26 Lars Malm

download 26 Lars Malm

of 30

Transcript of 26 Lars Malm

  • 7/27/2019 26 Lars Malm

    1/30

    with you all the time

    Mechanical Failure

    the facts

    Lars A. MalmDirector, Team Management

  • 7/27/2019 26 Lars Malm

    2/30

    IMCC, Dublin October 2007

    Question No. 1

    What claims category accounts for the highestaggregated claims cost?

    A: Collisions

    B: Groundings

    C: Machinery

  • 7/27/2019 26 Lars Malm

    3/30

    IMCC, Dublin October 2007

    Hull & Machinery:

    Claims by cost 1998-2006

    9%

    21%

    20%

    31%

    6%10% 3%

    Heavy Weather

    Contact

    Collision

    Grounding

    Machinery

    Fire/Explosion

    Other

  • 7/27/2019 26 Lars Malm

    4/30

    IMCC, Dublin October 2007

    H&M Claims 1998-2006

    Claims type Number Total Cost (USD) Avg. Cost (USD)

    Heavy Weather 101 27 310 050 270 397

    Contact 261 72 871 936 279 203

    Collision 214 176 987 490 827 044

    Grounding 202 164 898 053 816 327

    Machinery 867 263 390 668 303 795

    Fire/Explosion 32 48 807 117 1 525 222

    Other 190 88 348 286 464 991

    Total 1867 842 613 599 451 320

  • 7/27/2019 26 Lars Malm

    5/30

    IMCC, Dublin October 2007

    H&M claims and trends, 1988-2006

    521486 464

    376430

    505

    629664 650 672 664 657 642

    788

    1071

    910

    1190

    1475

    1570

    233 237 265

    121160

    118 127 143 146 131 142 137 112

    192242

    180233

    303 306

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1800

    88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

    0%

    5%

    10%

    15%

    20%

    25%

    30%35%

    40%

    45%

    50%

    55%

    60%

    Club entry (No.) H&M Claims (No.) H&M Claims share of Club entry (%)

  • 7/27/2019 26 Lars Malm

    6/30

    IMCC, Dublin October 2007

    Machinery claims, by cost 1998-2004

    43%

    10%14%

    8%

    23%

    2%

    Main engine

    Steering gea r

    Aux . engine

    Boi lers

    Propulsion

    Other

  • 7/27/2019 26 Lars Malm

    7/30

    IMCC, Dublin October 2007

    Machinery claims 1998-2006

    Claims type Number Total cost (USD) Avg. cost (USD)

    Main engine 354 112 514 417 317 837

    Steering gear 82 25 207 818 307 412

    Aux. engine 166 35 854 708 215 992

    Boilers 85 21 749 083 255 872

    Propulsion 119 58 454 623 491 215

    Other 19 4 047 198 213 010

    Total 825 253 780 650 307 613

  • 7/27/2019 26 Lars Malm

    8/30

    IMCC, Dublin October 2007

    Main Engine claims and trends, 1988-2006

    521486 464

    376430

    505

    629664 650 672 664 657 642

    788

    1071

    910

    1190

    1475

    1570

    32 34 49 20 29 26 21 26 28 19 21 22 15 39 43 2567 66 50

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1800

    88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

    0%

    5%

    10%

    15%

    Club entry (No.) ME Claims (No.) ME Claims share of Club entry (%)

  • 7/27/2019 26 Lars Malm

    9/30

    IMCC, Dublin October 2007

    Investigation details

    z

    Period: 1998 2006z Number of claims: 354

    z Based on our fleet.

    z NB! Deductible avg. $110 000z Claims >=$10 000

  • 7/27/2019 26 Lars Malm

    10/30

    IMCC, Dublin October 2007

    Main engine claims, by cost 1998-2006

    28%

    19%8%4%

    7%4%

    3%

    3%

    24%

    Turbocharger

    Crankshaft, Con Rod

    Cylinderl iner

    Entablature, Staybolts

    Journal, Bearing

    Fuelpum p, Gears

    Cam shaft, Coupl ing

    Piston, Piston rodVarious

  • 7/27/2019 26 Lars Malm

    11/30

  • 7/27/2019 26 Lars Malm

    12/30

    IMCC, Dublin October 2007

    Question No. 3

    Of the Clubs total number of entries for H&M, what isthe proportion of Low Speed main engines respectively

    Medium Speed main engines?

