Global marine insurance report - IUMI · GLOBAL MARINE INSURANCE REPORT Global Marine Insurance...

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



Focus: Challenges (market & data)








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.











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!











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)


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)


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











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


** 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.


** 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%











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


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


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

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


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


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











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



*

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



*

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)

[email protected], 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

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