Houston Marine Insurance Seminar

Tuesday, October 1, 2013 48th Anniversary

WELCOME

www.houstonmarineseminar.com

Innovation or Evolution?Marine Hull Insurance

Founded in 1837 as a mutual hull club Based in Norway, 3 offices 9000 vessels insured

95% of the OSV fleet in Norway 70% of Mobile Offshore Units worldwide

Claims lead – 4800 vessels More than a capacity provider – Expect

More!

Norwegian Hull Club

Innovation or Evolution?

Objects insured Policies underwritten Terms offered

Source: Flickr

I. Marine or Energy?II. Risk Assessment of the OSV marketIII. Insuring the OSV marketIV. Client ServicesV. Summary

Agenda

Classification Society definitions Notations : Drill, Well …

“Worldwide struggle for consensus over FPSOs” Tradewinds Aug. 2013

Insurance Market As long as you get the most competitive terms?

I. Marine or Energy?

From Offshore Support to Well Intervention

Technological Innovations Subsea Construction (Deeper Waters) Well Intervention (Increased recovery from wells)

Offshore Support Vessel Market

Source: Offshoreenergytoday.com

“Cutting-edge conveyance systems, state-of-the-art tools and innovative

ways of using proven, conventional methods are being developed to

transform what is often a cost-prohibitive and risky undertaking into a

viable option for operators.”

Demand Drives Innovation

“The combination of ultra-deepwater and pressures of 15,000 psi is really

going to push the envelope on this technology.”

BP Group Chairman said that Aberdeen and other UK centres had developed “a microcosm of technological innovation.”

Experience – Offshore Supply

Developement of GT,SI and Deductible

Values

Source: DOF

LOA 88m H&M Value Index 1

LOA 157m H&M Value Index ?

45

Marine or energy discussion will continue …

There is innovation in the design

Set your own guidelines based on operations and qualified parameters set by Class, etc.

Ask yourself: What is the rationale for the (high) Sum Insured?

I. Summary

Risk Assessment will be the next step.

Question: Is the insurance market able to do a proper risk assessment of innovative design?

“It is better to be vaguely right than exactly wrong.”

II. Risk Assessment of the OSV Market

Sliding Left: From

UWR Experience

To Supporting

Tools Client

Experience Pricing Tools Internet

Sources More UWR

Experience

Client Risk Assessment

NHC/ DNV Project

Define your own parameters

Soft Factors Safety Culture Organization

A Supportive Tool

CRA – Client Risk Assessment

Understand the operation and trade Develop unemotional Risk assessment

supportive tools for selection of risk Apply Underwriter Experience Constantly try to look beyond the horizon for

changes and innovation within the segment

“Risk comes from not knowing what you're doing.” – Warren Buffett

II. Summary

Marine Insurance Market

Nordic Marine Insurance Plan of 2013 is an all-risks set of conditions

Agreed document between the Nordic Association of Marine Insurers (CEFOR) and the Nordic Shipowners’ Association

Latest revisions are the only set of conditions offered and used

Revisions reflect, amongst other things, the innovation and evolution of the market insured

Major evolutionary and experience-driven updates to Chapter 18 – Insurance of Mobile Offshore Units

III. Insuring the OSV Market

Develop a pricing tool based on statistics(CEFOR) Driving by looking in the rear-

view mirror? Incorporate Global trends

(2007 – The annul horribilis for the H&M market?)

It is about what will happen, not what has happened.

Insuring the OSV Market

Source: CEFOR

Technical Loss ratio

Today Over capacity Low barriers to entry

Trends Banks – Basel III

Allocation of capital more selective (less shipping)

Insurance Industry – Solvency II Allocation of capital based on risk profile? Lloyds PMD board – Tradewinds aug. 2013

Various ways of doing this have been suggested, said Mr. Indge, with marine hull underwriters collaborating with various registers, classification societies and the International Maritime Organization to improve their understanding of the risks they insure.

Markets

Trust your Risk Assessment

Understand the operation and trade in order to offer the best set of conditions to your client

Develop and constantly revise pricing tools

Stay Disciplined!

III. Summary

Sustainable service platform Terms and Conditions Capacity/Rating Claims Services/Emergency Support

Client Services Understand the needs of your clients and

members Experience Transfer

IV. Expect More

CLIENT SERVICES

Within the OSV market there is Innovation in technology Evolution in the insurance market

In order to stay on top as an insurer Keep a strong technical and operational focus Understand your client Develop and revise Risk Assessment tools Develop and revise Pricing Models Stay Disciplined!

SUMMARY