2015 ocean marine trends
TRANSCRIPT
SOSThat Are Changing the Rules in 2015
Five Emerging Underwriting Trends
f o r M a r i n e I n s u r e r s
The Wide Wake of Larger Vessels
Increasing severity of losses
Marine Cyber Risk
Extreme Weather
Political Risk and Trade Sanctions
Emerging Marine Underwriting Issues
85% of executives cite Cyber Risk as a top concern.
Marine businesses are at greater risk of Cyber attack.
Source: AIG Study
Is your policy language clear with respect to Cyber Risk?
In addition to the data breach potential, exposures include: property damage, bodily injury, business interruption and third-party liability.
The list of potential exposures is growing faster than the ability to manage the financial and reputational risk that can result.
MARINE CYBER RISK
Vessels and Offshore Platforms
Is your insured even aware of this risk?
Marine businesses are at greater risk of Cyber attack.
MARINE CYBER RISK
Researchers have found significant holes in navigation systems security (GPF, AIS, ECDIS).
“Every ship has a back door—communication lines.”
— Markus Wahler, Marine Cyber Consultant
Cargo
What do risk management teams need to be doing today?
Marine businesses are at greater risk of Cyber attack.
MARINE CYBER RISK
“Shipping and supply chains are the next targets for hackers.”
— International Maritime Bureau
Ports
Do your underwriters understand these exposures?
Marine businesses are at greater risk of Cyber attack.
MARINE CYBER RISK
Ports represent significant vulnerabilities in essential trade infrastructure, according to the Brookings Institute.
POLITICAL RISK AND TRADE SANCTIONS
U.S., EU and UN identify shipping as important to sanction objectives.
Marine and Aviation industries pose the highest risk for insurers.
Political Risks should be a major concern for Marine insurers.
Criminal Charges Fines Reputation Potential Breach of Contract
Are you comfortable with your organization’s risk controls?
POLITICAL RISK AND TRADE SANCTIONS
“Underwriting”
Risks of trade sanctions
What is your exposure when things go wrong?
Cargo and Hull sums insured are quickly approaching $1B to $2B at risk on larger vessels.
Concentration of Risk
THE WIDE WAKE OF LARGER VESSELS
Economies of Risk:
Economies of Risk:
Are you prepared for these events?
THE WIDE WAKE OF LARGER VESSELS
Occurring more frequently and costing more.
Risk size, environmental sensitivity of the public, politics and limited response infrastructure are all contributing factors.
Salvage and Wreck Removal
Economies of Risk:
Do you have enough reinsurance limit?
THE WIDE WAKE OF LARGER VESSELS
Arrivals are less predictable due to slow steaming and, once in port, larger vessels are tying up facilities longer.
The resulting increase in average daily values in port can increase even more quickly than the rate in growth of the vessels themselves.
Port Congestion
0
1
2
3
4
5
6
7
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
Number of Claims
20
00
199
9
199
8
199
7
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
1,200
1,000
800
600
400
200
Serious Ex TLTotal Loss
Number of Incidents
0
Source: Cefor Statistics Forum, IUMI Facts and Figures Committee, Lloyds List Intelligence, Clarkson Research, August 2014Note: Total Losses as Percentage of World Fleet, Vessels > 500 GT
INCREASING SEVERITY OF LOSSES
Claims in Excess of $30M USD Serious and Total Losses
Larger vessels are producing fewer total losses, but much higher partial losses.
INCREASING SEVERITY OF LOSSES
Greater complexity and exposure leading to significant claims handling uncertainty.
Contributing Factors:
EXTREME WEATHER
$47
$29
$15
$4
Billion
Billion
Billion
Billion
U.S. (Katrina)
U.S. (Sandy)
Thailand Flooding
Europe Flooding
2005
2012
2011
2012
Source: Central Europe Flooding, “Povodne v Praze, 30.jpg” by Jargo/CC BY-SA 3.0.
Climate change is a reality.
Are you managing Catastrophe exposures or just modeling them?
Insurers of cargo, pleasure yachts, marinas, boat builders and boat dealers need to prepare for a higher frequency of larger storms and the implications for their portfolios, such as wind, flood and storm surge.
Most static Marine exposures are located near the coast.
In today’s uncertain global environment, the threats and challenges for marine insurers will only increase.
New exposures, such as Cyber and Political Risk, continue to evolve on a daily basis.
Cargo and vessel limits and other Marine loss scenario exposures continue to grow faster than the ability to respond post-loss.
New exposures, such as Cyber and Political Risk, continue to evolve on a daily basis.
Cargo and vessel limits and other Marine loss scenario exposures continue to grow faster than the ability to respond post-loss.
Will we experience another resulting surge in serious and total losses when the global economy picks up speed, as we did from 2004–2007?
New exposures, such as Cyber and Political Risk, continue to evolve on a daily basis.
Growth in coastal Marine exposures continues to outpace the economy overall, and in the most vulnerable locations.
Cargo and vessel limits and other Marine loss scenario exposures continue to grow faster than the ability to respond post-loss.
Will we experience another resulting surge in serious and total losses when the global economy picks up speed, as we did from 2004–2007?
New exposures, such as Cyber and Political Risk, continue to evolve on a daily basis.
Are you prepared?
© 2015 General Re Corporation | This presentation is intended to provide background information for our clients and professional staff. It is time sensitive and may need to be revised and updated periodically.
When you’re ready to tackle these issues with a reinsurer that understands and accepts risk every day, we are here to help.
Jonathan Ball
+1 203 328 5748p
/in/jonathanfballin
@jonathan_f_ballt