Archive for March 2010

Marine Insurance Counts the Cost of Increased Attacks by Pirates!

Unbelievably Marine Piracy continued to grow in 2009, which should be a sobering thought for all us sea dogs who like to roam the seven seas.

The ICC International Maritime Bureau’s Piracy Reporting Centre (IMB PRC) has just released it’s 2009 annual report and it makes bleak reading for insurance loss adjusters and marine insurance actuaries trying to set rates for 2010.

Piracy and armed robbery incidents topped 400 in 2009.

Incredibly in these days of satellite surveillance and Type 45 Destroyers,  incidents of Marine Piracy have grown from 239 in 2006 to 406 in 2009.

The total number of incidents attributed to the Somali pirates stands at 217 with 47 vessels hijacked and 867 crew members taken hostage.

Somalia accounts for more than half of the 2009 figures, with the attacks continuing to remain opportunistic in nature, with small high speed outboard land based vessels being used to pick off a certain type of easy target.

So what precautions against pirates are being taken?

All shipping and vessels in the gulf are required to transit the Somali coast in convoy with a minimum speed of 10 knots with absolutely no stops or slowing.

It is recommended to protect the boat with razor wire around the freeboard or the the lowest area of the deck.
Greased or electrified handrails have been used although the vessel owners are encouraged to use non-lethal deterrents to prevent the situations escalating.

Vessels that regularly transit the area even resort to welding doors shut and welding metal plates across windows. The return of the Iron Clads!

It’s quite obvious that America doesn’t want to get involved in the region after the Blackhawk incident, however it’s Insurance Blogger opinion that until very stern measures are taken against the major perpetrators, these attacks will continue and continue; and the cost of freight insurance and boat insurance will rise and rise……

Meanwhile……..

British Hostages Paul and Rachel Chandler, taken by Somalia Pirates, are spending their 159th day in captivity!

Hey Gordon Brown!

How about this for some political capital this Easter…….

NEWS FLASH!!!

We interrupt the Snooker final for a message from Prime Minister Gordon Brown..

” It is with great pleasure that I have to tell you that this morning a team of our finest Royal Marine Commandos, successfully carried out a mission to rescue Mr and Mrs Chandler. There were no British Casualties……”

Post Budget Blues or Pre Election Reds – Playing Risk with Your Future!

So Alisdair Darling delivered his pre-election budget to a crowd of disinterested Brits yesterday and effectively opened the floodgates for the six week marathon of Polls, Accusations, Taunts, Cajolery, Calumny and Political Bollocks that culminates with you putting your X in the box of damage limitation and patting yourself on the back for being Democratic. (Especially if you are from an extremist party such as the BNP)

So what are the choices?
Hmm – A pompous inexperienced public school prat of the Harry Enfield mold with zero social conscience or a one eyed Scot with questionable religious motives whose already been given the chance to ‘change’ things and failed miserably in some quarters!

Yep, I can hear you all shouting that there are other choices, but my yellow friends you are kidding yourselves. I want you to all return to your constituencies and prepare not to govern!

This is a straight Two horse race like it or not – although it may, like the pathetic Lib/Lab pact of the Seventies not decide the outcome at the first hurdle.
In fact with all these Tory created Strikes and Industrial actions leading up to the election I keep getting flashbacks that I’m in 1979…. God help us all….

So today unpolitical but always controversial Insurance Blogger, nails his colours firmly to the mast and asks you the British people…..

NOT TO VOTE FOR CHANGE !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Why?

Because in case you haven’t noticed the UK Economy is on the brink of slipping back into recession.

The Interest Rates need to be kept as close to zero for at least another five years if the Japanese Economy recovery experience of the Nineties is to be followed.

A Conservative Government would naturally interfere with Interest Rates and the Bank of England monetary policies.
The Conservative party simply cannot be trusted not to inflate the rates to protect their own and their core voters savings!
Look what happened to the UK the last time they were allowed to Govern!
Lest we forget that quickly?

SELLING ENGLAND BY THE POUND

The Bank of England who along with the major European Insurance Companies, are currently doing a mighty fine job of managing UK Debt.

Insurance Companies can’t buy enough UK Government debt in the shape of gilts!

The last offering of UK debt this month was 3 times oversubscribed as the Insurance Illuminati rushed to defend Britain!

It looks like the UK Government are managing the debt pretty soundly!

Truth is, where else do you put your money? Greece? The Euro??

So if Insurance Companies (who BTW own everything including the banks) have faith in the Status Quo – - then So do I!

A vote for Cuckoo Cameron would be utter Madness. Cuckoo BTW because he hasn’t got any policies of his own!

Answers, objections and biased opinions in the comment box below please!

X

Insurance Companies Blame 2009 Losses on Personal Accident & Bodily Injury Claims

We recently heard that rising Personal Accident and Personal Bodily Injury Claims were pushing up the prices of Car Insurance premiums, now as the major UK Insurance Companies take stock of 2009 with the final quarter results, it appears that rising bodily injury claims and an unusually kind hurricane season were the two biggest factors in the 2009 results published to date.

There has been a mixed bag of results in the insurance world this week as a variety of insurance companies have announced how they have fared across the last year.
One of the biggest impacts on the industry was the phenomenal upsurge in the rising cost of bodily injury claims – partly as a result of the recession and partly due to the increase in claims farmers.

Kris Oldland gives Insurance Blog a roundup of the 2009 UK Insurance results so far……….

