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“The Underwriting of Marine War, Terrorism and Piracy in the 21 st Century” . History – Why a separate class of business, why not included in hull all risks. Change in Risk - Operative peril has shifted as the world has changed from war to terror/piracy and war. - PowerPoint PPT Presentation

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  • The Underwriting of Marine War, Terrorism and Piracy in the 21st Century History Why a separate class of business, why not included in hull all risks.

    Change in Risk - Operative peril has shifted as the world has changed from war to terror/piracy and war.

    Change in cover and process - Consequently market has been forced to change the coverage it gives and the manner in which it is given.

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st Century

    War policy is a limited write back of an exclusion that is applied to an all risks policy.Developed as a result of Spanish Civil War.1936 War and Civil War Exclusion Agreement.Amended after Hiroshima to address Nuclear Weapons.After 70 years, the 1936 Agreement with its more recent amendments remains as relevant today as it was then, to avoid giving coverage for an accumulation of risk which could exceed the capital available to us as underwriters.

    History

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturySingapore Container TerminalCL370, CL380 to address dirty bombs and computer viruses.

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturySeawise Giant 1986 - Casualty of the Iran/Iraq war.The Limburg 2001 Casualty off the coast of Yemen.21st Century Risks and Losses Has Anything Changed?

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturyWTC

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturyPhilippine Ferry SuperFerry 14 2004 result of the actions taken by Abu Sayyaf guerillas

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturySeawise Giant - Casualty of the Iran/Iraq war.The Limberg 2001 Casualty off the coast of Yemen.21st Century Risks and Losses Has Anything Changed?

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturyMalacca Vessel Steadfast

    Vegetable-oil-loaded Tanker, 17,650 DWTSailing for China from IndonesiaWent missing on the 18th December 2005Found abandoned on the 24th December 2005

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st Century

    New Government Pools TRIA, USA - Gareat, France - Extremus, Germany

    Existing Pools - Pool Re (UK) - SASRIA (South Africa) - CONSORICO (Spain)

    War on land in Lloyds

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturyChange in Cover and Process

    Change in market procedure

    Advisors are security analysts

    Look forwards as well as back

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturySeabourne Spirit

    Was this War or Piracy?

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st CenturyHull War Clauses Change in Cover and Process

  • Missing Vessel ClauseThis insurance is also to cover a loss of the subject matter of thisinsurance by reason of the vessel named in this policy beingmissing from ANY CAUSE during the currency of this Policy and thispolicy WILL PAY CLAIMS hereunder accordingly WITHIN THIRTYDAYS of presentation of proper documents.If such vessel be recorded at Lloyds as untraced or posted asmissing, she shall be DEEMED MISSING for the purpose of thisinsurance.No claim shall attach under this section where the specific cause ofthe loss of the above named vessel is proved by Underwritershereunder prior to the due settlement date of claim under thissection.

  • Talbot Draft Missing Vessel ClauseIn the event of the vessel named in this policy being recorded at Lloyds as untraced or posted as missing in the territorial waters of any of the countries or places or any other waters described in the current List of Areas of Perceived Enhanced Risk as may be published from time to time by the Joint War Committee, this policy will pay the sum insured in respect of that vessel within 90 days of presentation of proper documents. Under no circumstances will this policy pay more than the sum insured for war risks under this policy. In consideration of such payment war risk underwriters shall be subrogated to all rights and remedies that the assured may have against marine underwriters. In the event that such subrogation becomes necessary, the assured shall co-operate fully with war risk underwriters in the pursuit and settlement of such claim and shall furnish underwriters with all necessary documentation and assistance. If within 90 days of presentation of proper documents underwriters produce prima facie evidence that the loss is not covered by reason of an exclusion contained in this policy this clause shall become inoperative and the burden shall then rest with the assured to prove that the loss was proximately caused by a peril insured under this policy.?

