1
GLOBAL MARINE
INSURANCE REPORT 2015
Astrid Seltmann, Vice Chair F&F, Analyst @ Cefor
THIS YEAR’S ADVICE
Before you enjoy 2014 results…
Check impact of recent 2015 events (Tianjin explosion)!
Before you believe in sustainable improvement…
2015 economic & global environment:
Substantial changes with impact on marine market.
2014 is history.
Focus on 2015 (& 2016) risks and conditions.
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: The exchange rate rollercoaster
Cargo – Market & results
Focus: Aggregation risk
Hull – Market & results
Focus: 2015 trends
Offshore Energy – Market & results
Focus: A changed market environment
___________________________________________________________
@ www.iumi.com: Tables: Premiums by country & Loss ratios triangulations
23.2%
51.9%
6.6%
18.2%
2014
Global Hull
Transport/Cargo
Marine Liability
Offshore/Energy
MARINE PREMIUM 2014 - BY LINE OF BUSINESS
Total: 32.6 USD billion Change 2013 to 2014: -3.2%
Reduction due to strong USD!
In most local currencies,
income stable or increased.
52.6%
25.0%
9.8%
6.4%3.1% 3.0%
2014Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
MARINE PREMIUM 2014 – BY REGION
Total: 32.6 USD billion
BUILDING UP DATA - PREMIUMS
Start
date Area Association
Data
from
1993 IUMI members IUMI, with Cefor 1992
2010 Russia RUMI more market data 2008
2011 China Research Vivian 2008
2012 Asia non-IUMI Research Vivian 2010
Latin America
complete
ALSUM 2010
Middle East complete GAIF 2010
2014 UK – IUA IUA complete IUA
market
2012
Africa FANAF
countries
FANAF/CESAM 2010
2015 - USA AIMU Increase US
market coverage
ongoing
Premiums
change
also
backwards!
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
Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
MARINE PREMIUM 2008-2014 – AS OF 2015
UK-IUA
New data
survey
2008: China
2010: non-IUMI Asia
Latin America, Middle East, Africa:
complete data
Global premium:
2013: 33.7 USD bill.
2014: 32.6 USD bill. (both as of 2015)
2014: strong USD «reduces»
income in most currencies
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%20
05
2006
2007
2008
2009
2010
2011
2012
2013
2014
CNY (China)
JPY (Japan)
EUR (Euro)
NOK (Norway)
GBP (UK)
BRL (Brazil)
USD EXCHANGE RATE 2005-2014 AGAINST SELECTED CURRENCIES, INDEX, 2000=100%
Exchange rates not necessarily correlated, but in 2014 weakened most against USD.
2014: strong USD!Many currencies with
double-digit % devaluation.
Source: Norges Bank exchange rates, as of December each year.
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%20
05
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
CNY (China)
JPY (Japan)
EUR (Euro)
NOK (Norway)
GBP (UK)
BRL (Brazil)
USD EXCHANGE RATE UNTIL 2015AGAINST SELECTED CURRENCIES, INDEX, 2000=100%
2015: even
stronger USD!
* 2015 rates as of August
62%
29%
6% 3%
UK
Nordic
Japan
US
Calls 2014:UK: 2.27 Nordic: 1.08Japan: 0.24US: 0.09Total: 3.69 (USD billion)
P&I CLUBS INTERNATIONAL GROUP GROSS CALLS (PREMIUM) 2014 – OPERATIONAL LOCATION
Stable (+0.06)
Global Marine Insurance – Overview
Focus: The exchange rate rollercoaster
Cargo – Market & results
Focus: Aggregation risk
Hull – Market & results
Focus: 2015 trends
Offshore Energy – Market & results
Focus: A changed market environment
GLOBAL MARINE INSURANCE REPORT
43.0%
28.9%
12.7%
6.4%5.6% 3.4%
2014
Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
CARGO PREMIUM 2014 - BY REGION
Total: 16.95 USD billionChange 2013 to 2014: -7.1%
Reduction = effect of strong USD!
CARGO PREMIUM 2014 - BY MARKETS
Total: 16.95 USD billion Belgium1.7%
Brazil5.4%
China9.2%
France4.7%
Germany6.9%
Italy2.6%
Japan8.0%
Mexico2.2%
Netherlands2.3%
Nordic1.8%
Russia2.3%
Spain1.3%
UK (IUA)4.1%
UK (Lloyds)8.3%
USA5.9%
Other33.3%
2014
**
** incl. proportional and
facultative reinsurance
*
* AIMU ocean marine
-
500,000
1,000,000
1,500,000
2,000,000
2,500,00020
08
2009
2010
2011
2012
2013
2014
China
Japan
UK (Lloyds)
Germany
USA
Brazil
France
UK (IUA)
CARGO PREMIUM 2008-2014SELECTED MARKETS
2014: strong USD «reduces»
income in most countries.
