international group and the pooling system
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International Group and the pooling system. Lars Nilsson The Swedish Club. The Nordic Association of Marine Insurers. The International Group. Goals for this session Get an understanding for how the International Group is organized - PowerPoint PPT PresentationTRANSCRIPT
International Group and the pooling systemLars Nilsson
The Swedish Club
The Nordic Association of Marine Insurers1The Nordic Association of Marine Insurers
2
The International Group
Goals for this session
Get an understanding for how the International Group is organized
Understand the basic functions of the Pooling system and the Group reinsurance structure
3
The International Group
The Group
Comprises 13 non-profit-making mutual insurance associations (“Clubs”)
which insure third party liabilities relating to the use and operation of ships
and insure over 90% of world ocean-going tonnage – excess of 900 million tons and excess of 50,000 vessels
and insure over 95% of ocean-going tankers
with a total Group premium 2013 of USD 3,5 billion
4
The International Group
History
1855 First P&I Club - Today known as Britannia
First Pooling Agreement 1899. Six British Clubs – London Group
Reinsurance Contract 1951
Limited policy 1995
Hydra captive 2005
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The International Group
Current principal underwriting Group members American Steamship Owners Mutual Protection and Indemnity
Association, Inc Assuranceforeningen Gard Assuranceforeningen Skuld The Britannia Steam Ship Insurance Association Limited The Japan Ship Owners' Mutual Protection & Indemnity Association The London Steam-Ship Owners’ Mutual Insurance Association Limited The North of England Protection and Indemnity Association Limited The Shipowners' Mutual Protection and Indemnity Association
(Luxembourg) The Standard Steamship Owners’ Protection and Indemnity Association
(Bermuda) Limited The Steamship Mutual Underwriting Association (Bermuda) Limited The Swedish Club United Kingdom Mutual Steam Ship Assurance Association (Bermuda)
Limited The West of England Ship Owners Mutual Insurance Association
(Luxembourg)
11%4%
8%
10%
12%16%
5%3%
6%
13%
2%9% 1%
BritanniaLondonSkuldStandardUKGardWestSwedishSteamshipNorthShipownersJapan
The International Group
Group members – Tonnage 2013
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The International Group
Group functions to co-ordinate the operation of the claims pooling agreement for
claims in excess of the individual club retention ($9m) and the collective reinsurance for the Group clubs ($80m - $3.08bn)
to provide a forum for the Group clubs to develop common policy and promote shipowners’ interests in relation to liability and insurance issues
to provide a useful forum for sharing information on matters of concern to clubs and their members.
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The International Group
Underlying agreements
Constitution (amended 2006)
International Group Agreement “IGA” (amended 2013)
Pooling Agreement (renewed annually)
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The International Group
Constitution
the objects of the group
membership
appointment of officers, sub committees and working groups
organisation of group meetings
Resignation, cessation and expulsion
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The International Group
International Group Agreement (“IGA”)
vessel quotation procedures
references to the committee / reduced pooling facility
release calls
disclosure of average expense ratio (AER)
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The International Group
Pooling Agreement pooling/poolability of claims
excluded risks and losses
Individual club retention
basis of contribution to pool claims
individual/collective reinsurances
overspill provisions
Provision for new applicants to the pool
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The International Group
Group organisation the activities of the Group are co-ordinated through the Group
secretariat based in London
the work of the Group is carried out by the secretariat and by club managers in sub-committees and working groups which formulate policy recommendations for consideration by boards
the Group managers meet three times each year to co-ordinate the work of its sub-committees and working groups
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The International Group
Bills of lading Claims Co-operation Compulsory 3rd Party Liability
Insurance Capital Adequacy Maritime Security Confirmation of Entry Personal Injury Pilotage
Pollution Regulatory Affairs Reinsurance Representation Salvage Ships’ Standards Ship Technical War and Terrorism
More than 90 sub-committees and working groups, including:
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The International Group
Group policy positions
the Group’s policy positions are set by club boards who report through their managers into the Group – Group managers do not make Group policy – Shipowners do
need to reflect the wishes, sometimes conflicting, of different industry sectors
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The International Group
Challenges and issues
The EU investigation Sanctions legislation and regulation Piracy Cargo concerns
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The International Group
Summary of benefits provided by the Group system
Unparalleled range and limits of cover
Guaranteed prompt security / payment of compensation to victims
Experienced and effective casualty and claims management
Promotion/implementation of ship standards and safety measures
Further information at www.igpandi.org
Reinsurance -PoolingReduced volatility
The International Group
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The International Group
Reinsurance – Pooling
Reinsurance based on risk transfer
Pooling will normally not provide risk transfer
Mechanism to regulate the payback
Time value of payments
The International Group
SELENDANG AYU – USD 100 million
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COSCO BUSAN – USD 209 million
The International Group
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HEBEI SPIRIT – USD 218 million
The International Group
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RENA – USD 350 million
The International Group
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COSTA CONCORDIA – USD 1,600 million
The International Group
The International Group
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The International Group
Pooling Agreement Lower Pool Layer USD 36M XS USD 9M
Upper Pool Layer USD 15M XS USD 45M (90%)
Upper Upper Layer USD 20M XS USD 60M (95%)
Share of Pool dependent on volume and result
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The International Group
Reinsurance structure
General Excess Loss R/I Contract
Three layers (2x$500m and 1x $1bn) excess of $80m
Unlimited Reinstatements
Oil pollution two layers (2x$500m) limited to $1bn
Charterers P&I and oil pollution $270m excess of $80m
Collective Overspill Layer $1bn, one reinstatement
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The International Group
Reinsurance Capacity
over 90 participating reinsurers worldwide
security guidelines limit participation per layer and overall
Minimum credit rating agency requirements for participants A- stable
Downgrading and consolidation within reinsurers increases default exposure
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The International Group
Hydra Insurance Co. Ltd
Single cell Bermuda captive established 2005
1 cell per club
Reinsures pool $30-80m layer and 30% of GXL layer 1
Strategic response to market pricing and capacity volatility
Long-term commitment
The International Group
Rena
Gross Claim 350 000 000Club Retention 8 000 000Pool 22 000 000Hydra 30 000 000Group XL Cover/Hydra 290 000 000
Total Club retention
Club Retention 8 000 000Share of Pool 6,8% 1 500 000
9 500 000
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The International Group
What have we achieved?
Discovering the function of the international Group
Understanding of the Group Pooling and reinsurance system
Understanding the difference between Pooling and reinsurance