In the 2008 policy year, the following results were achieved in H&M business:
（１）The insured value of entered ships increased significantly.
Despite some Members reducing the values of ships insured, a significant increase in the overall insured value was still achieved in 2008. This can be attributed to Members (e.g. Cosco Bulk Carriers Co. Ltd, Hebei Ocean Shipping Co. Ltd) having bought in large vessels of high quality in the beginning of 2008 when the shipping market was thriving.
（２）The number of entered ships was kept at a stable level.
（３）The quality of the fleet insured improved greatly.
The average age of entered vessels was 14.06 years. Compared to those of the 2007 policy year, the average age of entered vessels decreased by 1.37 years. The condition of fleet insured was somewhat improved..
（４）The H&M insurance has won approval from Members
In the 2008 policy year, there were new
Members joining in the Association. In addition, the existing Members especially
Members in the Board of Directors, (such as Cosco Bulk Carriers Co. Ltd, Cosco
(H.K.) Shipping Co. Ltd., China Shipping Tanker Company) also contributed more
high quality tonnage to the Association.
In the 2008 policy year, the Managers took active
control of the level of underwriting and implemented the following measures to
make the underwriting more effective:
（１）Striving to obtain more beneficial reinsurance terms and reduce the reinsurance cost by keeping self-retention and investing in the reinsurance;
（２）Strict implementation of the Board of Directors' and the Hull committees' decisions to adjust the renewal premium;
（３）Adjusting underwriting conditions in accordance with the insurance market; and
（４）Improving efficiency in claim handling and actively mitigating losses.
The implementation of these measures achieved distinct results. The H&M business achieved surplus in five consecutive years.
１．Underwriting
As at 31st December 2008, 121 ships from 22 members, with a total insured amount of US$3.184 billion were insured by the Association for Hull & Machinery Risks (including IV Risks). Compared with 2007, there was an increase in membership of 4.76% in the 2008 policy year, whilst the number of entered ships decreased by 3.2%. However, the total insured value increased by 34.4%.
|
|
2007 |
2008 |
Change in % |
|
Number of Members |
21 |
22 |
4.76% |
|
Number of Entered ships |
125 |
121 |
-3.2% |
|
Total Insured Amount (in
US$100million) |
23.69 |
31.84 |
34.4% |
|
Number of Claims |
80 |
81 |
1.25% |
Note: The total insured amount includes those under HM cover and IV cover ( but excludes War Risks cover).The statistical period starts from 1st January to 31st December of the relevant policy year
２．Reinsurance
Although there had been very few serious claims, the loss record of the Association in the reinsurance programme continued to deteriorate in the last three years before 2008. The international reinsurance market also suffered significant losses, due to the direct and indirect impact of the events of “9/11” event and various global natural disasters (such as hurricanes), which, in turn, resulted in the reduction in the numbers and capacity of reinsurers. As a consequence, the Association’s efforts to improve its reinsurance conditions yielded less than satisfactory results.
The renewal itself was a difficult one, in which the Association had to rely on loss record. We successfully persuaded the reinsurers to give up their unmatched premium demands in the end, and moreover, a great many Members raised the insured value at the beginning of 2008. The reinsurance costs were increased by 66%.
３．Claims Handling
As at 31st December 2008, the Association had received 79 claims under Hull & Machinery risks, a decrease of 1.25% compared to the 80 cases in the policy year 2007. The total liability of the Association for these claims is estimated at US$ 6.74 million, representing a significant decrease of 48.1% from the US$ 13.01million in the 2007 policy year.
|
|
2006 |
2007 |
2008 |
Change in Nu. |
Change in % |
|
Number of claims |
67 |
80 |
79 |
-1 |
-1.25% |
|
Total Claimed amount (in US$ million) |
7.57 |
7.23 |
8.33 |
1.1 |
15.2% |
|
Estimated Liability (in US$? million) |
6.11 |
13.01 |
6.74 |
-6.27 |
-48.1% |
Claims settled |
28 |
27 |
24 |
-3 |
-11.1% |
Note: Estimated Liability = Liability pending + Paid-up
In the 2008 policy year, there were 3 major claims with estimated liabilities exceeding US$ 400,000.
US$, 000s
|
|
Vessel |
Member |
The Date |
The Place |
The Nature |
The Amount |
|
1 |
Lian Hua Feng |
China Shipping Tramp Company |
|
Zhoushan |
Collision |
250 |
|
2 |
Da Yue |
Shandong Far East Marine Group
Co. Ltd |
|
? |
Collision |
53 |
|
3 |
Le Shan |
Cosco Shipping Co. Ltd. |
|
|
FFO |
55 |
４．Operational Results
There was great improvement in the claims record during the 2008 policy year. Despite of the significant increase in the reinsurance costs, there remains a surplus of US$ 5.13 million. This is the fifth consecutive year ?that H&M business has retained a surplus.
5.Financial Statements
According to the Audit Report of 2008, as at 31st December 2008, free reserves of the H&M insurance is US$ 25.31 million, which is an increase of US$ 5.94 million compared to that of the previous policy year, an increase rate of 30.7%. This is a substantial achievement for the Association in respect of capacity of underwriting and risk resistance.