1 subrogateway coast underwriters cg&b group presentation crims montreal 20 sept. 2005...

1

SubroGateway SubroGateway

Coast UnderwritersCoast Underwriters

CG&B GroupCG&B Group

PresentationPresentation

CRIMS MONTREAL 20 Sept. CRIMS MONTREAL 20 Sept. 20052005

2

3

Losses Hitting Canadian Losses Hitting Canadian U/WRsU/WRs• Destruction of clothing in containers in Sri Destruction of clothing in containers in Sri

Lanka during the Tsunami in S.E. Asia in Lanka during the Tsunami in S.E. Asia in January 2005January 2005

• Major loss of cargo of bulk concentrate Major loss of cargo of bulk concentrate when the bulk carrier broke up and sank off when the bulk carrier broke up and sank off the coast of Japanthe coast of Japan

• Various thefts of entire containers in three Various thefts of entire containers in three different continentsdifferent continents

• Ongoing problems with cargo being Ongoing problems with cargo being discharged in Venezueladischarged in Venezuela

• New Orleans - KatrinaNew Orleans - Katrina

4

Kevan is an Kevan is an UnderwriterUnderwriter

• An Underwriter: one who lacks An Underwriter: one who lacks personality to be an Actuary. personality to be an Actuary.

5

Kevan is Well Kevan is Well BalancedBalanced

• ““We are all born mad some of us We are all born mad some of us remain so”.remain so”.

6

7

8

Impacting Rate FluctuationImpacting Rate Fluctuation

• Regulatory Compliance Regimes such as U.K. Regulatory Compliance Regimes such as U.K. Financial Services Authority (FSA) and Sarbanes Financial Services Authority (FSA) and Sarbanes Oxley (SOX)Oxley (SOX)

• European Union Commission inquiry about to European Union Commission inquiry about to commence commence

• Threat of International TerrorismThreat of International Terrorism• Following 9/11 revised Catastrophe Models Following 9/11 revised Catastrophe Models

influencing Reinsurance protectioninfluencing Reinsurance protection• More conservative investment strategyMore conservative investment strategy• The Spitzer factor; impact of changing business The Spitzer factor; impact of changing business

models surrounding remuneration models surrounding remuneration

9

OFACOFAC

• ““The Office of Foreign Assets Control ("OFAC") of the US The Office of Foreign Assets Control ("OFAC") of the US Department of the Treasury administers and enforces Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, national security goals against targeted foreign countries, terrorists, international narcotics traffickers, and those terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons engaged in activities related to the proliferation of weapons of mass destruction. OFAC acts under Presidential wartime of mass destruction. OFAC acts under Presidential wartime and national emergency powers, as well as authority granted and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and by specific legislation, to impose controls on transactions and freeze foreign assets under US jurisdiction. Many of the freeze foreign assets under US jurisdiction. Many of the sanctions are based on United Nations and other international sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close mandates, are multilateral in scope, and involve close cooperation with allied governments.”cooperation with allied governments.”

10

11

Len NotaroLen Notaro

Insurance Brokers are premium Insurance Brokers are premium lovers.lovers.

12

13

Captives Benefits Captives Benefits

• Lower insurance costsLower insurance costs

• Greater claims controlGreater claims control

• Cash flow benefitsCash flow benefits

• Fronting for reinsurance capacityFronting for reinsurance capacity

• Unavailable coverage or cost of Unavailable coverage or cost of covercover

• Tax minimization and deferralTax minimization and deferral

14

Captives ObstaclesCaptives Obstacles

• Up front capital commitmentUp front capital commitment

• Fees (license, directors, audit, fronting)Fees (license, directors, audit, fronting)

• Management expensesManagement expenses

• Premium taxesPremium taxes

• Required expertiseRequired expertise

• Reinsurance costsReinsurance costs

• Sarbanes Oxley (SOX)Sarbanes Oxley (SOX)

15

16

Jerry GirouxJerry Giroux

"The definition of a consultant: "The definition of a consultant:

Someone who borrows your watch, Someone who borrows your watch, tells you the time and then charges tells you the time and then charges

you for the privilege."you for the privilege."

