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You can lead an actuary to water….. but you can’t make him price Ocean Marine

You can lead an actuary to water….. but you can’t make him price Ocean Marine. Agenda. Marine - Is it just “watered down” coverage? Trends - Writings and Losses The Reinsurance Market Reinsurance Products Guy Carpenter Instrat and the Actuary’s Role. Marine.

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You can lead an actuary to water….. but you can’t make him price Ocean Marine

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  1. You can lead an actuary to water…..but you can’t make him priceOcean Marine

  2. Agenda • Marine - Is it just “watered down” coverage? • Trends - Writings and Losses • The Reinsurance Market • Reinsurance Products • Guy Carpenter Instrat and the Actuary’s Role

  3. Marine • Not inland marine: transit over land • Lines of business • hull • cargo • marine liability / P & I • offshore energy

  4. What’s Covered? • Perils of the sea • Fire and explosion • Barratry of the master • Jettison • Assailing thieves • Theft and pilferage • War

  5. Trends (and data) • Approximately 1/3 of domestic business in London market, about half to Lloyd's • Premium grew 27% from 1998 to 2002 • Loss ratio fell from 66.4% to 57.6% during same period • Acceleration in loss payments • Lower investment returns

  6. Reinsurance Market • Use of non-marine market • Pre September 11, 2001 • soft pricing • negative returns • hardening began • September 11, 2001 • little ocean marine insured loss • rates continue to rise

  7. Reinsurance Market - 2003 • Client (insurer) concerns • price • retention • price • coverage • price • long-term stability of reinsurer/market • price

  8. Reinsurance Market - 2003 • Market settling • Pricing • exposure • retention • price • reinstatements • Expanded broker role

  9. Reinsurance Market - 2003 • Risks attaching vs. losses occurring • Gross vs. Net • TRIA • Capacity

  10. Capacity • New • Lloyd's

  11. Market Events Affecting Pricing • Fourteen large losses in 4th quarter, 2002 • Diamond Princess: $250 million • Hual Europe: $85 million • Hanjin Pennsylvania: $235 million • Tricolor: $130 million

  12. Underwriting Changes • Old • New • increased use of actuaries • submission information • quota share • limited terrorism cover • Capacity

  13. Reinsurance Products • Quota share • Excess of loss • “Follow-the-Fortune” • “Pure” • Broadening of coverage

  14. Guy Carpenter Instrat • What it is • Actuaries role • MetaRisk

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