GLOBAL MARINE INSURANCE REPORT 2018Astrid Seltmann Analyst/Actuary, The Nordic Association of Marine Insurers (Cefor)Vice chair, IUMI Facts & Figures Committee

2

Please note & Disclaimer

Figures reflect the 2018 state of reporting and will change retrospectively. Some figures are estimates.

For comparison purposes, therefore compare the updated premiums and loss ratios at www.iumi.com !

All information given is of informational and non-binding character.

Figures related to the marine market’s performance reflect market averages. They do not disclose single companies’ or local markets’ results. As with all averages, individual underwriting units may out- or underperform compared to the average.

IUMI’s aim is to provide information as available and raise consciousness for the importance of a fact-based evaluation of the risk exposure covered – and inspire everyone to do their own critical evaluation of real and seeming facts.

Global Marine Insurance Report

Market overview Income by line / by region

P&I Income / Claims

Cargo Premiums / Loss ratios

Hull Income / Vessel values / Claims / Loss ratios

Offshore energy Income / Claims / Loss ratios______________________________________________________________Additional data Marine premiums by line of business by country(https://iumi.com/statistics) Loss ratios triangulations Hull, Cargo, Energy

3

2018 Focus

• Cargo: Impact of recent years’ event and outlier losses.

• Hull: The gap between income, risk and costs.

• Offshore energy: Oil price recovering – What now?

• The aftermath of the 2017 hurricanes.

4

Global Marine Insurance Report

Market overview Income by line / by region

P&I Income / Claims

Cargo Income / Loss ratios

Hull Income / Vessel values / Claims / Loss ratios

Offshore energy Income / Claims / Loss ratios

5

24%

57%

7%

12%

2017

Global Hull

Transport/Cargo

Marine Liability

Offshore/Energy

Marine Premium 2017by line of business

Total estimate 2017: 28.5 USD billion / Change 2016 to 2017: +2%

NB: Exchange rate effects!

Hull & offshore energy share reduced 1%, Cargo share up 2%. 6

(other than IGPI)

49.2%

29.2%

9.7%

5.6%4.0% 2.4%

2017Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

Total: 28.5 USD billion

Marine Premiums 2017by region

7

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

2010 2011 2012 2013 2014 2015 2016 2017

Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

Marine premiums by region 2010-2017Data as reported 2018

8

2012: UK-IUANew data survey

2016: 27.9 USD bill. 2017: 28.5 USD bill.

Premium reductions 2013-16: Combination of strong USD and market conditions.

2017 influenced by strenghteningof local currencies against USD (besides market conditions).

50%

70%

90%

110%

130%

150%

170%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

CNY (China)

JPY (Japan)

EUR (Euro)

NOK (Norway)

GBP (UK)

BRL (Brazil)

USD Exchange rates 2005-2018Index 2000=100%, against selected currencies, as of Dec. each year (2018 as of July)

9

After some years with strong USD,

from 2016 most currencies

strengthen somewhat again. Exchange rates impact USD premium amountsin this report!

Premium trends may look different in local currency, especially for cargo.

Market overview Income by line / by region

P&I Income / Claims

Cargo Income / Loss ratios

Hull Income / Vessel values / Claims / Loss ratios

Offshore energy Income / Claims / Loss ratios

Global Marine Insurance Report

10

62%

30%

6% 2%

UK

Nordic

Japan

US

Calls 2017:UK: 1.92 Nordic: 0.92Japan: 0.20US: 0.07

Total: 3.11 (USD billion)

48%

18%

14%

12%

6% 2%

BermudaUKLuxembourgNordicJapanUS

P&I International Group – Income Gross Calls (premium) 2017 – Operational location

All down: - 6.3%

by country of registration

11

(- 5.4%)(- 8.3%)(- 3.6%)(- 13.4%)

Source: International Group of P&I Clubs

P&I premiums down for 3rd year in a row

P&I – Pool claims by policy yearSource: International Group of P&I Clubs

12

Modest recent impact of pool claims – but P&I is a complex business with high liabilities!

More information at www.igpandi.org

**Int. Group Excess of Loss Reinsurance

Global Marine Insurance Report

Market overview Income by line / by region

P&I Income / Claims

Cargo Income / Loss ratios

Hull Income / Vessel values / Claims / Loss ratios

Offshore energy Income / Claims / Loss ratios

13

Cargo Premium 2017 – by region

Total estimate: 16.1 USD billion / Change 2016 to 2017: +6%Exchange rate effects strongest on cargo premium.