    A: Low Speed 20% Medium Speed 80%

    B: Low Speed 60% Medium Speed 40%

    C: Low Speed 80% Medium Speed 20%

  • 7/27/2019 26 Lars Malm

    13/30

    IMCC, Dublin October 2007

    Percentage of Club entry and damage cost

    (1998 - 2006)

    80,3%

    19,7%

    57,8%

    42,2%

    0,0%

    10,0%

    20,0%

    30,0%

    40,0%

    50,0%

    60,0%

    70,0%

    80,0%

    90,0%

    Low speed Medium Speed

    Club Entr y

    Cost

  • 7/27/2019 26 Lars Malm

    14/30

    IMCC, Dublin October 2007

    Cost per ship and year (USD) 1998 - 2006

    9 141

    27 094

    0

    5 000

    10 000

    15 000

    20 000

    25 000

    30 000

    Low speed Medium Speed

    Cost (USD)

  • 7/27/2019 26 Lars Malm

    15/30

    IMCC, Dublin October 2007

    Types of main engine claim: all

    Claims type Number Total

    cost (USD)

    Avg. Cost

    (USD)

    Turbocharger 135 32 409 706 240 072

    Crankshaft,Con Rod

    30 22 655 684 755 189

    Cylinderliner 31 9 126 286 294 396

    Journal,Bearing

    22 8 398 832 381 765

    Entablature,

    Staybolts

    19 4 130 803 217 411

    Fuelpump,Gears

    17 4 804 472 282 616

    Camshaft,Coupling

    12 4 100 955 341 746

    Piston, Pistonrod

    14 3 971 266 283 662

    z The eight most common main

    engine claims types.z In terms of numbers and total cost,

    turbocharger damage remained themost common and costly claimscategory, accounting for 135 of the

    354 claims and USD 32.4 million ofthe USD 117.7 million total cost.

    z 104 of the 135 turbocharger claimsinvolved low speed engines.

    z Crankshaft & connecting rod failures

    was the second most common andexpensive damage category. Interms of average cost, these failuresproduced the most expensive claims(USD 755,000/damage).

  • 7/27/2019 26 Lars Malm

    16/30

    IMCC, Dublin October 2007

    Types of main engine claim: low and

    medium speed 1998-2006

    Claims type Number

    Total cost

    (USD)

    Avg. Cost

    (USD)

    Turbocharger 104 27 869 016 267 971

    Entablature,Staybolts

    19 4 130 803 217 411

    Cylinderliner 28 8 291 734 296 133

    Journal, Bearing 13 3 906 343 300 488

    Piston, Pistonrod

    9 2 348 233 260 915

    Claims type Number Total cost(USD)

    Avg. Cost(USD)

    Turbocharger 31 4 540 689 146 474

    Crankshaft,Con Rod

    27 19 496 058 722 076

    Camshaft,

    Coupling8 3 451 850 431 481

    Journal,Bearing

    9 4 492 490 499 166

    Fuelpump,Gears

    7 1 023 196 146 171

    Slow speed Medium speed

    z The tables above show the five most common claims for low speed and medium speed engines.z Turbocharger damage is the most common and expensive failure event for low speed engines.

    z Crankshaft and connecting rod damage is the most expensive medium speed engine failurecategory. There were 27 such claims in 1998-2006, costing USD 19.5 million.

    z The table to the left also shows that, on an average cost basis, damage to the Journal or Bearingsis the most expensive claims type (at USD 300,500).

    336 877

    983 683

    Avg.05-06 Avg.05-06

  • 7/27/2019 26 Lars Malm

    17/30

    IMCC, Dublin October 2007

    Turbochargers who or what is at fault?

    z 135 damages average costUSD 240 000

    z 40% of claims not related to turbine

    foreign objects.

    z Medium speed engine over-represented in number

    z Running hours Strictly adhere tothe makers instruction

    z Total cost for damages 1998-2006: USD 32 400 000

    z ABB SEKO Concept (life time of rotating parts)

  • 7/27/2019 26 Lars Malm

    18/30

    IMCC, Dublin October 2007

    Crankshafts, Connecting rods

    who or what is at fault?

