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ASTRID SELTMANN
Vice chair, IUMI Facts & Figures CommitteeAnalyst/Actuary, The Nordic Association of Marine Insurers (Cefor)
Global Marine Insurance
Casualty trends
CONTENTS
• IUMI Facts & Figures Committee projects
• The Global Marine Insurance Market
• Vessel values & fleet trends with impact on casualty trends
• CASUALTY TRENDS
Main data sources: Premiums: IUMI (Global Marine Insurance Report, September 2017)Fleet data: Clarkson Research, Lloyds List IntelligenceVessel values: Nordic Marine Insurance Statistics (NoMIS)Casualties: slides 21-24: Lloyds List Intelligence; else Nordic Marine Insurance Statistics
CONTENTS – CASUALTY TRENDS
SHIPOWNERS’ LIABILITY (Crew, Environment, collision etc.)
• Pool claims International Group of P&I Clubs
HULL CASUALTY TRENDS
• Total and major losses and their impact
• Trends by type of casualty
• Trends by vessel type / age group
• Special:
‐ Cost driving factors
‐ Owner / Flag change: Impact on claims frequency
IUMI FACTS & FIGURES COMMITTEE
PROJECTS
2017-2018 FACTS & FIGURES PROJECTS (1)
Published March 2018: (at www.iumi.com for IUMI members)
• 2018 IUMI Hull Spring Statistics
• 2018 IUMI Cargo Spring Statistics
• 2018 IUMI Energy Spring Statistics
Other recent initiatives:
• Major Claims Database
• Reporting of Carriers’ Liability
• Identification of new data demands from other IUMI Committees
• External Forum participations – such as IUMI@IMO
2017-2018 FACTS & FIGURES PROJECTS (2)
IUMI conference 16-19 Sept. 2018 – New updates on:
• Report on World Merchant Fleet and World Trade& Update on Major Claims Database Pilot (Donald Harrell / F&F chair)
• Global Marine Insurance Report & Data tables for download:
‐ Marine premiums by line of marine business by country
‐ Loss ratio triangulations for hull, cargo, energy
(Astrid Seltmann/ F&F vice chair)
• Market environment analysis.(External speaker).
• Fact Sheets Hull, Energy, Cargo
• Cargo & Hull cost inflation indexes
• Press release / Whitepaper
THE GLOBAL MARINE INSURANCE MARKET
25%
54%
7%
13%
2016
Global Hull
Transport/Cargo
Marine Liability
Offshore/Energy
MARINE PREMIUM 2016BY LINE OF BUSINESS
Source: IUMI Global Marine Insurance Report 2017
Total: 27.5 USD billion / Change 2015 to 2016: -9%NB: Strong USD «reduces» premium in USD as compared to local currency!
50.2%
27.9%
9.5%
5.6%4.1% 2.7%
2016Europe
Asia/Pacific
Latin America
North America
Middle East
Africa
MARINE PREMIUM 2016BY REGION
Total: 29.9 USD billion
Source: IUMI Global Marine Insurance Report 2017
61%
30%
6% 3%
UK
Nordic
Japan
US
Calls 2016:UK: 2.03 Nordic: 1.00Japan: 0.21US: 0.08
Total: 3.32 (USD billion)
48%
18%
13%
12%
6% 3%
BermudaUKLuxembourgNordicJapanUS
P&I CLUBS INTERNATIONAL GROUPPROTECTION & INDEMNITY = SHIPOWNERS’ LIABILITY
GROSS CALLS (PREMIUM) 2016 – OPERATIONAL LOCATION
by country of registration
Source: IUMI Global Marine Insurance Report 2017
VESSEL VALUES
© Astrid Seltmann
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,0002
000
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
Average insured vessel value Average gross ton
AVERAGE GROSS TON & VESSEL VALUE
NoMISNordic Marine
Insurance Statistics
Decrease in av. vessel values despite
increase in av. vessel size
5.9%
2.3%
8.7%
2.4%
-14.8%
-7.9%
-4.3%
-6.4% -6.2% -6.0%
-9.3%
-7.4%
-5.2%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
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
Under stable market conditions, some value
reduction normal due to the aging factor.