The insurance arm of part nationalised bank Royal Bank Scotland was heavily hit with profits collapsing by 90% with £448m reserves being set aside for bodily injury (BI) claims.
The group which includes Direct Line, Churchill, Privilege and NIG – posted a drop in net income from £584m in 2008 to £54m last year. Chief executive Paul Geddes claimed that considering their size and risk exposure, 2009 was always likely to be a tough year saying that being “twice as big as anybody else, when the market sneezes we catch a cold.”

Of course many of the major operators within the personal lines market were hit particularly badly by the rising cost in BI claims although RSA managed to reduce the damage to just £30m by taking early action to counter the rising costs.
UK Chief Exec Adrian Brown admitted that “The hit to our result is fairly small compared with some of the other numbers being thrown around.”
He added “When it comes to bodily injury costs, you have to be massively up to date on claims; they are one of the things you have to watch like hell when you are cutting expenses and headcount.”

Another company that felt the impact of rising personal injury claims was the specialist car insurance company Equity Red Star who had a strong full-year profit of A$113m eroded away by bodily injury claims. Insurance Australia group (IAG) who own the company put a statement to market that read “A lower margin of 6.6% reflected reserve strengthening for prior-year bodily injury claims and weaker investment returns, both of which have been felt across the UK industry.”

Meanwhile Allianz have grown their operating profit in the last year by 5% climbing to £203m in the last year while the combined ration improved from 95.2% to 92.9% despite the obviously tough trading conditions.
A large part of the success has been down to Allianz’s hard line stance on driving rate rises of 24%. Chief executive Andrew Torrance predicted more of the same in 2010 commenting that “It remains a priority for in 2010 to increase premium rates to a level that provides an adequate return on the cost of capital.”

Other insurers posting impressive results for 2009 were Amlin and Hiscox who both had strong years due in large to the reasonably benign hurricane season.

Amlin were able to post combined operating ratio improvement from 76% to 72% although their results were padded out slightly by £174.1m in reserve releases whilst Hiscox insurer tripled profits before tax from £105.2m to £320.6m, in what chairman Robert Hiscox described as a “vintage” year.

Another Lloyd’s insurer to triple profits in 2009 thanks to the kind hand dealt by mother nature last year was Brit who increased profits to £171m although an uplift in investment returns of £137.4m last year from £7.4m in 2008 certainly would of helped also.

……..So it looks like a lot of people will be seeking big bonuses?

Apocalypse Now for Natural Disaster Insurance Claims

February 2010 has seen unprecendented natural disasters and as we head full steam towards December 2012, if those Mayan descendents and crusading followers of John’s Revelation are to believed, we have only just seen the beginning of the great losses as we plummet into the ‘End of Days!
Yeah OK! Insurance Blogger prefers predictions backed up with slightly more statistical analysis and insight……

however , a report released this week from Aon Benfield’s Impact forecasting team has predicted that the cost of recent natural disasters is likely to cost both the reinsurance and insurance sector billions.

The capital advisory unit provided the damning verdict in the latest edition of its Monthly Cat Recap report its regular analysis of worldwide catastrophic events. A combination of the Chilean earthquake, Windstorm Xynthia and savage winter conditions across the US and Europe in February has left many in the industry feeling the financial impact.

The magnitude 8.8 earthquake in Chile, the seventh strongest earthquake ever record, has devastated the South American country and has taken the life of at least 795 people. The tragic disaster follows only weeks on from the horrific Haiti earthquake disaster which has sadly now claimed over 200,000 lives.

However, it is the impact of the Chilean earthquake which may effect the tentative recovery of the global economy as the country has far more exposure to risk than the poverty stricken Caribbean island. With more than 1.5 million homes, buildings and other structures affected insured losses alone are set to be in single figure billions of dollars whilst the economic losses are expected to reach tens of billions of dollars. (USD)

There was further suffering in South America with flooding across four regions of Bolivia killing 15 people and more than 100,000 people having to abandon their homes. It is believed that well over than 35,000 homes have been damaged. Also in the continent 20,000 homes have been damaged or destroyed in Peru due severe flooding which also affected Uruguay and Argentina.

In Europe Windstorm Xynthia ravaged Spain, Portugal, France, Belgium and Germany causing damage right across western Europe and leaving close to two million homes without electricity. The report predicts that the insured losses resulting from the storm are expected to be in excess of 1.8 billion dollars (USD)

Meanwhile the heavy rains that soaked the continent were responsible for extensive flood damage in Bulgaria, Turkey and Italy. Greece’s current troubles were also deepened with 20,000 hectares of land flooded and damage to homes and infrastructure likely to cost approximately 10 million dollars (USD). Other areas hit by torrential rain and flooding were Madeira and Spain with reports of further lives being lost in Madeira and extensive property infrastructure damage resulting in reconstruction costs which are likely to approach 1.35 billion dollars.

The US too has also suffered severe winter storms as commentators suggest that the effects of climate change are beginning to take hold. Several key regions including Washington, New Jersey, Baltimore and Philadelphia which resulted in widespread blackouts and disruption to schools, airports, roads and railways. Over 35,000 claims have been filed in the US across February totalling 125 million dollars (USD)

With plenty of insurers posting strong financial profits after the benign hurricane season last year it seems Mother Nature is intent and making herself felt once again – or are we feeling as some would have us believe the first real effects of the climate change?

Either way February 2010 will be a month that will marked in history as a tumultuous and tragic year which has resulted in heavy costs both financial term and also tragically the loss of innocent life.