1. Houston Marine Insurance Seminar Tuesday, October 1, 2013 48 th Anniversary WELCOME www.houstonmarineseminar.com

2. Innovation or Evolution? Marine Hull Insurance

3.  Founded in 1837 as a mutual hull club  Based in Norway, 3 offices  9000 vessels insured  95% of the OSV fleet in Norway  70% of Mobile Offshore Units worldwide  Claims lead – 4800 vessels  More than a capacity provider – Expect More! Norwegian Hull Club

4. Innovation or Evolution?  Objects insured  Policies underwritten  Terms offered Source: Flickr

5. I.Marine or Energy? II.Risk Assessment of the OSV market III.Insuring the OSV market IV.Client Services V.Summary Agenda

6.  Classification Society definitions  Notations : Drill, Well …  “Worldwide struggle for consensus over FPSOs” Tradewinds Aug. 2013  Insurance Market  As long as you get the most competitive terms? I.Marine or Energy?

7.  From Offshore Support to Well Intervention  Technological Innovations  Subsea Construction (Deeper Waters)  Well Intervention (Increased recovery from wells) Offshore Support Vessel Market Source: Offshoreenergytoday.com

8.  “Cutting-edge conveyance systems, state-of-the-art tools and innovative ways of using proven, conventional methods are being developed to transform what is often a cost- prohibitive and risky undertaking into a viable option for operators.” Demand Drives Innovation  “The combination of ultra-deepwater and pressures of 15,000 psi is really going to push the envelope on this technology.”  BP Group Chairman said that Aberdeen and other UK centres had developed “a microcosm of technological innovation.”

9. Experience – Offshore Supply

10. Developement of GT,SI and Deductible

11. Values Source: DOF  LOA 88m  H&M Value Index 1  LOA 157m  H&M Value Index ? 45

12.  Marine or energy discussion will continue …  There is innovation in the design  Set your own guidelines based on operations and qualified parameters set by Class, etc.  Ask yourself: What is the rationale for the (high) Sum Insured? I.Summary

13.  Risk Assessment will be the next step.  Question: Is the insurance market able to do a proper risk assessment of innovative design? “It is better to be vaguely right than exactly wrong.” II.Risk Assessment of the OSV Market

14. Sliding Left:  From  UWR Experience  To  Supporting Tools  Client Experience  Pricing Tools  Internet Sources  More UWR Experience Client Risk Assessment

15.  NHC/ DNV Project  Define your own parameters  Soft Factors  Safety Culture  Organization  A Supportive Tool CRA – Client Risk Assessment

16.  Understand the operation and trade  Develop unemotional Risk assessment supportive tools for selection of risk  Apply Underwriter Experience  Constantly try to look beyond the horizon for changes and innovation within the segment “Risk comes from not knowing what you're doing.” – Warren Buffett II.Summary

17.  Marine Insurance Market  Nordic Marine Insurance Plan of 2013 is an all-risks set of conditions  Agreed document between the Nordic Association of Marine Insurers (CEFOR) and the Nordic Shipowners’ Association  Latest revisions are the only set of conditions offered and used  Revisions reflect, amongst other things, the innovation and evolution of the market insured  Major evolutionary and experience-driven updates to Chapter 18 – Insurance of Mobile Offshore Units III.Insuring the OSV Market

18.  Develop a pricing tool based on statistics(CEFOR)  Driving by looking in the rear- view mirror?  Incorporate Global trends (2007 – The annul horribilis for the H&M market?)  It is about what will happen, not what has happened. Insuring the OSV Market Source: CEFOR

19. Technical Loss ratio

20. Today  Over capacity  Low barriers to entry Trends  Banks – Basel III  Allocation of capital more selective (less shipping)  Insurance Industry – Solvency II  Allocation of capital based on risk profile?  Lloyds PMD board – Tradewinds aug. 2013 Various ways of doing this have been suggested, said Mr. Indge, with marine hull underwriters collaborating with various registers, classification societies and the International Maritime Organization to improve their understanding of the risks they insure. Markets

21.  Trust your Risk Assessment  Understand the operation and trade in order to offer the best set of conditions to your client  Develop and constantly revise pricing tools  Stay Disciplined! III.Summary

22.  Sustainable service platform  Terms and Conditions  Capacity/Rating  Claims Services/Emergency Support  Client Services  Understand the needs of your clients and members  Experience Transfer IV.Expect More

23. CLIENT SERVICES

24.  Within the OSV market there is  Innovation in technology  Evolution in the insurance market  In order to stay on top as an insurer  Keep a strong technical and operational focus  Understand your client  Develop and revise Risk Assessment tools  Develop and revise Pricing Models  Stay Disciplined! SUMMARY