  • The Underwriting of Marine War, Terrorism and Piracy in the 21st Century

    Thank you

    Good morning Ladies and Gentlemen. My subject this morning is the underwriting of marine war, terrorism and piracy in the 21st Century.I have divided this presentation into three parts.Firstly, I intend to run over a brief history of the development of war risk insurance to give our modern problems some historical context.Secondly, I would like to deal with how, in my view, the main risk has shifted from hull war to some of the other coverages we give, like terror and piracy.Lastly, I would like to discuss how this has affected our underwriting procedures and assessment of risk.06RupertAtkinIt is worth reminding ourselves about how war and terrorism insurance developed. It is essentially a limited write back of an exclusion that is applied to an all risks policy. The broad exclusion of war risks developed during the Spanish Civil War when it became apparent to a number of Lloyds underwriters that losses and damage caused by modern and efficient military equipment, particularly aerial bombardment, could potentially be unquantifiable. In the light of these concerns Lloyds underwriters and other UK insurers signed the War and Civil War Exclusion Agreement in 1936. This agreement introduced an absolute exclusion of such losses from policies, but then allowed a series of limited write backs in specific areas where it was felt that underwriters could provide a degree of coverage on a controllable basis. This Agreement is still in place, after 70 years, although it has obviously been updated on a number of occasions as new technologies have been introduced (such as nuclear weaponry following the Second World War). It is interesting to reflect on the fact that the concerns expressed back in the mid 1930s with regard to the ability of insurers to pay for claims arising under policies, are as true now, as they were back then. Not only do the issues remain the same, but the values have increased and modern weapons are far more powerful, enhancing the importance of the exclusion.

    06RupertAtkinSPEECH:CL370 and CL380 were developed as exclusions to avoid underwriters having to cope with systemic loss, the degree of which could be ruinous. In the absence of these exclusions, the consequences for underwriters could be terminal and consequently bring the industry into bad repute, for failing to honour policy coverage. The same concerns that led underwriters to rethink after the Spanish Civil War, have triggered a reassessment in the light of new, contemporary risks and threat. It is one of the few occasions that direct underwriters have reflected on the breath of cover they are giving and decided to take a pre emptive step to avoid future claims, rather than have to cope with reinsurers imposing similar restrictions on the direct market, following a large loss and then leaving direct underwriters having to figure out how to cope with the residual net run off risk.The reason this slide is up is to reflect on CL370/ CL380 in particular and the threat of NBC and computer virus. You can imagine the values exposed in this picture and what the loss would be if there was a release of nuclear material or a virus that rendered the goods untraceable. An American lady came to see me.

    NOTES:PSA Singapore Container Terminal:Handles one fifth of the worlds container transhipmentIn 2005 they handled 22.28 million TEU containers with only 4 terminals06RupertAtkin Here is a picture if two war casualties from two different centuries/Millenia! Has anything changed outwardly nothing seems different in terms of the type of loss. However, it is the cause of loss that has changed.The Seawise Giant was hit by a weapon of war, an Exocet missile in 1986 as part of the Iran/Iraq war. The Limberg was hit in 2001 by Al Quaeda suicide bombers in a launch full of explosives.06RupertAtkinNo sequence of pictures can better illustrate how the risk and the world has changed, than these.06RupertAtkinSPEECH:Since then and in addition to the Limberg, there has been this attack on the Superferry 14 by the Abu Sayyafin 2004. A classic example of the fact that no single type of vessel can really claim to be safe since terrorism is indiscriminate. We have tankers, ferries and cruise ships being attacked now.

    NOTES :Abu Sayyaf, the guerilla group responsible for the attack, admitted, and it was later confirmed by divers, to planting a bomb in a television before the vsl set sail.It was believed that Abu Sayyaf bombed Superferry 14 because the company that owned it, WG&A, did not comply with an Abu Sayyaf letter demanding protection money. 06RupertAtkinI have put this picture up again because despite the outward appearance of being similar, as I said before, the cause of loss is different and underwriters have dealt with the claims differently. Lloyds has reacted differently in the following way:During the Iran/Iraq war there was a passive approach to the conflict