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MARINE P&I

COMMERCIAL MARKET REVIEW | SEPTEMBER 2015

FOUNDED BY ARTHUR GALLAGHER IN CHICAGO IN 1927,


ARTHUR J. GALLAGHER & CO HAS GROWN TO BE ONE OF THE
LARGEST, MOST SUCCESSFUL INSURANCE BROKERAGE AND RISK
MANAGEMENT COMPANIES IN THE WORLD. WITH EXTRAORDINARY
REACH AND DEPTH ACROSS INTERNATIONAL BORDERS, OUR
PARENT GROUP EMPLOYS OVER 17,000 PEOPLE AND ITS GLOBAL
NETWORK PROVIDES SERVICE IN MORE THAN 140 COUNTRIES.

Outside the US, we use the brand name Arthur J. Gallagher.


Wherever and whenever there is an issue of risk were there for our clients from individuals to
small businesses to international conglomerates. Our people, our depth of technical expertise and our
global reach is critical in delivering unrivalled coverage, risk management and placement expertise.
We work seamlessly across countries and international territories. Where we do encounter difficulties
and complexities we meet them head on. We dismantle barriers never letting them get in the way.
We work tirelessly to provide solutions that drive value and competitive advantage for the benefit
of all our clients and we liberate our people to do what they do best: promoting and protecting our
clients interests. We just do not give up; whether its sourcing cover for the thatched cottage in
England; cyber risks across European borders; complex coverage for the international supermarket
chain; marine cargo in Australia; political risk coverage in developing economies; energy cover in
extreme environments; or helping our banking partners with their comprehensive homeowner offer.
Family values have been core to our culture since our company was founded and this drives the way
in which we, Arthur J. Gallagher, look after our clients. Since 1927 we have built our business for
today. For tomorrow, we continue to invest in our business.
A BUSINESS WITHOUT BARRIERS

CONTENTS
01

COMMERCIAL P&I MARKET REVIEW 2015

03

OWNERS MARKET

Welcome from the Executive Director..... 05


The World of P&I According to AJG....... 06

Introduction.......................................... 54

Executive Summary............................... 08

P&I Owned Premium

Fixed Premium P&I Insurance Explained.. 16

Income Development............................. 56

P&I Market Facilty Variations................. 17

P&I Owned GT Development.................. 58

Commericial P&I Market Today.............. 18

P&I Owned Average P&I Rate

P&I Commercial Market News............... 19

Per GT Development.............................. 60

Commercial P&I Market Overview.......... 20

02

INDUSTRY STATISTICS

CHARTERERS MARKET
P&I Charterers & Traders

MARKET FACTS & FIGURES

Premium Income Development.............. 62

Introduction to Facts & Figures.............. 22

P&I Charterers & Traders Number

British Marine....................................... 24

of Vessels Insured Development............ 64

Carina................................................... 26

P&I Charterers & Traders Average

Eagle Ocean Marine.............................. 28

Premium Per Vessel Development.......... 66

Hanseatic Underwriters......................... 30

NON-IG MUTUAL MARKET

Hydor AS.............................................. 32

Non-IG Mutual P&I

Ingosstrakh Insurance Co...................... 34

Premium Income Development.............. 67

Lodestar Ltd......................................... 36

Non-IG Mutual P&I GT Development...... 68

Navigators P&I...................................... 38

Non-IG Mutual P&I Average

Osprey Underwriting Agency Ltd............ 40

P&I Rate Per GT Development .............. 69

Raetsmarine BV.................................... 42

Rating Agency Analysis.......................... 70

Rosgosstrakh Ltd.................................. 44
NON-IG MUTUAL MARKET FACTS & FIGURES
Korean Shipowners Mutual P&I............. 46

04

NON-IG CHARTERERS FACTS & FIGURES

MAJOR LIMITING CONVENTIONS


AND STATUTES AFFECTING P&I RISKS
Developments in the past 12 months..... 74

Charterama BV..................................... 48
Charterers P&I Club.............................. 50
Norwegian Hull Club............................. 52