17

18

The New BusinessThe New Businessof Insuranceof Insurance

19

OldOld Mission Statement Mission Statement

“To be the best marine insurance company, providing superior service, security and value for money, whilst fostering the group’s global vision to become a world-class company”

20

21

22

( CNA Worldwide P/C Insurance OperationsMission Statement

It is the sole and single mission of XYZ Worldwide P/C Insurance Operations to create and enhance shareholders value by instilling organizational behaviors needed to win and drive shareholder value.

NewNew Mission Statement Mission Statement

23

Operating Model

Tactical

Behavioral

PProfitability

DDistribution

IInfrastructure

Strategic Vision

Leadership

Guiding Principles

Core Values

FAS

T FAST

Cultural

Where is the reference to the customer?

24

Going Forward 2006Going Forward 2006• Aggressive Insurance MarketAggressive Insurance Market• Premium savings used to buy additional Premium savings used to buy additional

limitslimits• Cover and conditions negotiableCover and conditions negotiable• Captives and risk retention remain as Captives and risk retention remain as

useful alternativesuseful alternatives• Marine markets to offer broader productsMarine markets to offer broader products• Sarbanes-Oxley mandates for improved Sarbanes-Oxley mandates for improved

risk awarenessrisk awareness• Face to face meeting with underwritersFace to face meeting with underwriters• Retro Rating and Swing Programs Retro Rating and Swing Programs

25

CaptivesCaptives

• Smoothing effect of lossesSmoothing effect of losses

• Cash flow benefitsCash flow benefits

• Unbundling of conventional Unbundling of conventional productsproducts

• Consolidating global exposuresConsolidating global exposures

• Reduction of government Reduction of government restrictionsrestrictions

26

Web Based SolutionsWeb Based SolutionsLogistics Risk Management Industry Logistics Risk Management Industry

IssuesIssues

• Inefficient, paper-based, labor intensive processInefficient, paper-based, labor intensive process

• Certificate control often in the client’s hands Certificate control often in the client’s hands leaving room for errors, omissions and fraudleaving room for errors, omissions and fraud

• Inability to access standardized data for risk Inability to access standardized data for risk analysisanalysis

• High administrative & customer service costs High administrative & customer service costs •Submission managementSubmission management•policy & certificate issuancepolicy & certificate issuance•premium calculationpremium calculation•coverage issues & special case handlingcoverage issues & special case handling•billing & collectionbilling & collection•claims managementclaims management

27

Web Based SolutionsWeb Based Solutions Opportunities For GrowthOpportunities For Growth

• Many shippers continue to book insurance Many shippers continue to book insurance through freight forwarders for convenience and through freight forwarders for convenience and due to lack of known alternativesdue to lack of known alternatives

• Companies and assureds have embraced Companies and assureds have embraced Internet-based quote, bind and issue Internet-based quote, bind and issue applications for home, auto & life policies and applications for home, auto & life policies and the same principles have been successfully the same principles have been successfully applied for Marine Cargo (e.g. Oceanwide.com)applied for Marine Cargo (e.g. Oceanwide.com)

• Management of your own data in one Management of your own data in one environmentenvironment

28

Web Based SolutionsWeb Based Solutions Internet Application BasicsInternet Application Basics

• Paperless and easy-to-use Paperless and easy-to-use

• Accessible using a standard web browserAccessible using a standard web browser

• State-of-the-art security and encryption State-of-the-art security and encryption technologiestechnologies

• Branded client/partner-facing web sitesBranded client/partner-facing web sites

• Integration into client logistics management Integration into client logistics management systems as well as underwriter back-office systems as well as underwriter back-office claims management and accounting systemsclaims management and accounting systems

• ASP vs. deployed solution considerationsASP vs. deployed solution considerations

• Availability and cost of internal IT Availability and cost of internal IT resourcesresources

• Experience with on-line application Experience with on-line application marketingmarketing

• Speed to marketSpeed to market

29

Web Based SolutionsWeb Based Solutions Internet Marine Cargo System Internet Marine Cargo System FunctionalityFunctionality

• Policy issuance / accessibilityPolicy issuance / accessibility

• Certificate generation with policy compliance validation & Certificate generation with policy compliance validation & automated referral workflow for special-case shipmentsautomated referral workflow for special-case shipments

• Shipment/storage declarations and premium calculation Shipment/storage declarations and premium calculation (Marine, War, Storage, Vessel Penalties and taxes)(Marine, War, Storage, Vessel Penalties and taxes)

• First notice of loss entry and claim status reportingFirst notice of loss entry and claim status reporting

