How Cargo Insurance is Changing with New Technologies Like AI, IoT, and Geopolitical Influences

 1. The global cargo insurance market reached $22.64 billion in 2024, growing 1.6% from 2023, and is projected to reach $106 billion by 2032 with a 4.1% CAGR. Europe leads with 37.68% market share, while Asia-Pacific grows fastest at 35.15% due to e-commerce and regional trade.

2. Geopolitical and environmental risks such as the Ukraine war, Red Sea disruptions, inflation, and climate-driven disasters (floods) have increased premiums and triggered stricter underwriting.

3. Common coverage includes fire, explosion, collision, storms, piracy, theft, mishandling, and salvage costs. Exclusions are inherent vice, ordinary leakage, delays, war, strikes, and cyber risks unless specifically added. Recent risk shifts include rising fire incidents from lithium batteries and EVs, surging cargo theft, more frequent floods, and cyberattacks like ransomware.

Non-life ILS capacity hits near-record high

1. The insurance-linked securities (ILS) market has enjoyed significant growth this year, with non-life capacity issued or outstanding at a near-record high, research by Willis Re has uncovered.

2. The findings show that there was $27.3bn (£21.2bn) of non-life capacity issued or outstanding at the end of the third quarter, exceeded only by the $27.8bn recorded for all of 2018.

Reinsurance Basics - Part 4 - Additional Info for Treaty and Facultative reinsurance

Continuation from below:

https://levelnineatwork.blogspot.com/2017/07/reinsurance-basics-part-1-factreaty-and.html

https://levelnineatwork.blogspot.com/2017/07/reinsurance-basics-part-2-pro-rata.html

https://levelnineatwork.blogspot.com/2017/07/reinsurance-basics-part-3-quota-share.html

Slight growth in Malaysia general insurance premiums (As at March 2019)

1. Motor continued to drive the local general insurance sector, which recorded a 1.5% growth, underpinned by the jump in car sales during the tax-free period from June to August.

Underinsured Opportunities and Overpaid Premiums

US LIFE INSURERS MISSING OUT ON $70BN IN PREMIUMS
1. The average life insurance policyholder in the US is massively underinsured, new research has found, with firms potentially missing out on almost $70bn (£53bn) in annual premiums.

Low Rates Of Business Claimants Winning Insurance Claims Dispute

1. A study of every court case related to primary business insurance disagreements between 2013 and 2018 shows that a whopping 68% went in the insurer’s favour.

2. It was also found that it takes an average of three years for commercial insurance disputes to be resolved, with settlements typically just three-fifths of the original amount claimed.

3. Nearly half of large claims are disputed, according to the research by governance experts Mactavish. 

4. Transport, manufacturing and construction the sectors most commonly affected.

Insurance Sector Global Reports

Compilation of reports and outlooks for 2017 - 2018 covering the global market, Malaysia's Takaful and Vietnam's growing insurance sector.

Blockchain and the Insurance Industry

The financial industry is at a “crossroad” and risks future growth if it does not adapt to changing consumer behaviour. By embracing blockchain, insurers can benefit from more efficient underwriting, the development of bespoke products, and a smarter way to process and manage claims.

BNM's Comments on the State of Malaysia's Insurance

Key points from governor’s Keynote Address at the Malaysian Insurance Summit (MIS) 2017.

Practical Considerations for IBNR Issues

1. Excess or shock claims, especially their timing, number and amount, are  examples of real world disruptions to a health actuary’s IBNR calculations. There are other outside Influences on Health Claim Reserves and Patterns

2. Shock claims have a material impact on completion factors produced by development IBNR calculation methods. Often the adjudication time for these excess claims is longer; thus, when they are paid, they can lower all paid lag month’s completion factors, raising the overall claim reserve produced. 

3. By incorporating the excess claim’s impact (e.g., lower completion factors), one is essentially providing an ongoing reserve for a similarly expected excess claim. Alternatively, in the rare case that the large excess claim is paid much faster than other claims, the resulting completion factors will be increased, thus lowering reserves, a likely unwanted result.

Reinsurance Basics - Part 2 - Pro Rata Quota/Surplus Share and XOL Treaties

1. As described earlier, pro rata, also called “proportional,” is a form of reinsurance in which the reinsurer shares a proportional part of the original losses and premiums of the ceding company. Pro rata forms are often used in property insurance, since this form provides catastrophic protection in addition to individual risk capacity

2. There are two distinct types of pro rata reinsurance - quota share and surplus share.

Reinsurance Basics - Part 1 - Fac/Treaty and Pro Rata/XOL

The purpose of reinsurance is to spread risk. This post provides a simple overview for those new to the industry.

Extending Falling Mortality Rates

1. It is a natural law that the historic longevity trend will continue into the future. 

2. Every stochastic mortality forecast model extrapolates the observed evolution of falling mortality rates.

3. What does it take to continue this trend? 

Understanding and Managing Anti Selection

One of the greatest threats facing life insurers is anti-selection (also called adverse selection or negative selection). Anti-selection occurs when an underwriting information deficit allows a higher-risk group (such as smokers) to purchase life or health insurance at the same price a lower-risk group (non-smokers)

Understanding Trade Credit Insurance

1. In April 2017, The Actuary reported trade credit insurers paid £210m to businesses last year due to non-payment claims, the equivalent of over £4m a week.

[Framework] IFRS 17 Insurance Contracts - Part 3 - PAA on liability for remaining coverage

1. The Premium Allocation Approach (PAA) is a simplification of the Building Block Approach (BBA) to measuring insurance contract assets and liabilities. The IASB developed the PAA as an approximation during the coverage period for a short duration contract.

2. It is an optional measurement approach for contracts of short duration under IFRS 17, prior to and during the exposure period of the contracts. 

3. This post focus on the liability before the occurrence of an insured event (liability for remaining coverage). There is no contractual service margin under the liability for incurred claims as by definition the contractual service margin is amortized over the coverage period of the contract.

4. The liability for incurred claims is measured using risk-adjusted expected present value of fulfilment cash flows.

[Framework] IFRS 17 Insurance Contracts - Part 2 - Remeasuring, Presentation and Impact

1. Remeasuring after subsequent period.

2. Presentation in Financial Statement

3. Impact on Insurers (Life and General)

[Framework] IFRS 17 Insurance Contracts - Part 1 - Summary and Features

1. IFRS 17: Insurance Contracts will take effect on 1 January 2021.  

2. The new standard will replace interim standard IFRS 4: Phase I for entities to continue with their current diverse practices of reporting insurance contracts. 

Eight Priority & Potential Markets Identified In the Insurance Industry

1. The Association of British Insurers (ABI) identified China and India as the top two priority markets for the UK insurance industry after leaving the EU.

2.In addition to China and India, Hong Kong (SAR), Indonesia, Japan, Malaysia, Singapore and South Korea have been identified as the eight markets with the highest potential for progress and growth.

Alternative Capital and Risk Transfer Trends

TYPES OF ALTERNATIVE CAPITAL MARKETS
1. Catastrophe Bonds - A risk-linked debt security that transfers a specified form of catastrophe risk from a company to investors.

2. Collateralized Reinsurance - A reinsurance agreement that is fully collateralized, typically by unrated third party capital

3. Side Cars - A limited purpose company created to assume a pre-defined portion of insurance policies from an issuing insurance carrier

4. Collateralized Industry Loss Warranty - A contract that pays out for events greater than a pre-defined loss threshold.