CHANGE IN VALUES – ALL VESSELSCOMPARING INSURED VALUE OF SAME VESSELS IN TWO CONSECUTIVE YEARS
NoMISNordic Marine
Insurance Statistics
Source: Cefor Annual Report 2017
Strong reduction in 2015/2016 mainly due to
challenges in bulk and supply/offshore segment.
Bulk market shows signs of recovery in 2017.
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0.00
20.00
40.00
60.00
80.00
100.00
120.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Change in average sum insured (%) Oil Price, USD (Brent), annual average
OFFSHORE VESSEL VALUES & OIL PRICENoMISNordic Marine
Insurance Statistics
Some recovery in offshore market in 2018?
Source: Cefor Annual Report 2017
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
25.0
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
Ave
rage A
ge
Total Tanker
Bulkcarrier Containership/MPP
Gas Others
5.0
10.0
15.0
20.0
25.0
30.0
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
Ave
rage A
ge
Global Fleet <2,000GT
Global Fleet >=2,000GT
WORLD FLEET STARTS GETTING OLDER
AVERAGE AGE, VESSELS > 100 GT
Source: Clarksons Research, January 2018
0
500
1000
1500
2000
2500
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
< 5000 gt >= 5000
NEWBUILDINGS WORLD FLEETLESS THAN AND ABOVE 5,000 GROSS TON
Source: Lloyds List Intelligence, World Fleet Update, as of January 2018
Less new buildings -> fleet age increases.
New buildings larger in size.
CASUALTY TRENDS
© Astrid Seltmann
No claim – just a matter of perspective!
TYPES OF (INSURED) CASUALTIES
• Physical damage – vessels, offshore energy units, cargo
• Third party liability
‐ To object e.g. collision
‐ People (passengers, crew)
‐ Environmental damage (e.g. oil spill)
• Loss of income
• Terror etc.
P&I POOL CLAIMS BY POLICY YEAR= SHIPOWNERS’ LIABILITY CLAIMS
Source: IG P&I Annual Review 2016/17 https://static.mycoracle.com/igpi_website/media/adminfiles/IGPI_Annual_Review_16-17_nSXn9m4.pdf
Pool claims on 2016/17 policy year reduced compared to 2015/16.IG P&I: “This continues the encouraging trend of more benign large claims…”
P&I is a complex business with high liabilities!
HULL CASUALTY TRENDS – FREQUENCY
TOTAL LOSSES 2000-2016 (LLI) AS % OF WORLD FLEET, VESSELS > 500 GT
Total losses:
Long-term positive trend.
Sources: Losses: Lloyds List Intelligence; Fleet numbers: Clarksons Research
0.0%
0.1%
0.2%
0.3%
0.4%
in % of Vessels in % of GT
0.0%
0.1%
0.2%
0.3%
in % of Vessels in % of GT
Sources: Losses: Lloyds List Intelligence; Fleet numbers: Clarksons Research
TANKER TOTAL LOSSES 2000-2016 (LLI)AS % OF WORLD TANKER FLEET, TANKERS > 500 GT
0.0%
0.1%
0.2%
0.3%
in % of Vessels in % of GT
Sources: Losses: Lloyds List Intelligence; Fleet numbers: Clarksons Research
BULKER TOTAL LOSSES 2000-2016 (LLI)AS % OF WORLD BULKER FLEET, BULKERS > 10,000 DWT
0.0%
0.1%
0.2%
0.3%
in % of Vessels in % of GT
Sources: Losses: Lloyds List Intelligence; Fleet numbers: Clarksons Research
CONTAINER TOTAL LOSSES 2000-2016 (LLI)AS % OF WORLD CONTAINER FLEET
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
partial claims (left axis) TLO claims (right axis)
NoMISNordic Marine
Insurance Statistics
CLAIMS FREQUENCY* (NOMIS):
LONG-TERM POSITIVE TREND
Total loss frequency
Partial loss frequency
Pre-financial crisis peak
* = No. of claims divided by no. of insured vessels
Source: Cefor Annual Report 2017
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
0%
5%
10%
15%
20%
25%
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
0 - 10,000 USD
10,000 - 500,000 USD
500,000 - 2,000,000 USD
(right axis)
> 2,000,000 USD
(right axis)
CLAIMS FREQUENCY > CERTAIN COST LEVELS:
STABLE TO POSITIVE TREND
NoMISNordic Marine
Insurance Statistics
Source: Cefor Annual Report 2017
HULL CASUALTY TRENDS – COST
0
20,000
40,000
60,000
80,000
100,000
120,000
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
Claim cost per vessel Claim cost per vessel excluding total losses
CLAIM COST PER VESSEL –
INCLUDING/EXCLUDING TOTAL LOSSES
Strong total loss impact
2003-08: Strong increasein repair cost per vessel.
