Dear Friend,

The annual meeting that spawned the Monte Carlo rendezvous, the IUMI mega marine conference, has been going on this week in Tokyo.

Every year Eric Alexander, a regular correspondent of Reinsurance and a former London market marine underwriter, goes out and covers the event for us.

I’ve just had his IUMI report run across my desk.

What everyone has been worrying about this year is a huge new class of container ship (or to use the marine jargon, an ultra-large container Ship — ULCS) of which the first, the Emma Maersk has been built and is sailing.

This is an awesome construction – designed to hold 11,000 (and maybe even on occasions up to 14,500) containers in one go.

We’re talking some pretty hefty values here — $145m for the hull and around $880m for the 11,000 containers — a $1bn boat!

But there’s more — the Emma Maersk carries lots of fuel — almost half an Exxon Valdez worth! In fact enough to cause a $500m pollution incident.

Add in those extra 3,500 containers to bring it up to the occasional 14,500 max load and Emma is close to becoming a $2bn floating exposure.

Now just get two of these babies to collide in heavy fog the English Channel…

I had no idea that cargo was becoming a such Cat-exposed business.

But here’s something amazing — Cargo underwriters don’t have any method to allow them to handle aggregates.

The standard practice of writing open covers means that they don’t have any reliable way of measuring accumulations.

So if you thought property Cat retro players were writing by the seat of their pants, you should check out these guys!

If the Emma Maersk went down tomorrow – no-one would be able to tell you how many of the 11,000 containers were theirs — until the claims started coming in.

There’s bound to be a technological way to solve this problem — say by using Radio Frequency ID tracking devices on individual containers, so that underwriters can track aggregates and buy cat cover as needed.

And in fact Swiss Re just mentioned all this technology in their pervasive computing report that was also out this week.

So attention modellers and risk consultants — looks like there’s plenty of juicy work in the offing — I’d get working on it right away.