state of the ocean marine reinsurance market 2014

Marine Insurers Should Watch For in 2014

4 emerging underwriting trends that could change the rules of

the game going forward…

4

Emerging Trend 1:

Increasing vessel size

Maersk Mc-Kinney Moller

Source: http://en.wikipedia.org/wiki/Maersk_Triple_E_class

16% larger than the

previous world's largest

The 2013 Triple E Maersk class container carrier is 399m (l) x 59m (w) x 73m (h)

15 blue whales

equivalent in length to

It can carry up to

$1.8 B in cargo values

This larger size means an increase

in risk

Source: London Salvage Conference, December 2012

The ability to fight fires onboard

is unknown

No salvage plan exists to unload

such a ship at sea in less than 6 months

Does such a vessel merit a lower than average rate...or higher?

Normally new, higher TIV vessels get cheaper rates, but in this case we are talking about more risk

Risk Risk Risk Risk Risk Risk

Escalating Removal-of-Wreck Costs Emerging Trend 2:

33

2008 1999

55

Large-scale wreck removals increased from 33 to 55 per year

$

$

$

$

$

Cost of each removal is rapidly rising due to:

Larger and more complex vessels

Overconfidence of salvage companies

GLOBAL awareness and transparency of environmental impact

Politics

Lack of qualified resources in many world regions

Shipping across Arctic waters Emerging Trend 3:

Unknown post-loss response means smaller initial losses could easily escalate if no local response

Charts are improving, but are still imperfect

No standard requirements for ship design

Limited experiential data means more decisions based on intuition

Shortage of qualified crew

A new frontier

Emerging Trend 4:

Misuse of Catastrophe modeling

catastrophe modeling

Commonly misused or misinterpreted

Too easy to "outsource" underwriting decisions

to modelers

Effectiveness of market models on marine risks

can vary

Helps with risk selection & pricing of individual accounts

Facilitates more active portfolio

risk management

Conclusion

Ocean Marine insurance business faces great uncertainty as we head into 2014

Loss ratios continue to climb in many world regions due to loss activity and rate reductions

Little room for error

Greater frequency of severe losses globally

Major underwriting concerns affecting Cargo, Commercial Hull, P&I, and Recreational Marine lines

to discuss underwriting and new product possibilities

This presentation is intended to provide background information to our clients and professional staff. It is time sensitive and may need to be revised and updated periodically.

+1 203 328 5748 jball@genre.com

/in/jonathanfball @Jonathan_F_Ball t

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