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Hull Products.pptx

  1. 1. THE HULL INSURANCE - SUPERVISED BY : DR. SARAH MAZHAR - SHORT-TERM ACTUARIAL MATHEMATICS II
  2. 2. Hull Story Coverage & Limits Market Competition Underwriting Claims Profitability COVID-19
  3. 3. HULL AND MACHINERY INSURANCE  What it is? - Type of marine insurance providing damage protection for the ships and the machinery which is part of them. - Hull:-it means the body of the ship(outer portion) - Machinery: -like engine, boiler etc.
  4. 4. - The oldest forms of insurance. - The first formal marine insurance policy that we would recognize today as such was from 1350,” said Rod Johnson, director of marine risk management at RSA Global Risk, a major UK underwriter. - In the 20th century, The English Marine Insurance Act 1906 In England - Goal : regulate contracts and insurance policies. STORY :-
  5. 5. BASIC COVERAGES AND LIMITS - The usual limit is 25% of insured value of the vessel under the Hull insurance - Covers accidental loss or damage to ships - Total loss of the ship - Partial damage to the ship - Explosion or fire - Collision : Liability can be sustained to the ship or toward the other ship - Striking other objects . BASIC COVERAGES AND LIMITS
  6. 6. - Marine shipping companies are the best target market - Particularly, the ships that visit Egypt and Suez cannel. - The Evergreen ship accident ! TARGET !
  7. 7. Distribution channels:- - Direct sales : insurers sell insurance products directly to a consumer without an intermediary > Gives complete control of how the product is managed and delivered to the end user - SME : Small Medium Size : customized plans with great deal of flexibility usually by authorized Agents to meet the needs of the customers
  8. 8. COMPETITION:- Suez Canal AXA Royal Insurance Allianz- Miser Insurance Tokio Marine Egypt GIG
  9. 9. OUR STRATEGY - Provide new service to the businessmen with competitive prices. - Example : - - Egypt is self sufficient in natural gas. It has reached 8 billion dollars during 2021-2022 - It is 13 times higher than the exports amount of 2014 - Vessels that will collaborate with the Egyptian government to export gas will get extra discounts. - Those companies that will export gas to Europe will get extra discount, less premiums, more contract and more encouraged companies from Europe and Ukraine
  10. 10. UNDERWRITING:- - What is it? Types… ! - How underwriting works? - How are risks assessed? - How does insurance companies avoid anti-selection?
  11. 11. UNDERWRITING:- - Underwriting : the process of determining whether or not to accept a risk - If so, what amount of insurance the company will write on the acceptable risk, and at what rate - Underwriters : companies, individuals
  12. 12. UNDERWRITING:- Determining premiums is complicated because each policyholder has a unique risk profile. How :- - Evaluate historical loss for risks - Examine the risk profile of the potential policyholder - Estimate the likelihood of the policyholder to experience risk and to what level. - Based on this profile, the insurer will establish a monthly premium.
  13. 13. UNDERWRITING:- - State insurance regulators attempt to limit the potential for catastrophic losses by requiring insurers to maintain sufficient capital. Regulations prevent insurers from investing all the premiums, which represent the insurer’s liability to policyholders, in risky or illiquid asset classes. - These regulations exist because one or more insurers becoming insolvent due to an inability to pay claims, especially claims resulting from a catastrophe, such as a hurricane or a flood, can negatively impact local economies.
  14. 14. UNDERWRITING | HOW IT WORKS - An insurance contract represents a guarantee by an insurer that it will pay for damages and losses caused by covered perils. Creating insurance policies or underwriting typically represents the insurer’s primary source of revenue. By underwriting new insurance policies, the insurer collects premiums and invest the proceeds to generate profit.
  15. 15. UNDERWRITING | HOW IT WORKS - An insurance contract represents a guarantee by an insurer that it will pay for damages and losses caused by covered perils. Creating insurance policies or underwriting typically represents the insurer’s primary source of revenue. By underwriting new insurance policies, the insurer collects premiums and invest the proceeds to generate profit.
  16. 16. Anti selection - Adverse selection is when one party( insurer or insured has more knowledge and information than the other party. - Example: - Vessels with hidden cracks
  17. 17. In a moral hazard situation, the change in the behavior of one party occurs after the agreement has been made Moral hazard !!!!
