The claims numbers and cost into the International Group (IG) Pooling structure between 1995 and 2016 (as at August 2016) are shown in the graph below.
In this Review, reference to 'Pooling' includes all areas where the IG collectively shares the risk, either directly through the Pool or via Hydra in the Pool and the co-insurance layer. For example, Pool claims in 2016 would be those claims greater than USD 10 million and up to USD 80 million.
For the first 10 years of this 22 year period, total Pool costs averaged at a reasonably predictable level of just over USD 150 million per year. 2004 showed the first signs of a change in this trend and over the more recent 11 years the pattern has been of significantly greater volatility and considerably higher average annual Pool costs (for the period 2005 to 2015 the average Pool cost was more than double the previous decade, at just over USD 360 million per year).
In the most recent spike in total Pool claims cost (2011 to 2013) there is an interesting lack of correlation between number of Pool claims and the aggregate cost.
Between 2003 and 2007 the number of Pool claims more than doubled (from 20 to 42 per year). This was during a period where shipping was booming and where almost every type of vessel was under considerable time pressure. The surge in number of claims and the corresponding increase in total cost of claims were therefore predictable.
Pool Claims as at 20 August 2016
Since 2008, in a relatively subdued period for shipping, the trend is again as expected in that the numbers of Pool claims fell back to historically 'normal' levels (around 20 claims per year). The potentially concerning aspect however is that between 2011 and 2013, while the number of incidents remained modest, the total cost of Pool claims surged to similar levels last seen in 2006 and 2007.
The current year (2016/17) figures as at August 2016 are around the same level as 2015/16 was at the same point last year. It is clearly much too early to make any sensible predictions about the eventual cost of the current year.