14

41%

32%

12%6%

6%3%

2017

Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

Cargo Premium 2017 – by markets

Total estimate: 16.1 USD billion

15

Belgium1.8%

Brazil5.3%

China9.6%

France4.8%

Germany7.4%

India2.1%

Italy2.6%

Japan9.0%Mexico

2.6%Netherlands1.8%

Nordic1.4%

Russia2.0%

Singapore2.4%

Spain1.4%

UK (IUA)3.3%

UK (Lloyds)8.8%

USA5.1%

Other28.6%

2017

*

* incl. prop & fac. reinsurance

0

500,000

1,000,000

1,500,000

2,000,000

2,500,0002

01

0

2011

2012

20

13

2014

20

15

2016

2017

China

UK (Lloyds)

Japan

Germany

USA

Brazil

France

UK (IUA)

India

Cargo Premium 2010-2017Selected markets

2014-15: strong USD «reduces» income of most countries. Difficult to identify real market development.

16

2016/2017 variousinfluences: Upswing in trade, strenghtening ofcurrencies against USD & other market conditions.

80%

100%

120%

140%

160%

180%

200%

220%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

World Trade Values(Goods)

World Trade Volume(Goods)

Global Cargo Premium

Cargo Premium versus World Trade Values & Exports

17

Index of evolution, 2005=100%

Evolution of world trade values and cargo premium seem to correspond.

Premiums also reflect exchange rate influences.

Extended risk covers and the increasing risk of event losses (risk accumulation) need also to be taken into account!

Cargo - Loss ratios

1st class quality dried cod –before shipping to destinations.

Foto: Astrid Seltmann

50%

60%

70%

80%

90%

1 2 3 4 5

2010

2011

2012

2013

2014

2015

2016

2017

2014, 2015, 2016: Each yearextraordinary increase in loss ratios. Change in typical pattern. The new normal?

2017 starts at 2014 level. With a ‘normal’ pattern (grey lines), 2017 would end around 70%. With recent pattern, 2017 ends around 80%.

19*Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)**Data included from: Belgium, France, Germany, Netherlands, Italy, UK, USA

Gross* loss ratiosCargo Europe (& partly US) **Underwriting years 2010 to 2017, as reported at 1, 2, 3, 4, 5 years Gross premiums, paid+outstanding claims

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

reported IBNR estimate (normal pattern) IBNR Estimate (recent pattern)

* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)**Data included from: Belgium, France, Germany, Netherlands, Italy, Spain (until 2007), UK, USA

Ultimate Gross* loss ratiosCargo Europe (& partly US)** Underwriting years 1996 to 2017, gross premiums, paid+outstanding claims

20

2017

?

Recent years strong impact by outlier & Nat-cat event losses:

2015: Tianjin port explosions2016: Hanjin, Amos-6 satellite2017: Hurricanes / Nat Cat2018: Mærsk Honam

Affect more than one uw year.

Increasing expenses a concern.

0%

10%

20%

30%

40%

50%

60%

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gross premiums Paid claims Paid loss ratio

Gross loss ratios accounting yearCargo Asia*Gross premiums, paid claims only

21* China, Japan, Hong Kong

Stable 40-45% until 2014.

Increase from 2015.

Probable impact by Tianjin port explosions, Nat Cat & deteriorationin premium volume.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gross premiums Paid claims Paid loss ratio

Gross loss ratios accounting yearCargo Latin America*Gross premiums, paid claims only

22

Stable around average 50-55%.

Peak in 2015 related to major claimimpact in one country.

*Figures included from: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Panama, Paraguay, Peru, Venezuela.

Cargo Key points

• 2014-2016 results all severely deteriorated. Strong impact from large event losses (Nat Cat and outlier losses), but also attritional losses on the rise.

• 2017 underwriting year also expected to deteriorate more than average (Hurricanes, Mexico earthquake, Bangladesh flooding & other Nat Cat).

• Risk of large event losses (Nat Cat and man-made) substantially increased. Increasing value accumulation on single sites/vessels .

• Covered risks represent increasingly stock exposure rather than transit exposure.

• Trade growth accelerating, but change in economical and political frame conditions makes prognoses uncertain.

• USD premium influenced by combination of market conditions and exchange rates.

• Market trends and results can differ substantially by region/unit.