• On-line claims file for settling agents, brokers & assuredsOn-line claims file for settling agents, brokers & assureds

• Flexible exception-based alerts, emails and reportingFlexible exception-based alerts, emails and reporting

• Real-time underwriting control over policy conditions, limits, Real-time underwriting control over policy conditions, limits, rates and access rates and access

• Automated billing, payment and receivables managementAutomated billing, payment and receivables management

• Sophisticated data analysis & reporting toolsSophisticated data analysis & reporting tools

• Detailed audit trail Detailed audit trail

• Clause library and reference table lookups to speed entry Clause library and reference table lookups to speed entry

30

Web Based SolutionsWeb Based Solutions Benefits for ClientsBenefits for Clients

• Eliminates paperwork & redundant typing Eliminates paperwork & redundant typing

• Speeds up certificate preparation & bordereau Speeds up certificate preparation & bordereau reportingreporting

• Enhances workflow efficiency through Enhances workflow efficiency through collaboration between shippers, brokers and collaboration between shippers, brokers and underwritersunderwriters

• Eliminates errors – helps prevent/detect fraudEliminates errors – helps prevent/detect fraud

• Integration with existing systems offers ultimate Integration with existing systems offers ultimate ease of use and efficiency while providing ease of use and efficiency while providing complete shipment detail for risk management complete shipment detail for risk management purposes purposes

• Improved risk management offers potential for Improved risk management offers potential for lower costslower costs

31

Terms of SaleTerms of Sale

1.1. “The Carrier Covers My “The Carrier Covers My Losses”Losses”

2. 2. “I Export F.O.B.”“I Export F.O.B.”

3. 3. “I Import C.I.F.”“I Import C.I.F.”

4. 4. “Nothing Will Happen To My “Nothing Will Happen To My Goods”Goods”

5. 5. “I Already Have My Own Cargo “I Already Have My Own Cargo Policy”Policy”

32

SubroGateway SubroGateway Applicable Applicable

LawsLaws• US COGSAUS COGSA

• HAGUE RULESHAGUE RULES

• HAGUE-VISBYHAGUE-VISBY

• HAMBURG RULESHAMBURG RULES

• TRUCK TRANSPORT ACTTRUCK TRANSPORT ACT

• Q.C.C. (NOTICE)Q.C.C. (NOTICE)

• New CIFFA STC’sNew CIFFA STC’s

33

Agency Role - Other Agency Role - Other ClausesClauses

• The company does not assume a role The company does not assume a role as principal by delivering a fixed price as principal by delivering a fixed price quotation or invoice. The customer quotation or invoice. The customer acknowledges that the difference acknowledges that the difference between the amounts payable to third between the amounts payable to third parties retained to carry out the parties retained to carry out the customer's instructions and the fixed customer's instructions and the fixed price represents the company's gross price represents the company's gross profit for its services. profit for its services.

34

Forwarder New Conditions Forwarder New Conditions 20052005• When acting as an agent, the Company acts solely on When acting as an agent, the Company acts solely on

behalf of the Customer in engaging the services of behalf of the Customer in engaging the services of third parties on the usual terms and conditions on third parties on the usual terms and conditions on which the third parties offer such services for the which the third parties offer such services for the carriage, storage, packing or handling of any goods, or carriage, storage, packing or handling of any goods, or for any other service in relation to them, thereby for any other service in relation to them, thereby establishing a direct contract between the Customer establishing a direct contract between the Customer and the provider of such services capable of being and the provider of such services capable of being enforced by the Customer as principal, whether or not enforced by the Customer as principal, whether or not the Customer is identified in the contract. The the Customer is identified in the contract. The Company shall on demand by the Customer provide Company shall on demand by the Customer provide evidence of any contracts made on its behalf.evidence of any contracts made on its behalf.

35

2. “I Export 2. “I Export F.O.B.”F.O.B.”

At Which Point Does The Insurance At Which Point Does The Insurance Attach?Attach?

Portions Of The Trip May Be UninsuredPortions Of The Trip May Be Uninsured

Lethal If Combined With Extended Lethal If Combined With Extended Payment TermsPayment Terms

Weak Currencies AboundWeak Currencies Abound

Trade Law And Business LawTrade Law And Business Law

Seller’s Interest ... At MinimumSeller’s Interest ... At Minimum

36

BuyerBuyerSellerSeller

Seller’s CostSeller’s Cost

INCO TERMS COMPAREDINCO TERMS COMPARED

1. FOB1. FOBFree On BoardFree On Board

Buyer’s CostBuyer’s Cost

Seller’s RiskSeller’s Risk Buyer’s RiskBuyer’s Risk

37

3. “I Import 3. “I Import C.I.F.”C.I.F.”

