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Houston Marine Insurance Seminar 2002. U.S. Gulf Claims More Predictable Than Ever. September 23rd, 2002. Mutual Insurance - what is it?. It is essentially co-operative self-insurance (a “Club”) The insured are also the insurers The insured's own the insurance fund

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Houston marine insurance seminar 2002 l.jpg

Houston Marine Insurance Seminar 2002

U.S. Gulf Claims

More Predictable Than Ever

September 23rd, 2002


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Mutual Insurance - what is it?

  • It is essentially co-operative self-insurance (a “Club”)

  • The insured are also the insurers

  • The insured's own the insurance fund

  • The aim of a mutual is to cover losses, not make a profit

Mutual insurance is different from commercial insurance


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The Clubs in the Maritime Field

  • The Clubs insure 95% of all ocean-going ships

  • The Clubs have cooperated for over 100 years (Pooling Agreement 1899)

  • The Clubs’ boards of directors comprise a hugely influential body of ship-owners

  • The Clubs have consistently acted in the interests of the maritime community


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Typical Club Structure


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Function Of Club Managers

  • UnderwritingArrange cover; process entries, allocate calls, draw up/dispatch debit notes:

  • ClaimsHandle and reimburse claims, provide advice, approve some contracts/indemnities, decide on deviation cover, approve costs/fees;guarantees

  • InvestmentGenerate investment income on Club funds within delegated guidelines

  • Loss PreventionLegal/technical publications, claims analysis


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Club Financial Structure

OBJECTIVE

Premiums + Investment Income = Claims + Expenses

SURPLUS = Premiums + Investment Income > Claims + Expenses

Transfer to Reserves

Return to Members

DEFICIT = Premiums + Investment Income < Claims + Expenses

Transfer from Reserves/ Reinsurance

Further call on Members


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RISKS: Protection & Indemnity

  • P&I Insurance isinsurance in respect of 3rd party liabilities

  • P&I Insurance is not

    • hull and machinery insurance,

    • war risk insurance,

    • loss of profit/freight insurance,

    • detention insurance,

    • strike insurance

    • defence


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Core Covers in P&I

  • Injury, illness or loss of life of passengers

  • Loss or damage to personal effects

  • Injury, illness or loss of life of crew

  • Pollution and environmental damage

Third Party Liabilities in respect of:


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Core Covers in P&I (cont.)

  • Collision

  • Dock and other Property Damage

  • Fines

  • Legal costs

  • “Omnibus cover”

Third Party Liabilities in respect of:


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The World’s Largest P&I Club

Figures in millions GT

International Group - Owned & Chartered - February 2002


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Members by Trade Type - Tonnage

Chemical

1.0 %

GasCarrier

7.0 %

Bulk Carrier

27.3 %

Reefer

1.1 %

5.1 %

Passenger

2.4 %

Ro/Ro

Vehicle Carrier

3.8 %

Miscellaneous

1.6 %

Container

8.7 %

Specialist

0.5 %

General Cargo

3.2 %

Tanker

38.5 %

May 2002

Trade Sector Market Share (2002)

Gas Carriers32%RoRo 16% Reefer 11% Chemical 7%

Passenger30%Bulk 14% Combis 10%

Tankers22%Container 12% Dry Cargo 9%


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Global Membership

62.3%

55.1%

26.3%

33.7%

Club: 11.4%

World: 11.2%


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Age Profile of the Club

  • The Club’s tonnage age profile has reduced in the critical 15 - 19 year age band from 24% to 19% to 17%.

  • Tonnage under 10 years old increased from 31% to 40% to 41%


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UK Club Reinsurance Structure

Overspill pool with other Clubs - cover available from UK Club catastrophe reserve & Swiss Re contract

US$ 4.5bn

US$ 3,030m

US $ 1470m

US$ 1000m

UK Club’s Overspill

Reinsurance

US$ 2,030m

US$ 1500m

Group’s excess R/I

US$ 1,000m

US$ 530m

Oil

Pollution

US$ 500m

US$ 30m

US$ 25m

Pool Retention

US$ 5m

Club Retention


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Safeguarding Member Quality

  • Six full-time inspectors conduct 500 ship visits a year.

  • Over 5,000 ships inspected since 1990.

    • Only 3% of inspections led to

      adverse report and the number

      of inspections generating a high

      rating with no comment was up

      from 51% to 53%

  • Unsatisfactory findings lead to

    independent condition surveys

    and restricted cover.

