The document discusses five emerging underwriting trends for marine insurers, highlighting significant concerns such as marine cyber risk, political risk, and increasing severity of losses due to larger vessels and extreme weather. It emphasizes the need for effective risk management and awareness of exposures in marine businesses, particularly with the rise of cyber threats. Insurers are urged to prepare for the evolving landscape of risks, which now include complex issues like cyber attacks and political sanctions impacting the marine and shipping industries.

1. SOS
That Are Changing the Rules in 2015
Five Emerging Underwriting Trends
for Marine Insurers

2. The Wide Wake of Larger Vessels
Increasing severity of losses
Marine Cyber Risk
Extreme Weather
Political Risk and Trade Sanctions
Emerging
Marine
Underwriting
Issues

3. 85% of executives cite Cyber
Risk as a top concern.
Marine businesses are at greater risk of Cyber attack.
Source: AIG Study
Is your policy language clear with
respect to Cyber Risk?
In addition to the data breach potential,
exposures include: property damage,
bodily injury, business interruption and
third-party liability.
The list of potential exposures is
growing faster than the ability to
manage the financial and reputational
risk that can result.
MARINE CYBER RISK

4. Vessels and Offshore Platforms
Is your insured even aware of this risk?
Marine businesses are at greater risk of Cyber attack.
MARINE CYBER RISK
Researchers have found significant
holes in navigation systems security
(GPF, AIS, ECDIS).
“Every ship has a back door—
communication lines.”
— Markus Wahler,
Marine Cyber Consultant

5. Cargo
What do risk management teams need
to be doing today?
Marine businesses are at greater risk of Cyber attack.
MARINE CYBER RISK
“Shipping and supply chains are
the next targets for hackers.”
— International Maritime Bureau

6. Ports
Do your underwriters understand
these exposures?
Marine businesses are at greater risk of Cyber attack.
MARINE CYBER RISK
Ports represent significant
vulnerabilities in essential trade
infrastructure, according to the
Brookings Institute.

7. POLITICAL RISK AND
TRADE SANCTIONS
U.S., EU and UN identify shipping as
important to sanction objectives.
Marine and Aviation industries
pose the highest risk for insurers.
Political Risks should be a major concern for Marine insurers.

8. Criminal Charges Fines Reputation Potential Breach
of Contract
Are you comfortable with your organization’s risk controls?
POLITICAL RISK AND
TRADE SANCTIONS
“Underwriting”
Risks of trade sanctions

9. What is your exposure when things
go wrong?
Cargo and Hull sums insured are
quickly approaching $1B to $2B at risk
on larger vessels.
Concentration of Risk
THE WIDE WAKE OF
LARGER VESSELS
Economies of Risk:

10. Economies of Risk:
Are you prepared for these events?
THE WIDE WAKE OF
LARGER VESSELS
Occurring more frequently and
costing more.
Risk size, environmental sensitivity
of the public, politics and limited
response infrastructure are all
contributing factors.
Salvage and Wreck Removal

11. Economies of Risk:
Do you have enough reinsurance limit?
THE WIDE WAKE OF
LARGER VESSELS
Arrivals are less predictable due to
slow steaming and, once in port, larger
vessels are tying up facilities longer.
The resulting increase in average
daily values in port can increase even
more quickly than the rate in growth of
the vessels themselves.
Port Congestion

12. 0
1
2
3
4
5
6
7
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Number of Claims
2000
1999
1998
1997
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1,200
1,000
800
600
400
200
Serious Ex TL
Total Loss
Number of Incidents
0
Source: Cefor Statistics Forum, IUMI Facts and Figures Committee, Lloyds List Intelligence, Clarkson Research, August 2014
Note: Total Losses as Percentage of World Fleet, Vessels > 500 GT
INCREASING SEVERITY
OF LOSSES
Claims in Excess of $30M USD Serious and Total Losses
Larger vessels are producing fewer total losses, but much higher partial losses.

13. INCREASING SEVERITY
OF LOSSES
Greater complexity and exposure
leading to significant claims handling uncertainty.
Contributing Factors:

14. EXTREME WEATHER
$47
$29
$15
$4
Billion
Billion
Billion
Billion
U.S. (Katrina)
U.S. (Sandy)
Thailand Flooding
Europe Flooding
2005
2012
2011
2012
Source: Central Europe Flooding, “Povodne v Praze, 30.jpg” by Jargo/CC BY-SA 3.0.
Climate change is a reality.
Are you managing Catastrophe
exposures or just modeling them?
Insurers of cargo, pleasure yachts,
marinas, boat builders and boat dealers
need to prepare for a higher frequency
of larger storms and the implications
for their portfolios, such as wind, flood
and storm surge.
Most static Marine exposures
are located near the coast.

15. In today’s uncertain global
environment, the threats and
challenges for marine insurers
will only increase.

16. New exposures, such as Cyber and
Political Risk, continue to evolve on a
daily basis.

17. Cargo and vessel limits and other
Marine loss scenario exposures
continue to grow faster than the ability
to respond post-loss.
New exposures, such as Cyber and
Political Risk, continue to evolve on a
daily basis.

18. Cargo and vessel limits and other
Marine loss scenario exposures
continue to grow faster than the ability
to respond post-loss.
Will we experience another resulting
surge in serious and total losses when
the global economy picks up speed,
as we did from 2004–2007?
New exposures, such as Cyber and
Political Risk, continue to evolve on a
daily basis.

19. Growth in coastal Marine exposures
continues to outpace the economy
overall, and in the most vulnerable
locations.
Cargo and vessel limits and other
Marine loss scenario exposures
continue to grow faster than the ability
to respond post-loss.
Will we experience another resulting
surge in serious and total losses when
the global economy picks up speed,
as we did from 2004–2007?
New exposures, such as Cyber and
Political Risk, continue to evolve on a
daily basis.

20. Are you prepared?

21. © 2015 General Re Corporation | This presentation is intended to provide background information for our clients and professional staff.
It is time sensitive and may need to be revised and updated periodically.
When you’re ready to tackle these issues with
a reinsurer that understands and accepts risk
every day, we are here to help.
Jonathan Ball
+1 203 328 5748p
jball@genre.come
/in/jonathanfballin
@jonathan_f_ballt