1. Market Structure
The Nordic Association of Marine Insurers

2. Business model A. Scandinavian
Cover
Claim information
Claim payment
Ship owner/
Management
company
(Assured)
Claims leader
Broker
Co-insurers

3. Business model B. Non-Scandinavian
Cover
Claim information
Claim payment
Ship owner/
Management
company
(Assured)
Broker
Claim leader
Co-insurers

4. Business model B. Non-Scandinavian
Cover
Claim information
Claim payment
Ship owner/
Management
company
(Assured)
Survey
Claims Leader
Co-insurers
Adjuster

5. Business model B. Non-Scandinavian
Cover
Claim information
Claim payment
Ship owner/
Management
company
(Assured)
Adjuster
Claims Leader
Co-insurers
Broker

6. Distribution of risk Ship owner Insurer Capital / assets Broker
Foreign capital
Reinsurance

7. Market structure - overview
Ship owner
Broker
Insurer
Reinsurer

8. Market structure - overview
Ship owner
Risk information
Broker
Insurer
Premium
and
claim payment
Reinsurer

9. 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

10. 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

11. The Global Marine Insurance Market
Premium Volume 2011 (USD billions) –
Marine liability (non-P&I Clubs) 1.8 ( 5.7%)
Offshore / energy (14.2%)
Hull & Machinery (26.2%)
Cargo / transport (54.0%)
Total
Mutual P&I Clubs 3.4
Estimated global premium volum USD 34 billion
(IUMI Sep 2012)
The Nordic Association of Marine Insurers

12. The Global Marine Insurance Market
The Nordic Association of Marine Insurers

13. The Global Marine Insurance Market
Premium Volume 2011 (USD million) – Hull & Machinery
Nordic / Cefor %
UK ILU/IUA %
UK Lloyd’s * 15%
China %
Japan %
France %
Italy / US / Netherlands each 4% each
Korea / Spain each 3% each
Rest 2, %
8,400
*incl fac reinsurance premium
The Nordic Association of Marine Insurers

14. The Global Marine Insurance Market
Premium Volume 2011 (USD million) – Cargo / transport
Japan %
China %
Germany %
UK Lloyd’s %
France %
US %
Brasil %
- - -
Nordic %
Rest %
17.200
The Nordic Association of Marine Insurers

15. 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)
Uwr yr
H&M
Cargo
2004 72 59
2005 71 63
2006 88 58
2007 82 76
2008 81 75
2009
2010 69
2011 96 73
The Nordic Association of Marine Insurers

16. The Global Marine Insurance Market
Premium Volume 2011 (USD million) – Offshore Energy
UK Lloyd’s %
US / Brasil / Nigeria / Malaysia – 5% each
Nordic %
Rest %
(4.500)
The Nordic Association of Marine Insurers

17. The Global Marine Insurance Market
Claim 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

18. The Nordic Association of Marine Insurers

19. 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

20. The Nordic Association of Marine Insurers

21. 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

22. 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