  18. 18. How to avoid anti selection:- 3 ways - Identification & quantification of risk factors - Renewed system to Reverify the information provided by insurance applicants from time to another - limits, or ceilings, on coverage
  19. 19. CLAIMS:- Claiming process : - Easy/ Complex is the claiming process depends on the case and the investigation - As a claim it is easy, but reaching a settlement can be complex sometime -Connect.. - Claim investigation begins. - Your policy is reviewed. - Damage evaluation is conducted. - Payment is arranged.
  20. 20. Example :- The worst such accident—indeed, the deadliest civilian maritime disaster in history—occurred on December 20, 1987, when the passenger ferry MV Doña Paz collided with the oil tanker MT Vector in the Tablas Strait, roughly 110 miles (180 km) south of Manila. Eager to reach their destinations prior to the Christmas holiday, an estimated 4,300 people (more than double the ship’s official capacity) had crowded onto the Doña Paz prior to its departure from Tacloban, Philippines. At the time of the collision, no senior officers were on the bridge of the Doña Paz, the Vector was traveling without a lookout, and it is likely that both ships lacked a functioning radio. Despite clear visibility and relatively calm seas, neither ship gave any indication that it was aware of the other. The collision ignited the 8,800 barrels of oil and gasoline on the Vector, and both ships were quickly engulfed in the blaze. Of the more than 4,400 passengers and crew on both ships, just 26 people were rescued from the oil-slicked waters.
  21. 21. PROFITABILITY - An insurer’s profitability depends on how well it understands the risks it insures against and how well it can reduce the costs associated with managing claims. - The amount an insurer charges for providing coverage is a critical aspect of the underwriting process. - The premium must be sufficient to cover expected claims but must also take into account the possibility that the insurer will have to access its capital reserve.
  22. 22. PROFITABILITY:- - On average, premiums are a percentage of your hull amount. They average from 1% – 3% normally. So a $200,000 boat with a 1% rate would cost $2,000 to insure or a $100,000 boat with a 3% rate would be $3,000 to insure Rate :- - Age of vessel – newer boats get lower rates - Type of construction - Navigation area
  23. 23. PROFITABILITY - The nature of the product is profitable. The cost may be high, but the frequency is low. - The hull insurance is working in most cases, even if there are stops as those is Covid-19 - Covid-19 affected the hull insurance for the new companies, but previous ones had their contracts from before. - Few companies may consider not to renew the contract due to covid-19 BUT: - They get back and thus companies will continue to insure themselves. - Technology has made it easier to avoid accidents and maintain vessels, thus less accidents are expected. - Local and international companies are more and more and more shipping through the sea, so, more premiums are expected thus, more profit too
  24. 24. ESTIMATION :
  25. 25. SOURCES: - https://www.dripcapital.com/resources/blog/marine-insurance-meaning-types-benefits - https://www.britannica.com/topic/hull-insurance - https://riskandinsurance.com/brief-history-marine-insurance/ - https://www.investopedia.com/terms/u/underwriting- risk.asp#:~:text=Insurers%20will%20evaluate%20historical%20loss,will%20establish%20a%20monthly%20premium. - https://www.slideshare.net/JubayerAlamShoikat/marine-insurance-168347280 - https://www.youtube.com/watch?v=L8u_aMjs8tE - https://www.linkedin.com/pulse/quick-glance-history-maritime-insurance-marcos-quintano-escapa/ - https://www.amt-insurance.com/en/insure/water/hull-and-machinery/ - https://www.reinsurancene.ws/worlds-largest-insurance-companies/ - - https://www.researchandmarkets.com/reports/5394277/marine-insurance-market-by-type-distribution - https://insuremydrone.net/hull-coverage-insurance-explained/ - https://www.investopedia.com/terms/u/underwriting- risk.asp#:~:text=Insurers%20will%20evaluate%20historical%20loss,will%20establish%20a%20monthly%20premium. - https://www.slideshare.net/anon27/types-of-marine-insurance-contracts - https://www.petronav.net/container-ships-for-sale - https://securenow.in/insuropedia/what-is-marine-hull-insurance-policy/#:~:text=Covers%20cargo%20while%20in%20transit,loss%20or%20damage%20to%20cargo

Editor's Notes

  • An insurance claim is a request filed by a policyholder to a provider asking for compensation for a covered loss
  • Rate :-
    Age of vessel – newer boats get lower rates
    Type of construction
    Navigation area

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