BOW WAVE 627

Bow Wave Issue 627--Flood Loss Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2012 WavyLine.com	Issue No 627 12 Feb 12
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. MV Rabaul Queen
3. Box Tracking Set to Become a Big Thing
4. Sichuan Speeds up Investment in Waterway Infrastructure
5. Thai Floods
6. And Finally...

1. Welcome

Poem of the Week

Meditation from 14A

And what if the passage out of this life
is like a flight from Seattle to St. Louis--

the long taxi out of the body, the brief
and terrible acceleration, the improbable

buoyancy, and then the moment when,
godlike, you see the way things fit

together: the grave and earnest roads
with their little cars, stitching their desires

with invisible thread; the tiny pushpin houses
and backyard swimming pools, dreaming

the same blue dream. And who but the dead
may look down with impunity on these white

birds, strewn like dice above the river whose name you have forgotten, though you know,

having crossed the Divide, that it flows
east now, toward the vast, still heartland,

its pinstriped remnants of wheat and corn
laid out like burial clothes. And how

you would like to close your eyes, if only
you could stop thinking about that small scratch

on the window, more of a pinprick, really,
and about yourself sucked out! anatomized!--

part of you now (the best part) a molecule
of pure oxygen, breathed in by the farmer

on his tractor; by the frightened rabbit
in the ditch; by a child riding a bike

in Topeka; by the sad wife of a Mexican
diplomat; by a dog, digging up a bone

a hundred years in the future, that foreign city
where you don't know a soul, but where you think

you could start over, could make a whole
new life for yourself, and will.

Jennifer Maier (2006)

News of Readers

Hilary Devey, the Chief Executive and Chairman of Pall-Ex (the pallet network) and top UK TV entrepreneur on Dragons’ Den, is becoming ever more popular: you can now buy Hilary face masks on ebay for as little as £3.10.

The Maritime Prize 2011 (in Danish, Den Maritime Pris 2011) was formally presented to the MBA program by Denmark’s Minister for Business and Growth, Mr Ole Sohn, in a ceremony on February 10 2012 at the Danish Design House, Copenhagen. The minister presented the award to the president of CBS, Per Holten-Andersen, and the Blue MBA program director Irene Rosberg, in front of an industry audience of distinguished guests.

After 13 years as chairman and CEO of Willis Group, Joe Plumeri will bring the curtain down on his time at the head of the big three broker next July as he celebrates his 70th birthday.

Note from the Editor

Realisation has dawned that the recent flooding in Thailand is a very big deal indeed for the worldwide insurance industry. Writing business too cheaply in Asia is not the only way to lose a packet. Item 5 refers.

Enjoy!

2. MV Rabaul Queen

A total of 372 people were on board the 22-year-old Japanese-built ferry, MV Rabaul Queen, when it sank near the end of its 20-hour, 290-nautical mile journey between Kimbe and PNG's second largest city, Lae on 02FEB12.

A major rescue operation, involving the Australian Maritime Safety Authority and PNG authorities, rescued some 246 people of those on board. most of those on board.

Rabaul Shipping said it was devastated by the disaster.

"We are stunned and utterly devastated by what has happened," managing director Peter Sharp said in a statement.

The company said the ferry's captain had routine radio contact with another vessel before the sinking and gave no indication anything was wrong.

Some of this tragic story bears a passing resemblance to other coastal and island ferry casualties in this part of the Pacific. Voices in the London market were asking whether the ship was carrying more than she was rated to carry, whether she was carrying P&I insurance and whether she is beneficially owned by Australians. Perhaps one of our readers knows the answer.

3. Box Tracking Set to Become a Big Thing

We are grateful to the Containerisation Group on LinkedIn for this news of technological progress:-

According to a new research report from the analyst firm Berg Insight, the number of active remote container tracking units deployed on intermodal shipping containers was 77,000 in Q4-2011. Growing at a compound annual growth rate (CAGR) of 66.9 percent, this number is expected to reach 1.0 million by 2016. The penetration rate of remote tracking systems in the total population of containers is estimated to increase from 0.4 percent in 2011 to 3.6 percent in 2016. Berg Insight’s definition of a real-time container tracking solution is a system that incorporates data logging, satellite positioning and data communication to a back-office application.

The market for container tracking solutions is still in its early stage. Aftermarket solutions mounted on high value cargo and refrigerated containers will be the first use cases to adopt container tracking. Orbcomm has after recent acquisitions of Startrak and PAR LMS emerged as the largest vendor of wireless container tracking devices with solutions targeting refrigerated containers. Qualcomm, ID Systems and Telular are prominent vendors focusing on inland transportation in North America, which is so far the most mature market for container tracking solutions. PearTrack Systems, Honeywell Global Tracking, EPSa and Kirsen Global Security are examples of companies offering dedicated solutions targeting the global end-to-end container transport chain.

"Ever since the events of 9/11, there have been a lot of activities to bring container tracking solutions to the market", said Johan Svanberg, senior analyst, Berg Insight. He adds that it is however first now that technology advancement, declining hardware prices and market awareness are starting to come together to make remote container tracking solutions attractive. "Container telematics can help stakeholders to comply with regulations and meet the high demands on security, information visibility and transportation efficiency that comes with global supply chains" concluded Mr. Svanberg.