Difficult to identify «real»
market development (not only
one currency in local figures…)
0%
50%
100%
150%
200%
250%
300%
350%
400%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
World Trade Values
World Trade Volume
Global Cargo Premium
CARGO PREMIUM /
WORLD TRADE VALUES & EXPORTS
Source (World Trade
Volume & Values):
IMF, World Economic
Outlook, April 2015
Exchange rate influence
on USD cargo premium!
Index of evolution, 1995=100%
?
?
IMF estimate
April 2015
0%
20%
40%
60%
80%
100%
120%
140%
19
96
1997
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
2010
20
11
20
12
20
13
20
14
Since 2007: Most
years expected to
end > 70% gross
loss ratio.
2012
Sandy
peak
* 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
CARGO – ULTIMATE* LOSS RATIOSEUROPE/USA**, UNDERWRITING YEARS 1996 TO 2014
August 2015
Tianjin port explosion:
Which impact on 2014
uw year result?
?
2014: Seeming
improvement may
deteriorate due to
Tianjin explosion.
40%
50%
60%
70%
80%
1 2 3 4 5
2009
2010
2011
2012
2013
2014
2011-2013:
Start at similar
level. Gross loss
ratio expected to
end above 70%.
2014:
Starts lower than
2012/2013, but
deterioration
expected due to
Tianjin explosion!
CARGO – ULTIMATE LOSS RATIOS EUROPE/USA**, UNDERWRITING YEARS 2004-13, AS AT 1, 2, 3, 4, 5 YEARS
CARGO CONCLUSIONS
Market: Strong USD ‘hides’ local market growth. Market growth and results differ by region.
Results: Seeming improvement probably outweighed by Tianjin port explosion
(2014 and 2015 underwriting years, various countries).
Claims: Tianjin port explosion potentially largest single cargo loss event ever. Auto industry major contributor to cargo/stock losses. Risk of costly cargo claims expected to increase:
Natural catastrophes (Thailand floods, Sandy)
Increased accumulation risk (Tianjin port)
Outlook: Impact of China/world economy and oil price on trade. Further strengthening of USD. Euro crisis solved? Difficult to predict combined impact of changing economic environment.
GLOBAL MARINE INSURANCE REPORT
Global Marine Insurance – Overview
Focus: The exchange rate rollercoaster
Cargo – Market & results
Focus: Aggregation risk
Hull – Market & results
Focus: 2015 trends
Offshore Energy – Market & results
Focus: A changed market environment
53.0%34.6%
5.1%5.3%
1.1%1.0%
2014
Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
HULL PREMIUM 2014 – BY REGION
Total: 7.6 USD billionChange 2013 to 2014: -5.8%
** Norway, Denmark,
Finland, Sweden
HULL PREMIUM 2014 – BY MARKETS
China11.9%
France3.9%
Italy4.0%
Japan7.6%
Korea, Republic3.6%
Netherlands3.0%
Nordic11.2%Spain
1.8%UK (IUA)
6.2%
UK (Lloyds)17.1%
USA4.7%
Latin America5.1%
Other20.0%
2014
**
** includes proportional
and facultative reinsurance
*
* AIMU ocean marine
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
UK (Lloyds)
Nordic
China
Japan
Latin America
UK (IUA)
HULL PREMIUM 2004-2014SELECTED MARKETS
Before 2010: only Mexico and/or Brazil
From 2012: extended data survey
Lloyds: increase in
original currencies
Japan: -7% in JPY
(-18,5% in USD)
Latin America:
various influences
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%20
05
2006
2007
2008
2009
2010
2011
2012
2013
2014
CNY (China)
JPY (Japan)
EUR (Euro)
NOK (Norway)
GBP (UK)
BRL (Brazil)
USD EXCHANGE RATE 2005-2014 AGAINST SELECTED CURRENCIES, INDEX, 2000=100%
2014: strong USD!
Exchange rates not necessarily correlated, but in 2014 weakened most against USD.
50%
75%
100%
125%
150%
175%
200%
225%
250%
275%19
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Gross tonnage(> 300 GT)
Av. insured vesselvalue (Renewals &newbuilds - Cefor)
Global Marine HullPremium
No. Ships (> 300 GT)
Data source: Insured vessel values: Cefor NoMIS statistics as of June 2015; No. Ships & tonnage: ISL Bremen, as at January 2015.
HULL PREMIUM / WORLD FLEET INDEX OF EVOLUTION, 1995 = 100%
Drop in 2014 hull premium can not
only be explained with strong USD
(global hull often written in USD).
0%
20%
40%
60%
80%
100%
120%
140%
19
96
1997
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
2010
20
11
20
12
20
13
20
14
Since 2009:
Repair cost relative
stable. Volatiliy by
major loss impact
(strong until 2011).
2014: Record-low
major loss impact.
