS Nordic Marine
Insurance Statistics
Decrease in vessel values despite
increase in vessel sizes
as of 31 December 2016

7. NoMIS Nordic Marine
Insurance Statistics
Change in values on renewal comparing insured value of same vessels in two consecutive years
Under stable market conditions, some value reduction normal due to the aging factor (<= 5%).
as of 31 December 2016

8. Bulk, Supply/Offshore vessels: Strong drop in values
NoMIS Nordic Marine
Insurance Statistics
as of 31 December 2016

9. Change in offshore vessel values & oil price
NoMIS Nordic Marine
Insurance Statistics
as of 31 December 2016

10. Average VESSEL Age Recent increase – less newbuildings
NoMIS Nordic Marine
Insurance Statistics
Average VESSEL Age Recent increase – less newbuildings
as of 31 December 2016

11. Newbuildings world fleet
Source: Lloyds List Intelligence, World Fleet Update
as of 31 December 2016

12. Summary Fleet trends (Insured) Vessel values drop since 2009
but average vessel size continues to increase
Largest drop in 2015/2016 for bulk and supply/offshore vessels
World fleet gets older
Less newbuildings entering the fleet
=> Implications on casualty trends?
…and vessels get bigger
from 2010 more newbuildings > 5,000 gross ton than less.
=> Increasing risk of more costly single loss events
as of 31 December 2016

13. Contents The Nordic Marine Insurance Statistics (NoMIS)
Contents
The Nordic Marine Insurance Statistics (NoMIS)
Vessel values & Age
Casualties – General trends
Claims frequency
Claims cost
Cost driving factors
Casualties – Special
Lay-ups: how do they impact claims trends?
Appendix (Definitions / disclaimer)

14. Total number of claims:
NoMIS Nordic Marine
Insurance Statistics
Number of Claims by type of casualty
Total number of claims:
: 16, : 3,053
as of 31 December 2016

15. Total cost of claims in USD million:
NoMIS Nordic Marine
Insurance Statistics
Cost of Claims by type of casualty
Total cost of claims in USD million:
: 4, :
as of 31 December 2016

16. Claims Frequency*: Long-term positive trend
Claims Frequency*: Long-term positive trend
NoMIS Nordic Marine
Insurance Statistics
* = No. of claims divided by no. of insured vessels
Pre-financial crisis peak
Partial loss frequency
Total loss frequency
as of 31 December 2016

17. Claims frequency > certain levels: stable to positive trend
NoMIS Nordic Marine
Insurance Statistics
as of 31 December 2016

18. Claim cost per vessel: Increasing volatility by major claims
NoMIS Nordic Marine
Insurance Statistics
2012/13/15:
strong major claims impact
2004: first claim > USD 50 million
2014/16: little major claims impact
Claim bands:
as of 31 December 2016

19. claims Exceeding 10 USD million as % of total claim cost
Strong volatility and impact on costs
by major claims.
as of 31 December 2016

20. claim cost per vessel – including/excluding total losses
: Strong increase in repair cost per vessel.
Since 2009: repair cost stable;
Volatility by major claims impact.
Strong total loss impact
as of 31 December 2016

21. Claims frequency – Alternative Facts (?)

22. Lloyds List INtelligence: Total losses as % of world fleet vessels > 500 GT
Total losses: Long-term positive trend.
Same perception as NoMIS stats.
as of 31 December 2016

23. Lloyds List INtelligence: ‘Serious’ casualties as % of world fleet vessels > 500 GT
LLI: Strong increase in ‘serious’ casualties in 2015 and NoMIS: Some impact by major claims in 2015, but very little in 2016.
So what’s right?
as of 31 December 2016

24. Answer: both!

25. Beware of the Terminology!
‘Serious’ casualty = serious related to the nature of the casualty (Lloyds List Intelligence, or IHS, Clarkson Research)
‘Major’ claim = extraordinary costly casualty, e.g. > 5 USD million (Insurer terminology)
Major claims are usually the result of serious events, but serious casualties are not necessarily costly.
‘Total loss’ = vessel is lost or damaged beyond repair.
The perception of a ‘total loss’ is near equal by all parties For insurers, a total loss means being liable to pay the insured value of the vessel (or even more, including salvage costs and 3rd party liability) A ‘constructive total loss’ occurs when the assumed repair costs exceed e.g. 80% of the insured vessel value.
as of 31 December 2016

26. NoMIS claims with match in LLI Casualties: split by ‘serious’/’non-serious’ (LLI) & 5 USD million cost (NoMIS)

27. Cost Driving factors NoMIS Nordic Marine 24.06.2018
Insurance Statistics
Cost Driving factors
Sources: Claim indices: Cefor NoMIS data as of ; Exchange rates: Norges Bank, Ship operation costs: Moore Stephen’s, Steel: CRU Steel Price Index
as of 31 December 2016

28. Summary Casualty trends
Total loss frequency Long-term positive trend continues in 2016 after small increase in 2015.
Overall claims frequency Long-term stable to downwards trend
Repair cost Increase before financial crisis, since 2009 relative stable at pre-crisis level. Correlation with certain parameters (e.g. steel price, USD exchange rate, labour cost).
Major (=costly) claims
More expensive single claims. (increasing vessel sizes, more complex objects)
Increasing Volatility Strong impact in some years (2012, 2013, 2014), little in other years (2014, 2016).
Due to random occurrence, difficult to estimate major claims impact for a specific year.
‘Serious’ casualties Strong increase in 2015 and Majority of ‘serious’ casualties no ‘major’ claims in terms of cost. A high share of ‘serious’ casualties should nevertheless give rise to concern and be further investigated.
Lay-ups: Does a higher share of inactive vessels keep the claims frequency/cost at bay?
as of 31 December 2016