05

CONTACTS
Marine Division Contacts....................... 88

01 COMMERCIAL

P&I MARKET
REVIEW 2015

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

COMMERCIAL P&I MARKET REVIEW 2015

MALCOLM GODFREY
EXECUTIVE DIRECTOR

WELCOME TO OUR
ANNUAL COMMERCIAL
P&I MARKET REVIEW
Arthur J. Gallagher is one of the leading global marine
insurance brokers in the P&I industry sector. One of
our key principles is transferring all pertinent market
statistics, information and views on the various P&I
insurers to our clients and business partners, which is
essential to remain successful this competitive market
environment.
The Arthur J. Gallagher Commercial P&I Market Review
is the first in-depth review of its kind and compliments
our mutual IG Club Annual Pre-Renewal P&I Review
offering, which will be published later this autumn.
We closely monitor and analyse the P&I market, as it
continues to evolve with its ever changing products,
service, security, strength and flexibility. Our view at
Arthur J. Gallagher is that the Non-IG market is an
important part of the maritime insurance industry, offering
products and services to the small ship sector, where
in previous years IG-P&I Clubs have in the past lacked
enthusiasm to participate in this risk profile.
As part of the markets evolution, we note however that
some of the IG-Club managers have developed new fixed
P&I facilities and moved into the commercial market to
diversify their product range, in order to increase revenue
streams to enhance their free-reserves further.

With the shipping market still continuing to struggle


through this prolonged depressed trading environment,
the commercial P&I markets may offer an opportunity for
a segment of the worlds small ship operators to reduce
their operational expenditure, which this review will
offer more detail on. The AJG Commercial P&I Market
Review will focus on the leading fixed premium, nonIG mutual and charterers liability facilities, which are
generally accessed via London brokers.
Arthur J. Gallagher P&I remains at the forefront as
industry leaders, this is something we are extremely
proud of and demonstrates our unrivalled value added
service and commitment to our clients and partners alike.
Yours sincerely,

Malcolm Godfrey
Executive Director
Marine Division | Specialty Risks

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

THE WORLD OF P&I ACCORDING TO AJG

NORWAY, ARENDAL
Gard AS

UK, NEWCASTLE
North of England

UK, LONDON

USA, NEW YORK


Eagle Ocean Marine

British Marine (QBE Group)


Carina
Lodestar Ltd
Navigators P&I
Osprey Underwriting Agency
Charterers P&I Club

USA, NEW YORK

UK, LONDON

American Club

Britannia P&I Club


London P&I Club
Shipowners P&I Club
Standard Club
Steamship Mutual P&I
The UK Club
West of England