Technical profit for
first time in years?
2013 also improved
(USD effect, when
repairs not in USD?)
* 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
Costa
Concordia
peak
HULL – ULTIMATE LOSS RATIOS*EUROPE/USA**, UNDERWRITING YEARS 1996 TO 2014
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5
2010
2011
2012
2013
2014
2011:
Unprecedented
total loss impact.
2012:
Similar to pre-
Costa Concordia
years.
2013/2014
Improved results.
Sustainable
change?
* 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
Costa Concordia
peak
HULL – ULTIMATE LOSS RATIOS*EUROPE/USA**, UNDERWRITING YEARS 1996 TO 2014
Global Marine Insurance – Overview
Focus: The exchange rate rollercoaster
Cargo – Market & results
Focus: Aggregation risk
Hull – Market & results
Focus: 2015 trends
Offshore Energy – Market & results
Focus: A changed market environment
GLOBAL MARINE INSURANCE REPORT
HULL CLAIMS TRENDS
Drawing by Dagfinn Bakke
(Foto by Astrid Seltmann,
taken on MS Finnmarken)
TOTAL LOSS FREQUENCY 1998-2014TOTAL LOSSES AS % OF WORLD FLEET
Sources: Lloyds
List Intelligence
(Casualty stats)
Clarkson Research
(World Fleet)
Vessels > 500 GT)
Long-term downwards trend
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%
40.00%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Claim frequency, by date of loss
partial claims (left axis) TLO claims (right axis)
CLAIMS FREQUENCY AS OFJUNE 2015CEFOR NORDIC MARINE INSURANCE STATISTICS
Claims frequency – all claims
Total loss frequency
(right axis)
Overall claims
frequency:
Downwards
trend continues.
Total loss
frequency:
Long-term
positive trend –
but do we see a
new increase in
2015?
-
20,000
40,000
60,000
80,000
100,000
120,0001996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Ultimate partial and total claim cost per vessel (USD), by date of loss
Ultimate claim per vessel incl. IBNR Ultimate partial claim per vessel incl. IBNR
CLAIM COST PER VESSEL (USD)CEFOR NORDIC MARINE INSURANCE STATISTICS
Including total losses
Excluding total losses
2014: Next to no
total loss impact.
2015: Renewed
total loss impact.
Excluding total
losses:
Claim cost per
vessel stable
since 2009.
25%
10%
16%
28%
6%
13%
28%
19%
29%
10%
35%36%
19%18%
26%
20%
54%
30%
19%
41%
0%
10%
20%
30%
40%
50%
60%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Claims in excess of 10 MUSD as % of total claim cost
MAJOR CLAIMS IMPACT: CLAIMS XS 10 USD MILLION AS % OF TOTAL CLAIMS COST
2015:
Renewed
impact of
major claims.
Accident
year
Cefor Nordic Marine
Insurance Statistics
as of June 2015
(claims costs reflect
100% of each vessel).
HULL CLAIMS TRENDS
Claims frequency: Long-term positive trend, only
interrupted by peak in 2008.
Total loss frequency: Long-term positive trend, but some
increase in 2015.
Claims cost excluding total losses: Stable since 2009.
Influence of strong USD on recent results?
(If hull premium written in USD, repairs done elsewhere)
Major losses: stay volatile.
2014: Unusually few major claims.
2015: Impact back to expected level.
HULL PORTFOLIO TRENDS
Drawing by Dagfinn Bakke
(Foto by Astrid Seltmann,
taken on MS Finnmarken)
6.0% 5.7%
2.7%
8.5%
4.9%
-14.3%
-9.3%
-3.6%
-6.3%-5.6% -6.0%
-8.4%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%2
00
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
Average annual change in insured values on renewed vessels
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
Source: Cefor Nordic Marine Insurance Statistics as of June 2015
THE RISK EXPOSURE –INFLOW OF HIGH-VALUE VESSELS CONTINUES
0%
1%
2%
3%
4%
5%
6%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Portfolio share of ships with values xs 100 USD million
> 300MUSD
100 - 300MUSD
Vessels with values xs 100 USD million as % of total insured portfolio:
Source: Cefor
Nordic Marine
Insurance Statistics
as of June 2015
HULL PORTFOLIO TRENDS
World fleet: Continues to grow, especially in tonnage.
Insured values:
Renewals: some value reduction expected due to aging.
Newbuilds: Inflow of high-value vessels continues.
Overall fleet: Inflow of high-value vessels outweighs
value reduction on renewals to a certain degree.
Global hull premium: Reduction since 2012.
(Strong USD only partial explanation.)
STAYING IN CONTROL
Drawing by Dagfinn Bakke
(Foto by Astrid Seltmann,
taken on MS Finnmarken)
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 Bakke
(Foto by Astrid Seltmann)Accumulation
HULL CONCLUSIONS
World fleet continues to grow, insured risk increases.