29. Lay-up effect – Example: Container vessels laid up in 2009

30. Claims frequency of container v
Claims frequency of container v. in lay-up in 2009 versus active vessels
NoMIS Nordic Marine
Insurance Statistics

31.
NoMIS Nordic Marine
Insurance Statistics
Claim cost per vessel of Container v. in lay-up in 2009 versus active vessels
Sources: Claim indices: Cefor NoMIS data as of ; Exchange rates: Norges Bank, Ship operation costs: Moore Stephen’s, Steel: CRU Steel Price Index
as of 31 December 2016

32. Summary Lay-up effect on Claims trends
Container vessels in lay-up in 2009:
Claims frequency was reduced by half during the period of inactivity.
Claims frequency & cost were above average both before and after lay-up period! Why also before lay-up? Substandard container vessels first put into lay-up?
Supply/Offshore vessels in lay-up in 2016:
Claims frequency equally reduced during period of inactivity in 2016
…but claims frequency before lay-up period was normal!
How claims frequency develops after lay-up period remains to be seen! May be challenging to reactivate complex objects.
as of 31 December 2016

33. NoMIS Reports 2016 NoMIS Nordic Marine
NoMIS Nordic Marine
Insurance Statistics
NoMIS Reports 2016
Cefor marine insurance statistics publications at :
(check the ‘NoMIS’ section)
Cefor Annual Report 2016
The 2016 Cefor NoMIS OCEAN Hull Report
The 2016 Cefor NoMIS COASTAL Hull Report
Half-yearly Claims Update Fact Sheet
Comparing claims trends for ships built in Asian countries (Cefor Annual Report 2015)
Fires on Car/RoRo/Passenger vessels (Cefor Annual Report 2014)
Other marine insurance statistics:
IUMI (International Union of Marine Insurance) – Statistics issued by IUMI’s Facts & Figures Committee:
as of 31 December 2016

34. Thank you.

35. The Nordic Marine Insurance Database
The Nordic Marine Insurance Database
The Nordic Marine Insurance Statistics (NoMIS) is a joint database project of Cefor members active in the Hull & Machinery market to compile insurance data and vessel characteristics for statistical purposes, administered by Cefor. From its foundation in 1985 until 1997, the data was compiled by appointing Cefor a facultative reinsurer to which members of the Norwegian Hull Agreement ceded 0.1% of their H&M insurance. Premium and claims information was exchanged via Borderaux, the lead insurer providing details of each claim. In 1996, the hull agreement was discontinued, but the statistics cooperation continued.
In 1998, steps were taken to update the NoMIS’ database electronically instead of manually. From December 1999, Cefor could produce up-to-date hull figures on regular basis. The scope of reporting was extended substantially by including non-lead business. From 2000, also business back to underwriting year 1995 was updated electronically. In the following years, several new major Cefor members joined the NoMIS cooperation, reporting retrospective data from 1995 underwriting year. In 2009, data from Gjensidige and Tryg was integrated, dating back to underwriting years 2000 and 2003 respectively. In 2012, data from Alandia was added, starting with underwriting year Further, If extended their scope of reporting to include all Nordic business. In 2015, the reporting format was modernized and the database migrated to a new technical platform.
In 2016, data from Skuld was added, dating back to underwriting year From 2016, all member report according to the modernized reporting format.
By 31st December 2016, in all 246,232 vessel-years and 71,311 claims were registered on underwriting years 1985 through 2016 for the ‘ocean’ hull portfolio (vessels with IMO number) The NoMIS statistics in this report comprise data from the following marine insurers: Alandia, Bluewater (until 2008), Codan, Gjensidige, If, Gard, NEMI (until 2009), Norwegian Hull Club, Skuld, The Swedish Club, Tryg (until 2009), Zurich (until 2002).
as of 31 December 2016

36. ocean huLL Report – Definitions
NoMIS Nordic Marine
Insurance Statistics
ocean huLL Report – Definitions
All amounts are presented in USD.
Rate of exchange applicable to convert the figures from the original currencies into USD:
Insured values: av. rate of exchange of the month the insurance coverage gets into force
Paid claims: av. rate of exchange of the month of the payment transaction
Outstanding claims: av. rate of exchange of December 2016
Underwriting year = year in which the insurance policy attaches
All claims are net of any applicable deductibles.
Total Claims = Paid claims + Outstanding claims
TLO (total losses) = claims in excess of 75% of the Sum Insured1
Partial Losses = all claims <= 75% of the Sum Insured
IBNR (”Incurred but not reported”) = reserve for claims adjustments and registration backlog
1 According to Clause 11-3 of the Nordic Marine Insurance Plan, a constructive total loss (CTL) is defined as a claim exceeding 80% of the sum insured ( To cater for currency conversion issues, the Cefor Statistics Forum includes in its total loss statistics all claims exceeding 75% of the sum insured.
as of 31 December 2016

37.
Legal disclaimer
Legal disclaimer Cefor provides the statistics material in this presentation for general information purposes only. All key figures are derived from the Cefor portfolio, which reflects a minor part of the world fleet, the selection of ships being biased by Nordic underwriting preferences. Therefore Cefor can accept no responsibility and shall not be liable for any loss which may arise from reliance upon the information provided.
With reference to Commission Regulation (EU) No 267/2010 of 24 March 2010 (EU Block Exemption), it is further stressed that the statistical data presented in this publication is non-binding in its character.
as of 31 December 2016