23

Global Marine Insurance Report

Market overview Income by line / by region

P&I Income / Claims

Cargo Income / Loss ratios

Hull Income / Vessel values / Claims / Loss ratios

Offshore energy Income / Claims / Loss ratios

24

48.1%

39.7%

5.8%3.9%

1.6%

0.8%2017

Europe

Asia/Pacific

Latin America

North America

Middle East

Africa

Hull Premium 2017 – by region

Total estimate: 6.9 USD billion / Change 2016 to 2017: -2.3%

25

Hull Premium 2017 – by markets

26

Total estimate 2017: USD 6.9 billion

China10.6%

France4.0%

Italy4.5%

Japan

7.3%

Korea, Republic2.8%

Netherlands2.0%

Nordic9.0%

Singapore12.1%

Spain1.6%

UK (IUA)5.1%

UK (Lloyds)16.4%

USA3.3%

Latin America5.8%

Other15.4%

2017

*

* Includes prop. &fac. reinsurance

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,0002

010

20

11

20

12

20

13

20

14

20

15

20

16

20

17

UK (Lloyds)

Singapore

China

Nordic

Japan

UK (IUA)

Latin America

Korea, Republic of

27

Hull Premium 2010-2017Selected markets

Hull – Portfolio trends

28Foto: Astrid Seltmann

5.9%

2.3%

8.7%

2.4%

-14.7%

-7.9%

-4.3%

-6.3%-6.2%-6.0%

-9.3%-7.5%

-5.8%-2.5%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

From 4Q 2008:Strong drop in values after financial crisis

Change in values on renewal = vessel value on renewal / vessel value previous uw year (same vessels in both years)

29

2015/16: strong drop mainly caused by bulk and supply/offshore

2017 bulk market recovering.

2018 some recovery in supply/offshore (increased activity with rising oil price).

Some value reduction expected due to aging of vessels (same vessels compared for two executive years).

NoMISNordic Marine

Insurance Statistics

80%

90%

100%

110%

120%

130%

140%

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

20

18

Index Average Sum Insured Index Average gross ton

Source gross ton: Lloyds List Intelligence, World Fleet Update

Average gross ton & av. vessel valueIndex, 2005 = 100%

30

NoMISNordic Marine

Insurance Statistics

After the financial crisis, average vessel sizes and average insured values showed an adverse development.

50%

75%

100%

125%

150%

175%

200%

225%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Gross tonnage(> 300 GT)

No. Ships (> 300 GT)

Global Marine HullPremium

Av. insured vesselvalue (Renewals &newbuilds - Cefor)

* Premium adjusted backwards for missing historical data.

Sources: No. Ships/tonnage: IHS, Av. Ins. vessel value: Nordic Marine Insurance statistics

Hull Premium / World Fleet Index of evolution, 2005 = 100%

World fleet continues to grow, especially in tonnage.

Hull premium deteriorates in line with ship values.

Increasing mismatch between fleet/vesselgrowth and income.

31

*

Hull – Claims trends

32

Foto: Astrid Seltmann

Data on slides 33 to 36:Cefor Nordic Marine Insurance Statistics

Figures reflect:• Hull & Machinery insurance.• 25% to 50% of world fleet.

(highest for largest & youngest fleet).• Vessels with IMO-numbers • Ca. 3,500 claims per year

(ca. 600 > 250,000 USD per year) • 100% of each vessel/claim • Do not include yachts.

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%1

996

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

20

18

partial claims <75% SI (left axis) TLO claims >75% SI (right axis)

NoMISNordic Marine

Insurance Statistics

Claims frequency

33

All claims frequencyLong-term downward trend, stable in recent years.

Total lossesLong-term positive trend. Recent fluctuation 0.05% - 0.1%.

Reduced vessel valuesincrease the probability ofconstructive total losses.

-

20,000

40,000

60,000

80,000

100,000

120,000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Ultimate claim cost per vessel incl. IBNR

Ultimate partial claim per vessel incl. IBNR

NoMISNordic Marine

Insurance Statistics

Claim cost per vesselTotal and partial claims, by accident year, in USD

34

Little total loss impact since 2016.

Reduced total loss impact in recent years.

Partial claim cost per vesselstable at moderate level.

0

20,000

40,000

60,000

80,000

100,000

120,0001

996

19

971

998

19

992

000

20

012

002

20

032

004

20

052

006

20

072

008

20

092

010

20

112

012

20

132

014

20

152

016

20

172

018

> 50 MUSD

30 <= 50 MUSD

10 <= 30 MUSD

5 <= 10 MUSD

1 <= 5 MUSD

<= 1 MUSD

IBNR

NoMISNordic Marine

Insurance Statistics

Claim cost per vesselin bands of claim cost, by accident year, in USD

35

Major lossesLow impact since 2016, butsince 2004 increased volatilityfrom (non-)occurrence of costlylosses.

