State of the Ocean Marine Reinsurance Market 2014
14
Marine Insurers Should Watch For in 2014 4 emerging underwriting trends that could change the rules of the game going forward… 4
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Marine insurers face challenging headwinds in 2014. The recent past provides multiple reminders to underwriters that natural catastrophes affect Marine just as they do Property risks, as highlighted by the disproportionately high number of insured losses from Superstorm Sandy paid by Marine insurers. In addition to this new concern and the steadily deteriorating global results across Cargo, Hull, and P&I lines, Marine insurers also face four emerging underwriting trends that could change the rules of the game going forward. Read the full blog post here: http://www.genre.com/knowledge/blog/4-trends-marine-insurers-should-watch-for-in-2014.html
Transcript of State of the Ocean Marine Reinsurance Market 2014
Marine Insurers Should Watch For in 2014
4 emerging underwriting trends that could change the rules of
the game going forward…
4
Emerging Trend 1:
Increasing vessel size
Maersk Mc-Kinney Moller
Source: http://en.wikipedia.org/wiki/Maersk_Triple_E_class
16% larger than the
previous world's largest
The 2013 Triple E Maersk class container carrier is 399m (l) x 59m (w) x 73m (h)
15 blue whales
equivalent in length to
It can carry up to
$1.8 B in cargo values
This larger size means an increase
in risk
Source: London Salvage Conference, December 2012
The ability to fight fires onboard
is unknown
No salvage plan exists to unload
such a ship at sea in less than 6 months
Does such a vessel merit a lower than average rate...or higher?
Normally new, higher TIV vessels get cheaper rates, but in this case we are talking about more risk
Risk Risk Risk Risk Risk Risk
Escalating Removal-of-Wreck Costs Emerging Trend 2:
33
2008 1999
55
Large-scale wreck removals increased from 33 to 55 per year
$
$
$
$
$
Cost of each removal is rapidly rising due to:
Larger and more complex vessels
Overconfidence of salvage companies
GLOBAL awareness and transparency of environmental impact
Politics
Lack of qualified resources in many world regions
Shipping across Arctic waters Emerging Trend 3:
Unknown post-loss response means smaller initial losses could easily escalate if no local response
Charts are improving, but are still imperfect
No standard requirements for ship design
Limited experiential data means more decisions based on intuition
Shortage of qualified crew
A new frontier
Emerging Trend 4:
Misuse of Catastrophe modeling
catastrophe modeling
Commonly misused or misinterpreted
Too easy to "outsource" underwriting decisions
to modelers
Effectiveness of market models on marine risks
can vary
Helps with risk selection & pricing of individual accounts
Facilitates more active portfolio
risk management
Conclusion
Ocean Marine insurance business faces great uncertainty as we head into 2014
Loss ratios continue to climb in many world regions due to loss activity and rate reductions
Little room for error
Greater frequency of severe losses globally
Major underwriting concerns affecting Cargo, Commercial Hull, P&I, and Recreational Marine lines
to discuss underwriting and new product possibilities
This presentation is intended to provide background information to our clients and professional staff. It is time sensitive and may need to be revised and updated periodically.
+1 203 328 5748 [email protected]
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