    • Surveys leading to a repair being

      required fell from 45% in 2000 to

      40% in 2002


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Crew Risk Management Programme

  • Enhanced pre-employment medical examinations (PEME)

  • Significant pre-existing illnesses and repatriation avoided

  • Available in ten crew-supply countries

  • Unique cost-saving service

  • Development into post-repatriation care


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VIDEOS

Tanker Matters

Bulk Matters

Container Matters

Any fool can stuff a container . . . .

BOOKS & MULTIMEDIA

Major Claims Analysis

The Human Factor

Port State Control

Carefully to Carry

Loss Prevention News

UK Club News

Publications & Videos


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Loss Prevention

  • Seminars & Workshops

    around the world

  • Weekly Loss Prevention

    Bulletins

  • Books, magazines &

    videos

  • Full-time department in

    London & specialist

    regional managers


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Advice & Information

  • Concentration of expertise available to all members regardless of size or premium contribution

  • Databases - Pollution legislation, conventions and procedures, legal and technical enquiries etc.

  • Past Projects - Millennium Bug (Ship 2000), ISM, STCW etc.


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Loss Prevention Developments

  • New website area

  • Benchmarking

  • Good Practice

  • Technical Reports

  • “How To” guides

  • ISM Analysis


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Worldwide Statistics


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Stable Claims Trend


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Claims Analysis @ 20/2/2002

US$ millions

350

300

250

200

150

100

50

0

00

02

74

76

78

80

82

84

86

88

90

92

94

96

98

Year


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10 Most Frequent Claims Producers


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Major and Minor Claims Percentages

By Value

By Number

Major Claims %

Minor Claims %


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Main Types of Major P&I Claims

2%

2%

8%

1%

Cargo

Collision

39%

Property Damage

Pollution

Fines

23%

Crew Injury

Wreck Removal

Non-Crew Injury

Other

2%

Unrecoverable GA

5%

8%

10%


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Main Causes of Major P&I Claims


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Fatigue

Morale

Motivation

Loyalty

Training

Standards of Certification

Experience

Conditions

Environment

Language

Management Policies

Human Factors


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Causes of Crew Injury Claims

%

Number

Value


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Location of Crew Injuries

Number

Value


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Collisions - Visibility and Sea State

Visibility

Sea State


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Tanker Claims

A number % of all large claims in each particular country)


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US Claims Statistics


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THOMAS MILLER (AMERICAS) INC.

Full Claims Handling Service

24 Hours a day in YOUR time zone

New Jersey , Miami and San Francisco


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AMERICAS REGION

  • 25 experienced claims handlers in New Jersey,

  • Miami and San Francisco

  • Full authority for Claims and Guarantees

  • Immediate response on major casualties

  • Monitoring attorney performance & cost

  • Contact with agencies (e.g. Coast Guard)

  • Loss Prevention on board Cruise Ships


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Claims Exposure in USA -The reason for local service

25% Industry claims in USA

$ncreasing exposure of Ship-owners in USA

$ 14m a year in legal / survey fees


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Major Claims ($100,000 +) in USA 1987/2002

  • 1014 Claims -- $422M

  • 20% of all Major Claims

  • 40% Personal Injury, 25% Cargo

  • 5%Pollution, Collision, Dock Damage

  • Numbers Decreasing - Average Value Increasing


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US Seamen Accident Type

Thousands

%


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US Seamen – Type of Injury

Thousands

%


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US Gulf Claims Since February 2000

  • 1,532

  • 47.87 Month


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Claim Since February 2000 cont..,

  • 1,532 - CLAIMSLAWSUITS

    • TEXAS567289

    • FLORIDA255164

    • LOUISIANA612219

    • ALABAMA 84 16

    • MISSISSIPPI 14 2

      1,532 690


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Mediation

  • TEXAS289-122

  • FLORIDA164-111

  • LOUISIANA219- 73

  • ALABAMA 16- 4

  • MISSISSIPPI 2- 0


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4 Factors Influencing ClaimsTrends In The US Gulf

1. Corporate

A New Type of Owner

2. Legal

2. Legal

Is it possible to try a case?

Hard or soft Market…..

3. The Insurance Market

Does It Really Make A Difference?

How so few influence so much?

4. Personalities


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