The most costly 1% of all claimsaccount for minimum 30% ofthe total claims cost in any year!

The risk of major losses withunprecendented cost remains(increasing vessel sizes, risk accumulation, new risk types & trading areas).

0

500

1,000

1,500

2,000

2,500

3,000

3,5001

99

61

99

71

99

81

99

92

00

02

00

12

00

22

00

32

00

42

00

52

00

62

00

72

00

82

00

92

01

02

01

12

01

22

01

32

01

42

01

52

01

62

01

72

01

8

Fire/Explosion

Collision, Contact,Grounding

Machinery

Heavy weather

Other

NoMISNordic Marine

Insurance Statistics

Average individual claim cost by type=Total claim cost per year / Number of claims

Volatility in claims cost strongly driven by (non-)occurrence of costly fire/explosion & navigational-related claims.

Hull – Loss ratios

37

?

?

??

?

How many fish (& chips) do I need to survive?

A simple equation - Theory

Loss ratio = Claims cost (C) / Premium (P)

Risk premium = expected claims cost (for partial and major losses).

Premium (P+) = Risk premium (expected claims cost)

+ Loading for expenses (acquisition costs, capital cost, management expenses)

+ Profit margin (ideally not negative).

38

C

P

C

P+

A simple equation – Reality check

Current situation:

• Less premium (for same or increased risk).

• Moderate claims impact (other than yachts).

• Little major claims impact.

• 2017 hurricane yacht claims.

What happens when major claims return? (they will!)

What do you expect?39

CYachts+

P+

Major claims+C

P+

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5

2010

2011

2012

2013

2014

2015

2016

2017

2016/2017: Hurricanes (yachts) & attritionallosses

* Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)** Data included from: Belgium, France, Germany, Italy, Nordic (Cefor), UK, USA

Costa Concordia peak

40

Trend towards more severe loss ratio development. (Steeper increase/ change in pattern).

2017: Extreme 1st year loss ratio compared to previous years.

2017 Hurricane impact (yachts).Ocean hull: Little major loss impact, loss ratios driven up by ‘normal‘ repairs (attritional losses).

Gross* loss ratiosHull Europe** (& partly US)Underwriting years 2010 to 2017, as reported at 1, 2, 3, 4, 5 years, gross premiums, paid+outstanding claims

-20%

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

20

16

20

17

as reported per December 2017 (paid+outstanding) IBNR estimate (normal pattern)

*Technical break even: gross loss ratio does not exceed 100% minus the expense ratio (acquisition cost, capital cost, management expenses)** Data included from: Belgium, France, Germany, Italy, Nordic (Cefor), Spain (until 2007), UK, USA

41

Substantial deterioration ofloss ratios since 2013.

Overcapacity, dropping vesselvalues and reduced activityinfluenced income negatively.

Yachts impact 2017 results, but:The income does not seem to cater for expected ‘normal’ repair cost any more.

Ultimate Gross* loss ratiosHull Europe** (& some US)Underwriting years 1996 to 2017, gross premiums, paid+outstanding claims

???

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gross premiums Paid claims Loss ratio - paid claims 42

Gross loss ratios accounting yearHull Asia*Gross premiums, paid claims only

* China, Japan, Hong Kong.

Recent increase in loss ratios. Stable annual claims costopposed to income reduction.

Some relation to previousportfolio growth possible(accounting year: claimsattaching to uw year paid over several acc.).

43

Gross loss ratios accounting yearHull Latin America* Gross premiums, paid claims only

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Gross premiums Paid claims Paid loss ratio

*Figures included from: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Panama, Paraguay, Peru, Venezuela.

Hull Key pointsExposure

• Values and income down, contrary to increasing fleet & vessel size.

• Higher single-risk exposure (with inherent risk of unprecedented major claims).

Claims (other than yachts)

• Claims frequency and cost per vessel: Stable at moderate level.

• Total losses: long-term downward trend. Came to a halt with fluctuation below 0.1%.

• Major losses: modest impact after 2015, but increased volatility steered by (non-)occurrence.

• 2017 Nat Cat event loss with severe impact (yachts).

Results

• With reduced major claims impact, partial losses account for an increasing share of the total claims cost.

• Loss ratios rise. Current income level does not even cater for expected ‘normal’ repair cost any more!

• No buffer for the return of major losses.

• For sustainability a balance between the risks covered and the cost must be re-established. All risk aspects must be taken into account.