GREECE, ATHENS
Aigaion Insurance Co. SA

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

NORWAY, BERGEN
Norwegian Hull Club

NORWAY, OSLO

NORWAY, OSLO

Hydor AS

Skuld P&I

SWEDEN, GOTHENBURG
Swedish Club

RUSSIA, MOSCOW
Ingosstrakh
Rosgosstrakh Ltd

JAPAN, TOKYO
Japan P&I Club

GERMANY, HAMBURG

KOREA, SEOUL

Hanseatic Underwriters

Korea P&I Club

NETHERLANDS, ROTTERDAM
RaetsMarine BV
Charterama BV

COMMERCIAL
P&I MARKET

INTERNATIONAL
GROUP P&I CLUB

CHINA, BEIJING
China P&I Club

NON-IG MUTUAL P&I CLUB

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

EXECUTIVE SUMMARY

ALEX VULLO
ASSOCIATE DIRECTOR

THE CHASE FOR PREMIUM


CONTINUES, PROMOTING
FURTHER MARKET VOLATILITY
AND RATE REDUCTIONS
Name your price! Underwriters operating within the commercial P&I market may as well forget rating models
and underwriting guidelines, whilst the survival of the fittest trading environment continues. When will the boxing
gloves really come off? Underwriters say they are in the middle of a rating war in an ever softening market, yet
there are no victims or forced market exits in the commercial P&I arena. Every year we at AJG observe the new
entrants win new business at cheaper prices and the established markets continue to mitigate their premium losses.
Isnt it time for the established heavyweights to react and kill off the competition? You might say that underwriting
principals must be upheld and that risks should not be underwritten at unsustainable levels, some underwriters
will just say that we cannot justify and will not compete at those premium levels or may also criticise a particular
market stating that they will not survive the next year as they are desperate for income yet a client will move to a
facility who will buy in the business and market continues as if nothing has really changed.
The commercial P&I market continues to evolve as new entrants re-shape the market environment, feeding from the
established market players who continue to see premiums diminish over a five year period.
What does this all mean? Well Shipping companies, charterers and operators continue to have more choice, buying
power and can opt to save money in the fixed premium market some ship owners will ask why should a 20 year
old panamax bulker pay in excess of US$ 150k in premium to an IG Mutual Club when a fixed market offering a
U$ 1 billion limit can do it for a fraction of the cost, with A-rated security? There are pros and cons in this strategic
scenario, the choice here needs to be carefully reviewed.
Collectively the non-IG commercial markets account for over $400 million in premium income (at 2014), which
approximately makes up 10% of the total IG and non-IG market spend, if you add the IG Club fixed premium
portfolios, we at AJG anticipate the total premium generated would be in the region of $700 million, which is
certainly something not to be underestimated in terms of attention that should be given to this market sector.

COMMERCIAL P&I MARKET INDICATORS FINANCIAL HIGHLIGHTS 2014 YEAR

OWNED TONNAGE

+4.56%
(2.1M GT)

10

TOTAL NON-IG
SPENDING AT

US$ 400M

OWNED P&I AVERAGE


RATE REDUCES BY

2.87%

AVERAGE RATE
PER GT

US$ 6.516

OWNED P&I
MARKET PREMIUM

+ 1.56%

(US$ 4.6M)

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

AVERAGE RATE PER GT VS OWNED GT


$7,800

50,000

$7,600

USD Per Ton

$7,200
40,000

$7,000
$6,800

35,000

$6,600
$6,400

Tonnage (000s)

45,000

$7,400

30,000

$6,200
$6,000

2008

2009

2010

2011

Average Rate PGT

2012

2013

2014

25,000

Total Owned GT

PREMIUM DEVELOPMENT USD (000s)

OWNED RATE PER TON HITS A NEW LOW WITH


OWNED GT RISING STEADILY
Continued market competition and oversupply has again
seen the commercial P&I market average owned rate per
GT reduced by -2.87% in 2014. When analysing the
compound effect since 2010 the average rate has fallen
by -14.92% (or US$1.143 PGT) during this period.
The owned market rate per ton has reduced further from
the -9.84% average reported in our last 2013 market
review. This new market low sees the average rate
per GT at US$6.51, which is down from US$ 6.708
reported in 2013. The overall market owned premium
increased by another 1.56%, up to US$ 300 million,
which is 8.99% greater than the 2010 policy year overall
premium position. The Owned GT development has also
seen a progressive increase of 4.56% in 2014 (similar to
2013 at +4.9%) to 46.15 million GT, which is a 21.9%
increase since 2010.

$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0

2008

2009

2010

2011

2012

2013

On the whole the


commercial market has
strengthened steadily in
terms of premium and
tonnage underwritten
over a five year period

2014

On the whole the commercial fixed premium P&I market


has strengthened steadily in terms of premium and also
tonnage underwritten over a five year period, a reflection
that these markets continue to mature. However, in
relative terms this growth over the period accounts for
a modest $27.36M in gross premiums written. By way
of comparison, this is equivalent to half of the annual
fixed P&I premium from owned tonnage placed with
RaetsMarine (at 2014) representing 10.1M GT, which
is equivalent to the fixed P&I tonnage insured by the
British Marine (at 2014). Whilst we can observe that
the five year growth has been modest, it would suggest
that the 13 International Group Clubs should not be
overly concerned. One exception may be Shipowners
P&I Club, with their core business focusing on smaller
and specialised tonnage, who reported a 96% retention
rate at the 2015 renewal. The theme therefore would
appear to demonstrate that the fixed premium commercial
insurers are more often than not competing against each
other on existing business written. Likewise as a changing
fixed premium market now looking at larger tonnage
emerges this has also seen the majority of IG Clubs
establishing their own defensive mechanisms through
the creation of fixed premium products for specific vessel
types. We anticipate greater use of such schemes, despite
the IGs drive to promote mutuality and the pooling of
risks, should the threat of losing tonnage to the fixed
premium providers becomes more prevalent.