Since 2009: repair cost stable;Volatility by major claims impact.
NoMISNordic Marine
Insurance Statistics
Source: Cefor Annual Report 2017
0
20,000
40,000
60,000
80,000
100,000
120,000
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
> 50 MUSD
30-50 MUSD
10-30 MUSD
5-10 MUSD
1-5 MUSD
<= 1 MUSD
IBNR
Claim bands:
CLAIM COST PER VESSEL:
INCREASING VOLATILITY BY MAJOR CLAIMS
NoMISNordic Marine
Insurance Statistics
2012/13/15:strong major claims impact2004: first claim
> USD 50 million2014/16/17:little major claims impact
Source: Cefor Annual Report 2017
ANNUAL SHARE OF 1% MOST COSTLY
CLAIMS OF TOTAL CLAIMS COST
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NoMISNordic Marine
Insurance Statistics
Strong volatility and impact on
annual costs by major claims.
Even in ‘good’ years the top
1% claims account for 30% of
the total cost.
Source: Cefor Annual Report 2017
HULL CASUALTIES – BY TYPE OF CASUALTY
Total Losses 2003 – 2017by cause, all vessel types, vessels > 500 GT
0% 10% 20% 30% 40% 50% 60%
Other
Machinery
Hull Damage
Collision/contact
Fire/explosion
Grounding
Weather
Frequency ( % of all total losses for the period)
2003 -2007
2008-2012
2013-2017
Source: LLI, total losses as reported by Lloyds List
NoMISNordic Marine
Insurance Statistics
NUMBER OF CLAIMS
BY TYPE OF CASUALTY
40.9%
2.3%11.0%
20.6%
8.5%
2.0%
14.7%
2012-2016
Machinery
Fire/Explosion
Collision
Contact
Grounding
Heavy weather
Other / unknown
42.3%
2.2%10.4%
19.0%
9.0%
1.6%
15.5%
2017
Machinery
Fire/Explosion
Collision
Contact
Grounding
Heavy weather
Other / unknown
Total number of claims:
2012-2016: 16,926 2017: 2,898
NoMISNordic Marine
Insurance Statistics
COST OF CLAIMS
BY TYPE OF CASUALTY
33.5%
13.6%
11.9%
7.5%
20.0%
2.5%
11.0%
2012-2016
Machinery
Fire/Explosion
Collision
Contact
Grounding
Heavy weather
Other / unknown
43.2%
10.5%7.0%
10.5%
20.2%
1.3%
7.3%
2017
Machinery
Fire/Explosion
Collision
Contact
Grounding
Heavy weather
Other / unknown
Total cost of claims in USD million:
2012-2016: 5,009.8 2017: 687.8
FREQUENCY OF CLAIMS > USD 500,000BACK TO PRE-BOOM LEVEL
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
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
Machinery
Collision, Contact,Grounding
Other
Fire/Explosion
Heavy weather NoMISNordic Marine
Insurance Statistics
Source: Cefor Annual Report 2017
AVERAGE CLAIM COST (USD 1,000)STRONG VOLATILITY OF FIRE/EXPLOSION IMPACT
NoMISNordic Marine
Insurance Statistics0
500
1,000
1,500
2,000
2,500
3,000
3,500
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
Fire/Explosion
Collision, Contact,Grounding
Machinery
Heavy weather
Other
CLAIMS TRENDS
BY AGE GROUP AND VESSEL TYPE
NoMISNordic Marine
Insurance Statistics
