EXAMPLE PAGE - ANNUAL REPORT - THE SWEDISH CLUB - Flipbook - Sida 61
NOTES - FINANCIAL STATEMENTS
Internal audit function
Insurance risks
Internal audit is an entirely independent
function that has been delegated to an
external party. It is responsible for
evaluating the system for internal control,
other parts of the corporate governance
system, independence of the actuarial
function and the remuneration policy for
employees. The function must report its
findings to the Board or, if the Board has
decided such, to the Finance & Audit
Committee. The internal audit function is
subordinate to the Board.
Internal audit is to be carried out in
accordance with the audit plan adopted
by the Board.
Insurance risk consists of underwriting risk,
concentration risk and reserving risk.
Effective management of underwriting risks
is fundamental to the Club’s operations. A
potential member’s vessels and
management team are thoroughly reviewed
prior to acceptance. Rating systems and
premium models are used to ensure that
correct premium levels have been selected.
The Club's comprehensive reinsurance
arrangements level out fluctuations in claims
results. This helps protect the Club from
incurring losses that are associated with very
large claims, including the aggregation of
losses from multiple insured interests.
Risk analysis
The accuracy of current claims models is
monitored on a quarterly basis, by
comparing the actual outcome per
insurance class to the expected result that
was generated by the models.
The Club’s risk exposure is primarily
associated with variations in the outcome
of claims for the insurance classes, as
well as variations in investment income.
The Club is also exposed to several other
risks.
The components of insurance risk,
counterparty risk, operational risk and
financial risks are presented as follows:
The claims model is also used to simulate
claims costs in the Club’s ICM, which
enables a consistent treatment of
underwriting risk based on the capital
requirements at all levels, i.e. from the
company level down to the underwriting of
an individual risk.
It is sometimes the case that a vessel is
insured in several insurance classes, which
gives rise to concentration risk. In these
cases, the same incident can lead to
claims in more than one class of
insurance. Based on how the different
reinsurance protections have been set up,
this could affect the allocation of claims
costs between reinsurers and the Club. It
primarily concerns the insurance classes
shown in the table below.
Reserving risk is included in the provision
for claims outstanding and the provision
for unearned premiums.
When calculating the provision for
unearned premiums, consideration must
be given to differences in risk exposure
during the policy period. For example,
there are seasonal variations in the
frequency/severity of claims between
quarters or other periods of time that must
be considered.
Vessels
H&M1)
P&I2)
LH1)
Hull Interest1)
Four classes
180
X
X
X
X
Three classes
17
508
727
0
X
X
X
X
X
X
64
60
2,405
0
0
0
X
X
X
Exposure
Two classes
Vessels by class
of insurance
1)
Incl. Energy risks
X
2)
X
X
X
X
X
X
X
X
4,809
Total number of vessels
X
X
X
1,582
X
X
X
1,081
3,841
5,740
P&I Owners
The table shows the concentration of insurance classes per vessel as of 31 December 2021:
3% of vessels were exposed to four insurance classes, 22% to three classes and 44% to two classes.
The weighted average duration for outstanding claims is 2.7 years.
THE SWEDISH CLUB ANNUAL REPORT 2021
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