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University of Houston Energy Case Study. Steven P. Weiss, CPCU, AMIM, NAMS-CMS Vice President, Marine Engineering, Latin America and Project Cargo. What are we going to do?. What is Risk Management What is risk financing

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university of houston energy case study

University of HoustonEnergy Case Study

Steven P. Weiss, CPCU, AMIM, NAMS-CMS

Vice President, Marine Engineering, Latin America and Project Cargo

what are we going to do
What are we going to do?

What is Risk Management

What is risk financing

What is the insurance industry and how does that play with Risk Management

How do the insurance players all interact

Who are the major players

Take a submission from cradle to grave

what is risk management
What is Risk Management
  • The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk Assumption, risk avoidance, risk retention, risk transfer, or any other strategy or combination of strategies in proper management of future events.
  • Enterprise risk management is a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.
how is this done
How is this done?
  • There are five steps
    • The identification and analyses of loss exposures
    • Examination of the feasibility of Alternative Risk management Techniques
    • Selection of the best risk management techniques
    • Implementation of the techniques
    • Continual monitoring of the program
the identification and analyses of loss exposures
The identification and analyses of loss exposures
  • What are the exposures?
    • First Party
    • Third Party
    • Financial
    • Employee
the identification and analyses of loss exposures cont1
The identification and analyses of loss exposures (cont)
  • Third Party
    • Contractual
    • Personal Injury
    • Property Damage (others)
the identification and analyses of loss exposures cont2
The identification and analyses of loss exposures (cont)
  • Financial
    • Business Interruption
    • Delay in Start Up
    • Self Insured Retentions
    • Deductible
the identification and analyses of loss exposures cont3
The identification and analyses of loss exposures (cont)
  • Employee
    • Workers Comp
    • Jones Act
    • Longshore and Harbor Workers
examine feasibility of alternative risk management techniques
Examine feasibility of Alternative Risk Management Techniques

Contracts to transfer risk

Training of Employees

Engineering solutions

Exit lines of business

Contractors

Insurance

selection of the best risk management techniques
Selection of the best Risk management techniques
  • In the present situation, what works best?
    • Probably some combination of the above
implementation of the techniques
Implementation of the techniques

Get the contracts signed

Engineer and install the solutions

Exit/sell lines of Business

Find the proper contractors

Purchase the Insurance

risk financing
Risk Financing
  • What is Risk Financing
  • Where do you get it?
    • Deductibles/Self Insured Retentions
    • Mutual Agreements
    • Cash flow
    • Insurance
insurance flow
Insurance Flow

Insured

Broker/Agent

Wholesale Broker

Underwriter

Reinsurance Broker

Reinsurer

assured insured
Assured/Insured

The Assured/Insured is the purchaser of the insurance

Normally through Broker or Agent

Pays Commission or fee for services to Broker

Pays premium to Underwriter

broker agent
Broker/Agent
  • One who for commission or fee, brings parties together and assists in negotiating contracts between them
  • Representative of the Assured
  • Receives Fee for service from Assured or commission from Underwriter
    • Broker works for the Insured
    • Agent can be the Insurance Company agent
  • Many are very well trained and knowledgeable
  • Also know as the Retail Broker/Agent
wholesale broker
Wholesale Broker

Intermediary between retail Broker/Agent and Underwriters if the B/A does not have the proper market

Normally commission paid by Underwriter

Represents the Insured sort of as well as the retail broker

underwriter
Underwriter

Reviews the risk as presented by the broker

If the risk is within appetite then assumes the risk for the loss of life, property or finances of another

Pays commission to the Broker if agreed up front

Pays Claims is covered by the Insurance Contract

Often for Commercial Insurers has staff Risk Engineering/Loss Control to increase the qquality of the risk if necessary

reinsurance broker
Reinsurance Broker

One who for commission or fee, brings parties together and assists in negotiating contracts between them

Places insurance for insurance companies

Normally commission paid by reinsurer

Allows the Insurance Company to have a greater capacity (treaty) or for the Insurance Company to share the risk of an aspect of the risk they are not keen on or to increase their capacity for a particular risk (facultative)

reinsurer
Reinsurer

Insurers who insure other Insurance companies

Pay commission to Reinsurance Broker

Often pay override to the ceding insurer

Allows insurance companies to manager and spread their risk

Many insurance companies also do Reinsurance and vice versa

top ten global property casualty insurance companies by revenues 2010 1 millions
TOP TEN GLOBAL PROPERTY/CASUALTY INSURANCE COMPANIES BY REVENUES, 2010 (1) ($ millions)

(1) Based on an analysis of companies in the Global Fortune 500. Includes stock and mutual companies. (2) Revenues include premium and annuity income, investment income and capital gains or losses, but excludes deposits; includes consolidated subsidiaries, excludes excise taxes.Source: Fortune./Insurance Information institute

top ten us writers of property casualty insurance by direct premiums written 2010 000
TOP TEN US WRITERS OF PROPERTY/CASUALTY INSURANCE BY DIRECT PREMIUMS WRITTEN, 2010 ($000)

(1) Before reinsurance transactions.(2) Based on U.S. total including territories.Source: SNL Financial LC./Insurance Information Institute

percent change from prior year net premiums written p c insurance 1975 2010 1
PERCENT CHANGE FROM PRIOR YEAR, NET PREMIUMS WRITTEN, P/C INSURANCE, 1975-2010 (1)

From Insurance Information Institute

issues for 2012
Issues for 2012
  • Numbers presented are all 2010 – numbers are not yet available for 2011
  • 105 billion in Global Catastrophic insured losses in 2011
    • Japan, Thailand, New Zealand, Australia, severe weather US and Europe
  • Potentially the largest insured marine loss January 2012
    • Costa Concordia
      • 16 confirmed dead, at least 20missing
      • Removing the oil
here is what we discussed
Here is what we discussed

What is Risk Management

What is risk financing

What is the insurance industry and how does that play with Risk Management

How do the insurance players all interact

Who are the major players

Take a submission from cradle to grave

other resources
Other Resources

http://www.iii.org/

http://www.aicpcu.org/

http://www.libertymutual.com

financial highlights liberty
Financial Highlights Liberty
  • Liberty Mutual 2010 Worldwide Revenue of $33.2 Billion up from $31.1 Billion in 2009
  • Statutory Surplus - $17.B (17.0% increase)
  • Total Assets – Over US$112.4 billion
  • World-class Fortune 100 (# 82) financial standing
        • AM Best – A (Excellent)
        • Moody’s – A2 (Good)
        • Standard & Poor’s – A- (Strong) - Positive
do you
Do you

Have any questions?