11

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

The chart below indicates the annual average rate change


per ton development, which provides an overview of the
market cycle, demonstrating that business continues to be
either won at lower premium levels or business that is being
renewed at a cheaper premium to the prior policy year.

MARKET CYCLE
6%
4%
2%
Percentage

COMMERCIAL MARKET CYCLICAL DEVELOPMENT


The commercial market prolonged soft market cycle
continues in 2014, where AJG has observed the average
reduction fall below the expiring premium level. In 2014
the average reduction was in the region of -2.87%.

0%
-2%
-4%
-6%
-8%

-10%

2009

2010

2011

2012

2013

2014

Continued market competition and oversupply


has again seen the commercial P&I market
average owned rate per GT reduced
by -2.87% in 2014

TWELVE MONTH MARKET DEVELOPMENT BY OWNED P&I PREMIUM INCOME (USD 000)

12

MARKET

2013 P&I
owned income
USD 000s

British Marine

2014 Change

MARKET

2014 P&I
owned income
USD 000s

Result
+/ (USD
000d

$100,000

British Marine

$97,500

-$2,500

Raetsmarine

$52,000

Raetsmarine

$52,500

+$500

Osprey

$30,000

Lodestar

$30,000

+$5,000

Lodestar

$25,000

Osprey

$27,500

-$2,500

Ingosstrakh

$21,800

Navigators

$20,000

-$1,430

Navigators

$21,430

Hanseatic

$19,500

+$1,200

Hanseatic

$18,300

Ingosstrakh

$16,500

-$5,300

Hydor AS

$9,000

Hydor AS

$14,000

+$5,000

Carina

$7,250

Carina

$10,000

+$2,750

10

Eagle Ocean

$6,500

10

Eagle Ocean

$7,000

+$500

11

Rosgosstrakh

$4,800

11

Rosgosstrakh

$6,200

+$1,400

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

OWNED RATE PER GT DEVELOPMENT


The commercial market average owned P&I rate for
2014 stands at US$ 6.516 per GT. Navigators P&I has
the highest rate per GT at US$ 10.53, however, this
figure has fallen from US$ 11.51 (-8.54%) since 2008.
The Navigators fixed premium average rate has been
on the increase since 2011, where AJG has observed

that premiums and GT levels have reduced annually


causing the average rate to maintain at a higher level.
Ingosstrakh, RaetsMarine, Carina and Rosgosstrakh
have the lowest average rate per GT values, which
range between US$ 3.929 down to USD 3.033 and are
therefore perceived to underwrite at more competitive
premium levels.

RATE PER GT DEVELOPMENT 2014 VS 2013


$12.000
2013

2014

$10.000

$8.000
2014
Average

$6.000

$4.000

$2.000

$0.000

Navigators

British Marine

Lodestar

Hydor AS Eagle Ocean Marine Hanseatic

OWNED MARKET DEVELOPMENT INDICATOR BY


PREMIUM INCOME
The 2014 policy year saw Lodestar take the third place
spot, with a premium income of US$ 30 million. Osprey
(4th) has continued to reduce their US market share in
the fish boat sector taking their premium income down by
US$ 2.5 million during the year. Ingosstrakh has moved

Ingosstrakh

RaetsMarine

Carina

Rosgosstrakh Ltd

down from fifth place to seventh with Navigators (5th)


and Hanseatic (6th) moving up, albeit both facilities have
seen premiums reduce. British Marine still remains the
largest fixed premium insurer with premiums in the region
of US$ 97 million. The top four fixed premium providers
(by income) make up 70% of the marketplace, with
British Marine making up 32.4% alone.

