HULL & MACHINERY
Tron Nummedal
Bjørn Skaar
Learning goals
Able to identify and understand the main H&M objectives.
Able to review a broker’s H&M presentation.
Able to structure received information.
Able to take an underwriting decision.
How to follow up the business.
C1
Agenda
C4
The H&M business model.
The H&M risk aspects.
The H&M underwriting
decisions.
The H&M service and follow
up work.
C2
C3
The H&M scream of our time?
The Nordic Association of Marine Insurers
The business model
- Four C’s
- Risk distribution
- Underwriting guide lines
- Insurance Conditions
TYPES OF INSURANCES:
HULL AND MACHINERY
P&I
(PROTECTION AND INDEMNITY)
COVERS
DAMAGE TO THE HULL.
COVERS
DAMAGE TO MACHINERY
OIL SPILL
DAMAGE TO OTHER VESSELS
CARGO CLAIMS
DAMAGE TO FIXED AND FLOATING
OBJECTS.
CREW INJURIES
The Nordic Association of Marine Insurers
The H&M insurance market
The Nordic Association of Marine Insurers
The Nordic Association of Marine Insurers
Gross written H&M premium
Cefor - Gross written premium (MUSD), Hull, 2012
Total sum hull = 810.6 MUSD
Alandia
29.6 / 3.8%
Møretrygd
12.3 / 1.6%
Tromstrygd
5.0 / 0.6%
Gjensidige
31.7 / 4.1%
If
50.3 / 6.5%
Gard
244.0/ 31.4%
Gerling
55.5 / 7.1%
Swedish Club
65.6 / 8.4%
Codan
76.4/ 9.8%
The Nordic Association of Marine Insurers
Norwegian Hull Club
208.0 / 26.7%
Hulls runs red as it sails
th
into the 17 year of
losses.
Tradewinds 11th September 2013
The Nordic Association of Marine Insurers
TradeWinds article 11th September 2013
 Hull runs red as it sails into 17th loss year
 The hull market shows all the signs of being stuck in a
deep rut
 It has become an annual tradition for the chairman of
IUMI’s Ocean Hull Committee to warn underwriters that the
market is in the red for yet another year.
 This year, the task falls to Lars Rhodin, managing director
of the Swedish Club, who took over the chairmanship of
the committee midterm.
The Nordic Association of Marine Insurers
2007 CEFOR Nordic Marine Insurance Statistics – Part 3
As of 31 December 2007
Hull Net Loss Ratio,
as reported per 31.12.07 (2007 incl. IBNR)
250%
224%
207%
200%
150% 151%
150%
134%
134%
124%
123%
100%
98%
116%
124%
115% 117%
90%
50%
47% 48%
110%
100%
78%
74%
110%
98%
54%
To be continued!
0%
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
L/R est. final (2006, 2007 incl. IBNR)
100%
Hull Net Loss Ratio,
as reported per 31.12.07 (2007 incl. IBNR)
250%
224%
207%
200%
150%
150%151%
134%
134%
124%
123%
100%
98%
116%
124%
115%117%
50%
47% 48%
110%
100%
78%
74%
110%
98%
90%
54%
0%
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
L/R est. final (2006, 2007 incl. IBNR)
100%
Net loss record
140
120
100
? ?
80
60
Loss record
Linear (Loss
record)
40
20
0
2007 2008 2009 2010 2011 2012 2013
Source :IUMI article TradeWinds 21.09.12.
Cefor Hull Claims Trends Update as of 30 June 2013:
Claim frequency and cost back to pre Costa Concordia levels
Increasing risk exposure to high-value vessels
• The claim frequency shows a positive to stable trend
after the peak in 2008. The frequency of total losses
shows a long-term positive trend after some increase in
2012.
• The average repair cost, excluding total
losses, reached in 2012 its lowest level since 2004.
• Some increase in 2013 is mainly due to two major
losses in the first half year of 2013, which were no total
losses.
• But despite a further decrease of insured value, the risk
exposure to major losses remains high, due to an
increasing share of high-value vessels in the portfolio.