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0-5 years 5-10 years 10-15 years 15-20 years 20-100 years
2012-2014
2015-2017
2012-2017
Source: The 2017 Cefor NoMIS Ocean Hull Report
CLAIMS FREQUENCY, BY AGE GROUP
CLAIM COST PER VESSEL, BY AGE GROUP
NoMISNordic Marine
Insurance Statistics
0
20,000
40,000
60,000
80,000
100,000
120,000
0-5 years 5-10 years 10-15 years 15-20 years 20-100 years
2012-2014
2015-2017
2012-2017
Source: The 2017 Cefor NoMIS Ocean Hull Report
CLAIMS FREQUENCY, BY VESSEL TYPE
NoMISNordic Marine
Insurance Statistics
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
Bulk Cargo Cont./Car/RoRo Passenger Tank Supply/Off
2012-2014
2015-2017
2012-2017
Source: The 2017 Cefor NoMIS Ocean Hull Report
CLAIM COST PER VESSEL, BY VESSEL TYPE
NoMISNordic Marine
Insurance Statistics
0
50,000
100,000
150,000
200,000
250,000
300,000
Bulk Cargo Cont./Car/RoRoPassenger Tank Supply/Off
2012-2014
2015-2017
2012-2017
Source: The 2017 Cefor NoMIS Ocean Hull Report
SUMMARY CASUALTY TRENDS – FREQUENCY
• Total loss frequency
‐ Long-term positive trend
‐ Stabilizing in recent years at a low and probably minimum achievable level.
‐ Result of increased focus on safety measures?
• Overall claims frequency
‐ Long-term positive trend
‐ Down from pre financial crisis peak > 30% to 23%.
‐ Low volatility since 2012, stabilizing around 23%.
• Influencing factors
‐ New normal or just coincidence of several factors acting together
‐ Claims frequency influenced by many factors, such as
▪ reduced vessel utilization (overcapacity, lay-ups)
▪ younger & bigger vessels
▪ higher insurer deductibles (less claims reported)
▪ exchange rates (strong dollar may reduce repair cost, less claims exceed insurer deductibles)
▪ …
SUMMARY CASUALTY TRENDS – COST
• Repair cost
‐ Increased substantially before 2008 financial crisis, down from 2009.
‐ In recent years stabilization around pre-crisis level.
‐ Correlation with certain parameters (e.g. steel price, USD exchange rate, labour cost).
‐ Strong USD may have kept cost down recently (repairs paid in other currencies).
• Major (=costly) claims trends:
‐ Trend towards more expensive single claims.
(increasing vessel sizes, more complex objects).
‐ Increasing Volatility
Strong impact of costly losses in some years (2012/13/14), little in others (2014/16/17).
‐ Strong influence on the overall cost also in years with few major losses:
The 1% most expensive claims account for minimum 30% of the claims cost in any year!
‐ Difficult to estimate major claims impact for a specific year due to random occurrence.
• Beware of terminology: ‘Serious’ casualties versus ‘major’ losses
IMO, LLI etc. define degrees of casualty ‘seriousness’ related to the nature of the event.