44

Global Marine Insurance Report

Market overview Income by line / by region

P&I Income / Claims

Cargo Income / Loss ratios

Hull Income / Vessel values / Claims / Loss ratios

Offshore energy Income / Claims / Loss ratios

45

UK (Lloyds), 44.7%

UK (IUA), 23.6%Mexico, 7.9%

Malaysia, 3.0%

Brazil, 2.3%

Japan, 3.1%

Nordic, 2.9%

Italy, 2.6%

Nigeria, 1.4% Egypt, 1.8%

India, 1.6%

USA, 0.6%

Other, 4.6% 2017

*

* incl. prop.& fac.reinsurance

Offshore Energy Premium 2017Total estimated: 3.5 USD billion / Change 2016 to 2017: -5% (2015 to 2016: -21%!)

46Kazakhstan and some other countries: no data available.

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,00020

12

2013

2014

2015

2016

2017

Other

USA

India

Egypt

Nigeria

Italy

Nordic

Japan

Brazil

Malaysia

Mexico

UK-IUA (2012)

UK-Lloyds

Willis estimatedupstream premium

Offshore Energy Premium 2012–2017

Kazakhstan and some other countries: no data available. 47

IUMI:

Premiums reported by associations.Some double-reporting due to global nature of business.

=> Overestimation of global premium.

Willis approach:

From Lloyds premium triangulation. (risk codes EC, EN, EM, EY, EZ).Grossed up to 100% by assuming Lloyd’s represents 70%.

=> Underestimation of global premium

The trend is the same: Strong decrease from 2014, now flattening out.

50%

100%

150%

200%

250%

300%

350%

400%

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

20

18

Average Day Rates

Global Offshore Energy

Premium

Oil price, Brent Crude

No. Contracted Rigs

Offshore energy premiumEnergy mobiles, day rates, oil price

48

* Global premium adjusted backwards for missing data.

*

Drop in oil price was followed by drop in premium.

Oil price started to recover.

0

2

4

6

8

10

12

14

16

18

20

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

0

2

4

6

8

10

12

14

16

18

20

Upstream losses excess US$1m estimated worldwide Upstream premium (US$)

WELD Upstream Energy losses versus estimated upstream premiumLosses > USD 1 million, 2000-2018

Source: Willis49

2005Katrina & Rita

2008Ike

2004Ivan

Hurricane impact reduced in recent years. 2017 hurricanes had modest impact on offshore energy.

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

2016

2017

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

2005Katrina & Rita

2004Ivan

2008Ike

2009-16 no major hurricane activity

Offshore Energy – Gross Loss RatiosUnderwriting years 1996 to 2017 / incl. liability / data from UK, Nordic, US/ reported as of Dec. 2017

50

Youngest underwriting years still develop, will deteriorate over time.

2017Hurricanesprobably

little impact

Offshore Energy Key points

• Strong drop in premiums followed oil price reduction, but flattening out.

• High-profile losses of recent years little impact on market.

• Weather impact reduced since 2009. Hurricanes back in 2017 (Harvey, Irma & others), but little impact.

• Oil price recovering since 2016.

• Downturn in activity starting to reverse. Historically 18 months time lag between improved oil price and authorisation for expenditure.

• More risk retained -> Mismatch between capacity and insurable objects.

• 2018: Risks and claims potential arising from unit reactivation an issue.

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Cargo

• Results strongly impacted by recent years’ unprecedented event losses (man-made & Nat-cat).

• Value ACCUMULATION an issue (on land and at sea)

Hull

• Results deteriorate further despite last years’ benign claims trends (except yachts).

• Current income unsustainable, does not cater for expected normal repair cost any more.

Offshore energy

• Income substantially reduced following reduced activity, but oil price started to recover.

• Benign claims impact in recent years, but high risk exposure.

• Risks following reactivation of units currently a major issue.

Market environment

• Trade growth accelerating, but political and economic uncertainty prevails.

• Climate change / Nat-Cat losses /accumulation / new risks. 52

Take-away points

Issues to monitor

High-value risks

Arctic risks

Dagfinn Bakke, Foto by Astrid Seltmann

© Astrid Seltmann

© Astrid Seltmann

Navigation

Oil price, fuel quality

New technology

Climate change

Changes in regulation (liabilities)

Human factor/Qualification

Dagfinn Bakke. Foto by Astrid Seltmann)

Value accumulation

Cyber risk

Fire on RoRo & Container vessels

Internet of things/complex technologies

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ASTRID SELTMANN

Analyst/ActuaryThe Nordic Association of Marine Insurers (Cefor)astrid.seltmann@cefor.no

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 thepolicy). 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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