Global hull premium reduced.
Claims frequency improved.
Major claims risk stays volatile and follows exposure.
Technical results improved. For 2014 technical profit
expected – due to extraordinary absence of major claims.
Economical environment is rapidly changing.
For sustainability: All risk aspects must be considered.
Global Marine Insurance – Overview
Focus: The exchange rate rollercoaster
Cargo – Market & results
Focus: Aggregation risk
Hull – Market & results
Focus: 2015 trends
Offshore Energy – Market & results
Focus: A changed market environment
GLOBAL MARINE INSURANCE REPORT
UK (Lloyds), 47.4%
UK (IUA), 22.3%Brazil, 4.4%
Nigeria, 3.8%
Mexico, 3.6%
Malaysia, 3.1%
Nordic, 2.5%
Japan, 2.4%
Egypt, 1.9%
India, 1.9%
Italy, 1.5%
USA, 1.3%
Other, 3.8%
2014
OFFSHORE ENERGY PREMIUM 2014
No data: Kazakhstan.
*
* incl. proportional and
facultative reinsurance
Total: 5.7 USD billionChange 2013 to 2014: 11.1%
(major part written in USD; two
units with substantial increases)
No data: Kazakhstan.
(large bi-annual renewal)
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Other
USA
Nordic (2011)
Nigeria (2008)
Mexico (2010)
Malaysia
Japan
Italy
India
Brazil
UK-IUA (2012)
UK-Lloyds
OFFSHORE ENERGY PREMIUM 2004-14
Nordic, Nigeria, Mexico: no data available before indicated year;
UK- IUA: from 2012 extended data survey; Kazakhstan: no data available;
*
*
*
*
0%
100%
200%
300%
400%
500%
600%
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
Average Day Rates
Global Offshore Energy Premium
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: Rigzone
0%
100%
200%
300%
400%
500%
600%2
00
0
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 Energy Premium
Oil price, Brent Crude
No. Contracted Rigs
OFFSHORE ENERGY INTO 2015ENERGY MOBILES, DAY RATES, OIL PRICE
Index of evolution, 2000 = 100%Different business mix – Influx of
drillships with higher day rates.
By rig type, day rates stable.
2015 drop in oil price will have
substantial impact on market.
Source: Day rates, contracted rigs: Rigzone
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
outstanding
paid 12th year
paid 11th year
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 & Rita2004
Ivan
2008
Ike
2009-14 no major
hurricane activity
Offshore Energy – Loss Ratios (incl. liability)
Underwriting years 1996 to 2014 / data from UK, US and (new!) Nordic
As of December 2014
OFFSHORE ENERGY – AS OF 2014
Hurricane/weather impact little in recent years (Gulf of
Mexico).
Some large single loss events (physical loss and liability)
in recent years.
Recent years still develop due to long time lag until cost is
fully known, but no severe loss events in 2014.
Positive results in recent years.
OFFSHORE ENERGY – 2015
Strong drop in oil price
Downturn in activity
Costly new projects postponed (deep-water, Arctic)
More risk retained in captives
Series of high-profile losses in 2015(Mexico: platform fire&jackup total loss; Brazil: FPSO fire; US: sinking of spar mooring tendons)
Low interest rates / stock market instability
Many mobiles currently idle.
Weather: little hurricane activity predicted for 2015,
but a single event can produce significant losses.
OVERALL CONCLUSIONS
Seeming improvement in 2014 underwriting year results
probably outweighed by 2015 event impact (cargo!).
Trend towards unprecedented large losses continues
2012 Costa Concordia
2012 Sandy
2015 Tianjin explosion largest marine claim ever?
Market environment and conditions change rapidly.
Focus on 2015 / 2016 risks and conditions!
2015: A CHALLENGING ENVIRONMENT
Low oil price
(reduced offshore activity; fuel price and quality)
Low interest rates / stock market volatility
(investment income)
Where is China & the World economy heading?
(influence on global trade)
Strong USD (various impact)
High values, new technology, increasing accumulation,
Arctic risks, climate,…
Oslo: Astrid
A SAMPLE OF THE GLOBAL F&F TEAM
The cap-provider:
Joachim from Hanover
New York:
Henry
Admin support
Hamburg: Lars
Zurich:
Patrizia
Hong Kong: Vivian
London: Darren
& Dave & Phil
ALSUM/ Latin
America: Erika
Bermudas: Jesse
France: Mathieu
Japan: Tetsuya
Madrid: Javier
Milano: Laura
USA II: Donald
F&F Guest speaker
2015:
Graham Slack
Chief Economist
A.P.Møller-Mærsk Group
Astrid Seltmann
Vice chairman F&F Committee
Analyst/Actuary @ The Nordic Association of Marine Insurers (Cefor)
Thank you!
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
Top Related