PREMIUM INCOME DEVELOPMENT 2014 VS 2013


$120.000
2013

2014

$100,000

The top four fixed premium


providers (by income) make
up 70% of the marketplace

$80,000

$60,000

$40,000

$20,000

$0

British Marine RaetsMarine

Lodestar

Osprey
Underwriting
Agency

Navigators

Hanseatic
Underwriters

Ingosstrakh
Insurance Co

Hydor AS

Carina

Eagle Ocean
Marine

Rosgosstrakh
Ltd

13

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

BUSINESS ENVIRONMENT
The market is flooded with new business enquiries in
the fixed premium sector; however the hit ratio for the
majority of insurance providers is between 10% and
20%. The individual markets retention rate is, however,
more important for insurers to have a reasonable level of
stability in their portfolios. The chase for premium income
continues to promote market volatility driving rates down
further and therefore this portfolio volatility will prove to
be a fundamental challenge for all insurers in the coming
years.
CONSOLIDATION
Market consolidation would help to drive the challenge,
posing a threat to the IG P&I Clubs whilst, however,
it would seem as if the majority of business transfer
still remains within the commercial market itself. With
fixed market underwriters grappling for market share,
the focus for growth will predominately stay within the
sector taking the immediate focus away from competing
with the IG market. Once a commercial market reaches
the established category we have observed that their
premium income generally tends to fall each year, feeding
the next group of new entrants diluting premiums further.
Two examples of this are British Marine the largest fixed
premium insurer underwrote US$ 133M in 2010 and
in 2014 this dropped down to US$ 97M (-36.92%)
and Osprey also have seen a 47.27% drop in premium
income since 2010. The new entrant example however
is Hydor AS starting with US$ 2 million in 2011 and in
2014 reporting premium an income of US$ 14 million.
In more recent news, Mitsui Sumitomo has acquired
Amlin for 3.5bn, market sources suggest that Amlin
will remain as the go-to London syndicate at Lloyds.
We at AJG do not expect to see any major changes at
RaetsMairne.
BILLION DOLLAR LEAGUE
In our last commercial market review, we at AJG talked
about the need for diversification becoming important
for future success. Whilst there havent been any
fundamental changes in respect of new products on offer,
a number of fixed premium providers have joined the
USD 1 billion league - having the ability to offer larger
limits of liability in an attempt to challenge International

14

Group (IG) P&I Club business. Three market facilities


Lodestar Ltd, Navigators P&I and RaetsMarine have
joined forces to collectively purchase the additional US$
500 million layer of reinsurance in order to satisfy the
minimum and deposit premiums requested by the Lloyds
market. The focus here, as we see it, is to offer cheaper
fixed premium solutions using the USD 1 billion limit
for vessels up to 40,000GT, however, the release call
hindrance may still slow down business transfer, despite
a number of Clubs having relatively low release call
margins. It is our understanding from market sources that
plans are afoot for some fixed premium facilities to offer a
release call bank guarantee facility, as part of a package
of leaving the IG Club system, which would certainly be
attractive proposition for a number of shipowners who
many not have access to an A-Rated Bank. Earlier in the
year AJG called for the IG Club market to accept each
others security guarantees as a provision for release calls,
this is something we understand is now being discussed
by the IG committee. The effective date of the limit
change was the 20th February 2015; therefore the three
fixed premium facilities were unable to compete during
the IG Club 20th February 2015 renewal. AJG does
envisage that a number of Mutual members may look
elsewhere this year if Clubs continue to apply a further
general increase in 2016. We at AJG however envisage
the 20th February 2016 renewal to being relatively
soft with lower general increases (if any) being applied,
therefore it will remain to be seen whether the fixed
premium insurers will be able to capitalise at the end of
the IG Club hard market cycle in 2016.
THE BILLION DOLLAR LEAGUE
The following facilities are able to offer
limits of liability up to USD 1Billion:
British Marine
Hydor AS*
Ingosstrakh
Korean P&I Club
Lodestar Ltd*
Navigators P&I*
RaetsMarine BV*
*With effect from 20/02/2015

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

$12,000

48,000

$11,800

46,000

$11,600

44,000

USD Per Ton

$11,400

42,000

$11,200

40,000

$11,000

38,000

$10,800

36,000

$10,600
$10,400

34,000

$10,200

32,000

$10,000

2009

2010

2011

2012

Average Premium per vessel

2013

2014

Tonnage (000s)

AVERAGE PREMIUM PER VSL VS NO. VSL ON RISK

Number of vessels on risk

$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000

2008

2009

2010

2011

2012

2013

This significant average rate fall is mainly down to the


sudden reduction of the Norwegian Hull Club average
premium reducing by 21.39% in one year (2013: US$
7,353 to 2014: US$ 5,780).