Insurers monitor ‘major’ claims = extraordinary costly casualties. The majority of ‘serious’ casualties are no ‘major’ claims in terms of cost, but ‘serious’ casualties should nevertheless
give rise to concern and be investigated. For more details on the comparison, check my 2017 IMO presentation:
https://iumi.com/news/blog/iumi-presentation-at-imo-maritime-safety-committee
SPECIAL FOCUS:
- COST DRIVING FACTORS
- IMPACT OF OWNER/FLAG CHANGE ON FREQUENCY
50.0%
75.0%
100.0%
125.0%
150.0%
175.0%
200.0%
225.0%
250.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cost driving factors inflation index, 2000 = 100%
USD against EUR (annual exchange rate) Ship operating costs (Moore Stephens)
Claim per vessel (incl. total losses and IBNR) Partial claim per vessel (incl. IBNR)
Steel price index
Sources: Claim indices: Cefor NoMIS data as of 31.12.2017; Exchange rates: Norges Bank, Ship operation costs: Moore Stephen’s, Steel: CRU Steel Price Index
COST DRIVING FACTORS
NoMISNordic Marine
Insurance Statistics
IMPACT OF CHANGE OF OWNER OR FLAG
ON CLAIMS FREQUENCY
CHANGE OF OWNER: CLAIMS FREQUENCY
BEFORE / AFTER OWNER CHANGE, BY AGE GROUP
NoMISNordic Marine
Insurance Statistics
Source: Cefor Annual Report 2017
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
20
05
20
06
20
07
20
08
20
09
2010
2011
20
12
20
13
20
14
20
15
20
16
2017
No change of owner Owner has changed
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
2005
20
06
20
07
2008
20
09
20
10
2011
20
12
20
13
20
14
2015
20
16
20
17
No change of owner Owner has changed
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2005
20
06
20
07
20
08
20
09
2010
20
11
20
12
20
13
2014
20
15
20
16
20
17
No change of owner Owner has changed
Vessel age: 5-10 years 10-20 years Over 20 years
Owner change
No owner change
Independent of the age of the vessel, the claims frequency of vessels which changed owners during their lifetime is higher.
Source: Cefor Annual Report 2017
CHANGE OF FLAG: CLAIMS FREQUENCY
BEFORE / AFTER FLAG CHANGE
NoMISNordic Marine
Insurance Statistics
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
19
96
1997
1998
19
99
2000
20
01
20
02
2003
20
04
2005
2006
20
07
2008
20
09
20
10
2011
20
12
2013
2014
20
15
2016
20
17
No flag change Year of flag change Year before flag change Flag change, but not this or following year
Source: Cefor Annual Report 2017
CHANGE OF FLAG – CLAIMS FREQUENCY
BY AGE GROUP, BEFORE / AFTER CHANGE
NoMISNordic Marine
Insurance Statistics10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0-5 years 5-10 years 10-15 years 15-20 years > 20 years
No flag change Year of flag change Year before flag change Flag change, but not this or following year
Source: Cefor Annual Report 2017
CHANGE OF FLAG: CLAIMS FREQUENCY
BY VESSEL TYPE, BEFORE / AFTER CHANGE
NoMISNordic Marine
Insurance Statistics
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Bulk Car/RoRo Cargo Chem./Prod Container Fishing LNG/LPG Other Passenger Suppl/Off Tank
No flag change Year of flag change Year before flag change Flag change, but not this or following year
IMPACT OF OWNER/FLAG CHANGE
• Vessels which change owner and/or flag during their lifetime
showed a generally higher claims frequency than vessels
staying with the same owner or flag.
• The claims frequency is higher also in the year(s) before the change,
and thus not only due to any specific owner or flag.
• The increase in claims frequency showed in all age groups and for
nearly all vessel types, with the exception of fishing vessels – for
which a change of flag is rather uncommon – and chemical/product
and tank vessels.
ISSUES TO MONITOR
High-value risks
Arctic risks
© 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
MSC Safety discussions!
Cyber risk
Fire on RoRo & Container vessels
Internet of things/complex technologies
IUMI REPORTS 2016/17:
IUMI Statistics: https://iumi.com/statistics
Conference publications: Spring statistics on Cargo, Hull, Offshore energy:
Cefor NoMIS Statistics at http://cefor.no/Statistics/NOMIS/
CEFOR PUBLICATIONS 2018 – HULL TRENDSNORDIC MARINE INSURANCE STATISTICS (NOMIS)
Published 5 April 2018 (Hull casualty trends; Owner/flag change impact):
