Nordic insurers experienced one of the lowest claims cost per vessel in the past 20 years in 2018 due to an absence of large claims, Nordic marine insurance association Cefor has reported.
The association said that the most expensive claims in 2018 were two total losses, which cost its members around $25m each. The frequency of total loss claims was the lowest in 23 years.
Cefor said that the number of vessels with a value in excess of $30m had fallen by 20% from a 2014 peak.
The association said that a number of severe casualties towards the end of 2018 and during the first quarter of 2019 hinted at a rise in the number of major losses.
Helle Hammer, Managing Director of Cefor, said that “2018 was the third consecutive year with an exceptionally low claim cost, but the start of 2019 could mark the end of this.”
She noted “an extraordinary three-year period without claims in excess of $30m”, but that “two of a number of severe casualties that incurred in the period January to March 2019 were partly covered by the Cefor market”.
With the absence of costly total losses in the past three years, often being groundings or fire/explosion claims, a higher proportion of the overall claims cost originated from medium size to low cost claims, especially machinery.
A new analysis by the Cefor Statistics Forum revealed a clear relationship between detentions and casualties. “Vessels that had been detained in a three-year period prior to a claim have a higher claims frequency across all age groups and types of casualties than vessels without detention(s). Detention data is thus a clear indicator of the risk of a vessel incurring a casualty and to understand the cause of potential future casualties, as these tend to be related to the causes of the detention of the vessel”, said Hammer, adding that “to utilize the information, access to detention data in an easily accessible data format is important for insurers to assist in the overall risk assessment of a fleet they insure and in their loss prevention measures”., Since 1985, leading members of Cefor have compiled and analysed statistical information relevant to their hull & machinery insurance portfolio. By the end of 2018 the Nordic Marine Insurance Statistics database comprised more than 460,000 vessel years and 100,000 claims.
The Cefor Marine Insurance Market 2018
Market shares, all sectors
Gross premium income, direct insurance 2018: $1,681m.
(For Cargo, Norwegian income Cefor members only)
Hull by company
(Hull, hull interest, freight interest, loss of hire, builders’ risks, fishing (catch & gear)
|Norwegian Hull Club||131.1||154.7||24.6%|
|DNK (war risks)||11.5||13.6|
Gjensidige includes coastal marine clubs
Offshore energy €m €$m
|Norwegian Hull Club||19.0||22.5||28.7%|
|DNK (war risks)||2.3||2.8|
P&I €m €$m
|Norwegian Hull Club||8.3||9.7||1.0%|
|Other Cefor members||6.1||7.2||0.8%|
|DNK (war risks)||0.2||0.3|
Norwegian Hull Club is Charterer’s Liability
Other Cefor members are Alandia Insurance, Codan, Fender, Gjensidige, If, Møretrygd, Tromstrygd.
DNK here is cruise vessels only; for other vessel types P&I coverage is included in hull war premium.
Machinery claims were the most frequent individual claim type and accounted for more than 40% of all claims. Nautical-related claims, including grounding, collision and contact , accounted for another 40% of the total number of claims. Contact claims, where one vessel collides with a ‘non-vessel’ object, were the most frequent individual claim type representing around 20% of all claims.
In terms of cost, since machinery-related claims included many low-cost claims, their relative impact on the cost was lower. Fire/explosions, whilst low in number, represented relatively expensive claims.
Comparing the five-year period 2014-2018 with the previous five-year period 2009-2013, both the claims frequency and the claim cost per vessel were lower for all types of claims.
There was also a shift in the breakdown of claims by type, with a higher proportion of the overall claim cost relating to machinery. The shift in the breakdown of claims by type was less dramatic for the number of claims than it was for the cost, but the trend was the same.
Cefor said that to a large extent, the change could be explained by the relative absence of costly claims over the past few years. The costliest claims were usually fire/explosions or navigation-related claims. The impact of the Costa Concordia grounding in 2012 was significant for the period 2009-2013.
Percent of total losses by type, vessels < 10,000 gross ton
|Type of claim||Vessels without detention||Vessels with detention||All|