Reflections on IUMI 2012 and Marine Market Update

Transcription

1 American Marine Insurance Forum Reflections on IUMI 2012 and Marine Market Update Sean M. Dalton, CPCU, AMIM Senior Vice President, Head of Marine October 25, 201 2

2 Agenda Review of Economic and Regulatory Environment US Ocean Marine Market Update Customers Brokers / Agents Underwriters Excepts from IUMI Facts and Figures Report by Astrid Seltmann Excerpt from AM Best IUMI Presentation by Andrew Colannino Excerpt from IUMI Cargo Workshop by Dennis Marvin Outlook Q & A Zurich Insurance Company 2

3 Economic / Regulatory Environment Sea-borne freight demand growth forecast at 4% for US Trade in Goods through June versus prior YTD + 6.8% Exports and + 5.6% Imports driven by gains in all end use categories. Maritime employment in the US is expected to grow 20% from to Recovery in Recreational Marine Market has been slow. Legal environment will continue to get tougher. Zurich Insurance Company Sources: US Census Bureau US Bureau of Economic Analysis, US Dept. of Labor Bureau of Labor Statistics. 3

4 US Ocean Marine Insurance Market US Marine Insurance remains soft with the exception of Blue Water Hull line and accounts with loss issues are seeing corrective action to a degree. Significant deterioration in US Ocean Marine Market L/R fro m to worsening by 8.9 points. Property contents (including retail exposure) migrating to Cargo Market Stock Thru Put (STP) policies. Significant Ocean Marine Market Losses in including COSTA CONCORDIA ($1 billion), M SC FLAM INIA ($1 00 m illion). Reserve adequacy and concerns over adverse Prior Year Development. Zurich Insurance Company Sources: American Institute of M arine Underwriters, AM Best. 4

5 Customers Continue to show a great degree on variation as to importance of a globally compliant Marine program. Driven by Risk Management and Broker. Desire to STP options as Property Market hard. Many remain price driven as 1 st Party Coverage viewed as commodity and short tail in nature. Demand for insurers that can provide whole account solution on Marine risks. Zurich Insurance Company 5

6 Brokers / Agents Increased Acquisition Costs (Commission). Pressure on margin / revenue. Need to do more with less. Ease of doing business is key. Have done an excellent job for customers in crafting STP solutions. As compared to P roperty Market: More competitive price, additional CAT Limits / Capacity, Lower Deductible, and Broader Coverage. Challenges in balancing attractive price options being offered with carriers that can adequately service business. Claim s is key. Differing opinions as to requirements for a Globally Compliant Marine Program s. Zurich Insurance Company 6

7 Underwriters 4 of top 5 US Ocean Marine Underwriters posted L/R in in excess of 65%. Rising Expense Ratios. Interest Rate Environment. Markets have exited the Blue Water Hull Market. Companies increasingly are combining both Ocean and Inland Marine businesses. New entrants. A number of MGAs changing security. Commodity approach versus Value Proposition / Distinctive Competence. Higher reinsurance retentions. Impact of Capital Intensity (Solvency II). Zurich Insurance Company Sources: American Institute of M arine Underwriters, AM Best. 7

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26 Outlook Zurich Insurance Company Challenges are great but so are the opportunities. Change, change and more change. Exposures are not going away, they are growing and becoming more complex. Capital Intensity will increase for Marine. Result will be need to deliver improved combined ratios to achieve same return on capital. Expense pressure. Accountability for results. Markets will exit, will the capacity be easily replaced. Increased use of pricing tools and modeling. Value Proposition / Distinctive Competence versus Commodity Plan. Increased need for effective portfolio management. 26

27 Q & A 27

28 American Marine Insurance Forum Reflections on IUMI 2012 and Marine Market Update Sean M. Dalton, CPCU, AMIM Senior Vice President, Head of Marine October 25, 201 2