Read more and download summary with forecasts etc. at:-

http://goo.gl/mDbNG

[Editorial note: we can remember Savi Technology and others boosting this technology 10 years ago. Still looks like a damp squib all these years on]

4. Sichuan Speeds up Investment in Waterway Infrastructure

This item appears in the latest edition of Yangtse News, the superior zine issued by David Lammie:-

Sichuan provincial governor Jiang Jufeng announced recently that his government will speed up investment in waterway infrastructure so that by 2020, 2,000-3,000 dwt vessels can sail on the Yangtze trunkline and 1,000dwt vessels can sail in the tributaries. By then, container handling capacity is expected to reach 4m TEU.

The major port on the Yangtze trunkline is Luzhou, which can accommodate vessels between 1,000dwt and 3,000dwt depending on the season. Low water levels in recent dry seasons have led to a suspension of shipping in Luzhou.

The local government spent Rmb7.2bn on the waterway during 11th five-year period, the governor said, and it plans to increase spending to Rmb40bn in the current 12th five-year plan. Money will be spent on dredging (most of the waterways in the province have not been dredged), standardising vessels and modernising ports. The government hopes that, by 2020, 3,000dwt dry bulk carriers and container vessels carrying more than 200 TEU will dominate shipping on the upper reaches of the Yangtze.

To subscribe send an email to:-

mailto:info@yangtzebusinessservices

5. Thai Floods

A.M. Best Co. has released a briefing that provides updated estimates of insurers’ losses from the Thailand floods. The overall industry wide insurers’ loss estimates from the floods have increased 50 percent to $15 billion since Best’s last briefing on this event, published Nov. 23, 2011. "Such a loss would place the Thai floods in a tie for the fifth costliest insured loss event in the past 31 years," Best said.

But the insured losses are only part of the story. Best cited a study from Aon Benfield, which estimates that the floods in Thailand "have damaged or destroyed more than 4 million homes, businesses and manufacturing facilities." The amount of structural damage is actually "four times greater than what resulted from Japan’s earthquake and tsunami in March 2011, but only half of the total insured loss due to a low rate of insurance adoption."

How to assess business interruption (BI) claims and contingent business interruption (CBI) claims, which are based on supply chain interruption, rather than actual property losses, remains a conundrum.

Best explained: "Insured parties have several limitations on their ability to make CBI claims. If property insurance does not cover a certain peril, then related CBI claims will not be covered. Insurers could encounter reinstatement issues and face problems on first-loss limits from firms with multiple locations, as dates of damage vary for different industrial estates. Event limits were not always specified in Thai insurance contracts. Classifying the floods as multiple events could increase costs for the insurers/reinsurers that are involved. Many impacted companies moved to Thailand to mitigate losses from the March 2011 earthquake and tsunami in Japan. As a result there are increasingly complex 'causation and adjustment issues.'

Best noted that until recently "flood coverage for most industrial and large commercial companies was automatically included in the industrial all risk (IAR) policies, with almost 100 percent of the sum covered."

That is in the process of being changed drastically. Guy Carpenter noted that at January renewals there "was widespread interest in imposing limits on proportional treaties." Willis Re stated that "besides capping proportional treaties, there were no immediate significant changes to underwriting."

However, Best said the Thai commercial insurance industry "will likely begin facing sharply contracted capacity, higher pricing and tighter terms for coverage with the Asian and Japanese reinsurance renewals in April. In 2012, flood coverage will be separated from IAR policies.

"Flood policy premiums are expected to double or triple from previous levels, while the renewal and expansion of excess-of-loss protection has driven rate increases ranging from 500 percent to 1,000 percent." Policy limitations on coverage amounts available for specific types of loss are likely to be cut by between 10 and 20 percent of the sum insured. Deductibles of 10 percent are likely to follow.

In conclusion best underscored that the "unprecedented flooding has forever changed the perception of risk in Thailand and brought about significant changes to the Thai insurance industry." The rating agency foresees more "mergers, acquisitions and deals," as companies look for ways to offset heavy losses.

In addition Best said that "given the overall uncertainties and previous experience with other significant, un-modeled losses," it expects to see additional upward revisions to initial loss estimates and feels that the amount of the total insured loss could change-- a situation that it will be closely monitoring."

6. And Finally...

Just in from Frazer Hunt comes this fine play on words:-

Wee Billy from Glesga always wanted to look cool.

His friend told him that he needed a good designer pair of trainers to go with his shell suit.

Billy saved up all his Giros and all the money he got back from returning his empty bottles of Ginger and finally managed to get himself a pair of brilliant white trainers to go with his shell suit.

Proudly, he strutted down the street calling out to all the passers by "See ma new trainers? Stonkin, eh?"

One fine upstanding gentleman pointed out that they were ndeed a fine pair of trainers but was young Billy aware that one shoelace was undone?

Billy scornfully retorted that it was part of being cool to have a trailing lace on one trainer and that on the sole of the trainer there were instructions for the wearer to do such a thing.

When asked for proof of this instruction, Billy look off his trainer and held it upside down for the disbeliever to read.

"There y'are! It clearly says ....

Taiwan !!!!!

P.S. For some reason, the inbox of your editor usually contains each week at least one joke within the parish of the Catholic Church. This one is par for the course....

A guy goes into the confessional box after years being away from the Church. He pulls aside the curtain, enters and sits himself down. There's a fully equipped bar with crystal glasses, the best vestry wine, Guinness on tap, cigars and liqueur chocolates nearby, and on the wall a fine photographic display of buxom ladies who appear to have mislaid their garments.

He hears a priest come in: "Father, forgive me for it's been a very long time since I've been to confession and I must admit that the confessional box is much more inviting than it used to be".

The priest replies,"Get out you idiot. You're on my side".

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