This Is As Bad As Exporting This Is As Bad As Exporting F.O.B.F.O.B.

What Is “I”?What Is “I”?

Insurance Cost Is HiddenInsurance Cost Is Hidden

Where Does Cover Cease?Where Does Cover Cease?

Third Rate Currency?Third Rate Currency?

38

BuyerBuyerSellerSeller

Seller’s CostSeller’s Cost

INCO TERMS COMPAREDINCO TERMS COMPARED

2. CIF2. CIFCost, Insurance, FreightCost, Insurance, Freight

Buyer’s CostBuyer’s Cost

Buyer’s RiskBuyer’s RiskSeller’s RiskSeller’s Risk

39

Rule of Rule of ThumbThumb

Export C.I.F.Export C.I.F.

AndAnd

Import F.O.B.Import F.O.B.

40

BuyerBuyerSellerSeller

Seller’s CostSeller’s Cost

INCO TERMS COMPAREDINCO TERMS COMPARED

1. FOB1. FOBFree On BoardFree On Board

Buyer’s CostBuyer’s Cost

Seller’s RiskSeller’s Risk Buyer’s RiskBuyer’s Risk

41

3. “I Import 3. “I Import C.I.F.”C.I.F.”

This Is As Bad As Exporting This Is As Bad As Exporting F.O.B.F.O.B.

What Is “I”?What Is “I”?

Insurance Cost Is HiddenInsurance Cost Is Hidden

Where Does Cover Cease?Where Does Cover Cease?

Third Rate Currency?Third Rate Currency?

42

BuyerBuyerSellerSeller

Seller’s CostSeller’s Cost

INCO TERMS COMPAREDINCO TERMS COMPARED

2. CIF2. CIFCost, Insurance, FreightCost, Insurance, Freight

Buyer’s CostBuyer’s Cost

Buyer’s RiskBuyer’s RiskSeller’s RiskSeller’s Risk

43

3PL &4PL3PL &4PL

Why outsource?Why outsource?• Can someone else do it better or cheaper?Can someone else do it better or cheaper?• Can someone else do it for less than our Can someone else do it for less than our

cost of capital?cost of capital?• Does someone else have a better means Does someone else have a better means

of achieving end-to-end visibility?of achieving end-to-end visibility?• Do we have the necessary skills to Do we have the necessary skills to

orchestrate a complex supply chain?orchestrate a complex supply chain?• Outsource the execution of a process but Outsource the execution of a process but

not its controlnot its control

44

BPO - Did You BPO - Did You Know? Know?

• Claims staff “process recovery” earlyClaims staff “process recovery” early

• Improved cash flowImproved cash flow

• Underwriters write superior risksUnderwriters write superior risks

• Your deductible is recoveredYour deductible is recovered

• Rates up! Cover cut back! Deductible up!Rates up! Cover cut back! Deductible up!

• So what? Now what? Learning cultureSo what? Now what? Learning culture

• Demands on capital – personnel and expertiseDemands on capital – personnel and expertise

• Large technology investmentsLarge technology investments

• ID goodwill vs. liabilityID goodwill vs. liability

• Offer solutionsOffer solutions

45

SubroGateway SubroGateway Inc.Inc.

Open the Open the GateGate to a Smart Claims and Recovery to a Smart Claims and Recovery SolutionSolution

SubroGateway Inc. the choice of your Marine SubroGateway Inc. the choice of your Marine Underwriters!Underwriters!

Our Services Include: Our Services Include: AssetAsset Recoveries and Subrogation (no cure-no pay) Recoveries and Subrogation (no cure-no pay)

Abandoned goods Collection of bad debt Deductible recovery Abandoned goods Collection of bad debt Deductible recovery

FF lien positions Claims management Marketing of salvageFF lien positions Claims management Marketing of salvageAssisting your customerAssisting your customer

Covering your NVOCC position with carriersCovering your NVOCC position with carriersEducation and seminars on Marine Insurance Education and seminars on Marine Insurance

Proud to be a member of CIFFAProud to be a member of CIFFA