    z Total cost for damage 1998-2006: USD 22 700 000

    z 30 cases average cost USD 755 000

    z Very expensive!

    z Predominantly a Medium Speed Engine issue

    z Lubrication failure filters, purif iers, contamination

    z Lube oil analysis to be made on a quarterly basis

    z The Swedish Club recommends that partical counts are

    included in the above analysis

  • 7/27/2019 26 Lars Malm

    19/30

    IMCC, Dublin October 2007

    Crankshafts, Connecting rods

    who or what is at fault?

    z Automatic lube oil filter counter readings to be logged daily

    z Contamination of lube oil condition of cylinders

    z Crank shaft deflection readings to be carried out regularly,and compared with previous readings

    z In connection with repairs or maintenance make sure tofollow proper procedures (shipyard visits)

    z Bring in the experts!

  • 7/27/2019 26 Lars Malm

    20/30

  • 7/27/2019 26 Lars Malm

    21/30

  • 7/27/2019 26 Lars Malm

    22/30

    IMCC, Dublin October 2007

    Inflation Exposure H&M

    z Crews experience/competence is decreasing

    z Lack of dry-dock space and availability

    z Larger vessels > require bigger dry docks

    z In case of emergency dockings of large vessels there are

    substantial additional costsz Larger main engine > more parts, larger parts, more expensive

    parts, for example: l iners, bearings, pistons, cylinder heads

    z Innovation and new design > untested technology

    z Larger vessels contains additional auxiliary engines and T/C

    z Steel price is increasing

    z Delivery time for spares is extended

  • 7/27/2019 26 Lars Malm

    23/30

    IMCC, Dublin October 2007

    Hull & Machinery: claims cost and

    premium/deductible trends

    0,00%

    20,00%

    40,00%

    60,00%

    80,00%

    100,00%

    120,00%

    140,00%

    160,00%

    180,00%

    1998 1999 2000 2001 2002 2003 2004 2005 2006

    Claims

    Premium

    Deductible

    M i H ll E l ti f G L R ti

  • 7/27/2019 26 Lars Malm

    24/30

    IMCC, Dublin October 2007

    0%

    20%

    40%

    60%

    80%

    100%

    120%

    140%

    12 24 36 48 60 72 84 96 108

    120

    Ultim

    ate

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    70%

    2003

    2004

    2005

    Ultimate calculation based on figures of 6 IUMI members:France, Germany, Italy, Norway, UK Lloyds, UK IUA (5 for 1996 no Germany)

    Assuming a30% expenseratio(acquisition andmanagementexpenses),technical breakeven is achievedwhen the grossloss ratio doesnot exceed 70%

    19991998200020021997 / 2001200419962003/2005

    Marine Hull Evolution of Gross Loss Ratio,actual and estimated towards ultimate U/W

    Year 1996 to 2005

  • 7/27/2019 26 Lars Malm

    25/30

    IMCC, Dublin October 2007

    Question No. 4

    And the winner is?

    A: Underwriters

    B: Owners

    C: No one

  • 7/27/2019 26 Lars Malm

    26/30

    IMCC, Dublin October 2007

    Why insure such failures?

    How to insure such failures?

    If one is to insure these failures, consider thefollowing:

    Underwriting is a cyclical and painful exercise that requiresdiscipline over time

    There will most certainly be a market reaction given claimsdevelopment and current rates

    There is no alternative to Exposure Rating

    If you are not able to rate exposure commensurate to therisk assumed dont assume the riskActive and focused loss prevention will assist you but

    only to a certain extent

  • 7/27/2019 26 Lars Malm

    27/30

    IMCC, Dublin October 2007

    Minor engine problem off Dutch Harbour,

    Alaska, 2004

    Current reserve: USD 167 000 000

    ff

  • 7/27/2019 26 Lars Malm

    28/30

    IMCC, Dublin October 2007

    Minor engine problem off

    La Rochelle, France

    Current reserve: USD 83 000 000

  • 7/27/2019 26 Lars Malm

    29/30

    IMCC, Dublin October 2007

    Leaning towards an increase in premium

  • 7/27/2019 26 Lars Malm

    30/30

    IMCC, Dublin October 2007

    Where it all started