The Nordic Association of Marine Insurers
TradeWinds article 18th September 2013
Underwriters admit to hull pricing problems.
About three-quarters of underwriters believe hull insurance is priced significantly
below the level that business models suggest is necessary.
The International Union of Marine Insurance (IUMI) conference this week took
advantage of electronic voting technology to run the first ever poll of delegates’
perception of the market.
One-quarter voted that hull and machinery premiums were 50% below the level
required.
A further 48% said rates were 25% below the necessary price.
And 15% voted that pricing was 10% too low.
So 88% of those who voted acknowledge hull premiums are too low, but sadly
there was no follow-up question on whether underwriters are minded to do
anything about it.
The Nordic Association of Marine Insurers
Profiling Risk? “underwriters to price risk based
on their overall portfolios.”
Are the Deductibles the solution?
TradeWinds 13.09.2013
“Underwriting oversupply
haunts the hull markets”
The Nordic Association of Marine Insurers
How are our clients doing?
The Nordic Association of Marine Insurers
How is the shipowners’ freight market?
The Nordic Association of Marine Insurers
The Nordic Association of Marine Insurers
The Nordic Association of Marine Insurers
The current situation!
“Underwriting oversupply
haunts the hull markets”
“Clients have been through
the worst shipping market
ever”
The Nordic Association of Marine Insurers
PARIS MOU 2012 REPORT
Port State Control - Taking port State control to the next level
The poorest performing flags are
Bolivia, Tanzania and Togo.
Performance of Recognized
Organizations
For several years the Committee has
closely monitored the performance
of classification societies acting as
Recognized Organizations for flag
States.
Among the best performing recognized
organizations were:
■ American Bureau of Shipping (ABS)
■ Det Norske Veritas (DNV)
■ Lloyd’s Register (UK) (LR)
The lowest performing organizations
were:
■ Phoenix Register of Shipping
(Greece) (PHRS)
■ INCLAMAR (Cyprus)
■ Register of Shipping (Albania) (RSA)
The Nordic Association of Marine Insurers
From a DNV vessel a few weeks ago!
Guess which class?
The Nordic Association of Marine Insurers
PARIS MOU 2012 REPORT
Port State Control - Taking port State control to the next level
The poorest performing flags are
Bolivia, Tanzania and Togo.
Performance of Recognized
Organizations
For several years the Committee has
closely monitored the performance
of classification societies acting as
Recognized Organizations for flag
States.
Among the best performing recognized
organizations were:
■ American Bureau of Shipping
■ Det Norske Veritas (DNV)
■ Lloyd’s Register (UK) (LR)
The lowest performing organizations
were:
■ Phoenix Register of Shipping
(Greece) (PHRS)
■ INCLAMAR (Cyprus)
■ Register of Shipping (Albania) (RSA)
(ABS)
SMA – Scandinavian Marine Agency AS
Broker’s Competitive edge?
This Guy
or this guy?
Or maybe she?
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From: Peter Smart
Sent: 2. april 2008 09:16
To: Haakonsen, Mona GIS N; Basthus, Morten GIS N
Cc: Tony Ascot
Subject: Blue Shipping, Greece.
Typical Request.
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Dear Mona / Morten
We are pleased to give you the opportunity to quote for the above account which renews for 12 months with effect from 1st of May. The fleet used to be 4 vessels and is now 2 vessels.
They are both Panamax bulkers and are valued USD 85m and 25m respectively.
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The owner is Mr . Tuscot Papalacis. This is a very long standing small but high quality account which we are particularly keen to win and very much hope that you will share our
enthusiasm for. Blue Shipping have confirmed in writing that they have had a clean loss record for 17 years on vessels managed by them. They had a generator damage 18 years ago.
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We have attached a spreadsheet that lists two vessel schedule and our rating suggestion \ target. It is important that we maintain the existing deductible and that you pitch your indication
per (or as close as possible) our target. We are aware of the existing price so the target (incl returns) is set at a level where we can achieve an order.
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Vessel details :
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Alfa Runner
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2004 bulk carrier. LR class. Flag Panama.
