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Quantitative analysis of materiality in marine insurance

Author

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  • Kevin X. Li
  • Yulan Wang
  • Jie Min

Abstract

The ex post test of materiality is the traditional approach for a court to examine whether the non-disclosed information of the policyholder is material for a prudent underwriter. The approach of the ex post test has been questioned by the shipping industry, and amendments to the relevant clauses of the Marine Insurance Act 1906 are under discussion. In this research, the factors that significantly relate to marine incidents are determined based on the panel data through the step-wise random intercept model. The materiality of each factor can be reflected by constructing a factor-weighted risk indicator, which can be applied in the ex ante risk assessment of insured vessels. It endeavors to establish a risk index system for measuring the risk level of a ship, which can help both the underwriter and the policyholder in effective assessment of the materiality of information when they conclude the contract. A panel data of total loss incidents during the period 1999--2007 has been collected for verification of the methodology.

Suggested Citation

  • Kevin X. Li & Yulan Wang & Jie Min, 2009. "Quantitative analysis of materiality in marine insurance," Maritime Policy & Management, Taylor & Francis Journals, vol. 36(5), pages 437-455, October.
    • Handle: RePEc:taf:marpmg:v:36:y:2009:i:5:p:437-455
    DOI: 10.1080/03088830903187168
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    Cited by:

    1. Adland, Roar & Jia, Haiying & Lode, Tønnes & Skontorp, Jørgen, 2021. "The value of meteorological data in marine risk assessment," Reliability Engineering and System Safety, Elsevier, vol. 209(C).
    2. Knapp, S. & Heij, C., 2016. "Evaluation of total risk exposure and insurance premiums in the maritime industry," Econometric Institute Research Papers EI-1661, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    3. Fan, Lixian & Luo, Meifeng & Yin, Jinbo, 2014. "Flag choice and Port State Control inspections—Empirical evidence using a simultaneous model," Transport Policy, Elsevier, vol. 35(C), pages 350-357.
    4. Yin, Jingbo & Fan, Lixian, 2018. "Survival analysis of the world ship demolition market," Transport Policy, Elsevier, vol. 63(C), pages 141-156.
    5. Antão, P. & Sun, S. & Teixeira, A.P. & Guedes Soares, C., 2023. "Quantitative assessment of ship collision risk influencing factors from worldwide accident and fleet data," Reliability Engineering and System Safety, Elsevier, vol. 234(C).
    6. Zhou, Wei & Zhang, Keang & Zhang, Ying & Duan, Yunlong, 2021. "Operation strategies with respect to insurance subsidy optimization for online retailers dealing with large items," International Journal of Production Economics, Elsevier, vol. 232(C).
    7. Nejla Ellili & Haitham Nobanee & Ahmad Yuosef Alodat & Mehroz Nida Dilshad & Sabiha Nuzhat, 2024. "Mapping marine insurance: a bibliometric review: a taxonomical study using bibliometric visualization and systematic analysis," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(3), pages 745-762, September.

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