Hull value $ 68m and IV $ 17m.
ITC clauses and amendments to be advised.
Ex collision liability.
Hull deductible USD 75k.
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Beta Swimmer
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1984 bulk carrier. ABS class. Flag Cyprus.
Hull value $ 20m and IV $ 5m.
ITC clauses and amendments to be advised.
Ex collision liability.
Hull deductible USD 90k.
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The current broker is H Merit and the risk is placed into Lloyds (we think Beazley) plus London companies : Aspen, Wurt and HCC.
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We very much look forward to receiving your indication as soon as possible.
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Best Regards
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Peter Smart
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From: Peter Smart
Sent: 2. april 2008 09:16
To: Haakonsen, Mona GIS N; Basthus, Morten GIS N
Cc: Tony Ascot
Subject: Blue Shipping, Greece.
Typical Request.
•
•
•
Dear Mona / Morten
We are pleased to give you the opportunity to quote for the above account which renews for 12 months with effect from 1st of May. The fleet used to be 4 vessels and is now 2 vessels.
They are both Panamax bulkers and are valued USD 85m and 25m respectively.
•
The owner is Mr . Tuscot Papalacis. This is a very long standing small but high quality account which we are particularly keen to win and very much hope that you will share our
enthusiasm for. Blue Shipping have confirmed in writing that they have had a clean loss record for 17 years on vessels managed
them. They had a generator damage 18 years ago.
by
•
We have attached a spreadsheet that lists two vessel schedule and our rating suggestion \ target. It is important that we maintain the existing deductible and that you pitch your indication
per (or as close as possible) our target. We are aware of the existing price so the target (incl returns) is set at a level where we can achieve an order.
•
Vessel details :
•
Alfa Runner
•
•
•
•
•
2004 bulk carrier. LR class. Flag Panama.
Hull value $ 68m and IV $ 17m.
ITC clauses and amendments to be advised.
Ex collision liability.
Hull deductible USD 75k.
•
Beta Swimmer
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1984 bulk carrier. ABS class. Flag Cyprus.
Hull value $ 20m and IV $ 5m.
ITC clauses and amendments to be advised.
Ex collision liability.
Hull deductible USD 90k.
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The current broker is H Merit and the risk is placed into Lloyds (we think Beazley) plus London companies : Aspen, Wurt and HCC.
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We very much look forward to receiving your indication as soon as possible.
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Best Regards
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Peter Smart
Our Reply
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-----Original Message----From: Haakonsen, Mona GIS N
Sent: 2. april 2008 09:35
To: Peter Smart ;Basthus, Morten GIS N
Cc: Tony Ascot,
Subject: RE: Blue Shipping, Greece.
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Dear Peter,
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Reference is made to your e-mail earlier today.
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Regret to inform you that in respect of this account there is not much enthusiasm from our side. We used to write this account until 2005
when we were cut off without any explanation.
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We would also strongly suggest that you reapproach your Client and ask them about the following incidents:
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28/10/06 Papa Jogger
11/10/05 Captain Sleeper
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This Client seems eager to play games, changing brokers and withhold claims information and we do not want such Clients in our
portfolio.
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Trust you can understand our position.
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Best regards,
Mona
Maine Engine dmg
Collision
USD 307.207
USD 202.280
Conclusion?
“This is not a business
for the average guy”
Lars Rhodin Tradewind 21.09.12.
The Nordic Association of Marine Insurers
The risk
-Information, “Need to have and nice to have”.
(Hand out, exercise)
-Premium calculations.
* Scale.
*Burning costs.
* Deductible and bonuses.
The final underwriting decisions.
-Premium,
-Deductible.
-Conditions.
-Share
The final underwriting decisions
-Premium,
-Deductible.
-Conditions.
-Share
The follow up work
-Underwriting service.
-Claims handling and
adjusting.
-Loss Prevention.
“Miso Rakan”
December 2010 – March 2011
Encounter
ice
Problems
Engine
Damage
Dec 2010
Jan 2011
Vessel
Repaired