30,000

PREMIUM DEVELOPMENT USD (000s)

$0

CHARTERER & TRADERS


The average premium per vessel fell by a substantial
-14.98% in 2014, as the average premium per vessel hit
a six year low to US$ 10,282 (2013PY US$ 11,823),
which equates to a 30 day minimum of USD 845.09 per
vessel on risk.

2014

The total charters specialist premium income was reported


at US$ 75.1 million in 2014, which is -0.99% down
from the previous policy year, however, is 9.87% up from
2010. The other specialist charterers insurers saw a very
small increase in average rate per vessel in the region of
0% and 1.96%. In the same year the number of vessels
on risk increased by 1.25% (45,557 vessels). Looking
back over the past five years to 2010, the number of
vessels on risk was reported in the region of 39,501,
therefore the growth over this period was 15.33%.
The Charterers P&I Club saw a modest growth in
premium income by 0.35%, with RaetsMarine reporting
increases in the region of 1.96%, whereas Charterama
BV saw the largest increase in premium growth reporting
an increase of 5%. The Norwegian Hull Club however
has reported a deficit of -18.18%.

The average premium per


vessel fell by a substantial
-14.98% in 2014 (an average
30 day minimum period is
in the region of US$ 845
per vessel)

15

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

EXPECTATIONS FOR 2015


We have previously written that the market is trading in a
survival of the fittest environment. Therefore, if the market
requires further income revenues the key growth will come
from making serious inroads into the IG Club market.
There appears, however, to be no fundamental change in
the prevailing market conditions. Oversupply, mixed with
increased competition and cheap reinsurance capacity
will continue to allow rates to fall. Therefore there is an
expectation at AJG for the market cycle to continue on this
current trajectory with the average (owned) rate likely to
reduce further in the region of 2% to 3% in 2015.

There is an expectation at
AJG for the market cycle
to continue on this current
trajectory with the average
(owned) rate likely to reduce
further in the region of 2%
to 3% in 2015.

It will however remain to be seen what impact the billion


dollar league will have on the 2016/17 IG P&I renewal
to determine whether the collective strategy to buy bigger
limits of reinsurance capacity will actually pay off. We do
however expect to see some movement between the IG
sectors to the commercial market; however we suspect
that Owners considering a change will be operators with
tonnage less than 10,000 GT.
MORE TRANSPARENCY
We at AJG believe now is the time for all commercial
P&I markets to provide full and transparent reporting
data. All of the International Group P&I Clubs provide
a transparent overview in their annual report an
account and the commercial P&I market still appears
to be decades behind in providing accurate up-to-date
information on a calendar year basis. The manner in
which IG Club currently account for their fixed premium
business is not always clear and this is something that
we would also like to understand better. This will enable
AJG to provide an even more comprehensive overview
of both IG and commercial markets. We at AJG believe
this to be significant as we anticipate the total fixed call
income would account for almost 15%-17.5% of the
entire P&I premium spend across all markets.
In particular AJG and our clients would like to see more
information on claims trends, reinsurance costs as well
as profitability in the non-IG market. We strongly feel that
the more we and our clients know about a market the
more confidence the buyer will have, along with giving
the market as a whole further credibility.
NOTE: The Commercial P&I Market continues to play an important role in the marine insurance industry and as this market expands, so does awareness, credibility and
desirability. All fixed facilities ultimately offer the same product and compete for the same business; however clients will need to be carefully guided on a suitable market
candidate in the selection process. There are many factors and disparities offered by each carrier, such as service, reputation, flexibility at renewal, ability to put up a letter
of security and more importantly a track record for reimbursing their clients on claims. With rate reductions and more capacity on the horizon clients will need to choose
wisely to take advantage for this prevailing soft market. We at Arthur J Gallagher are certainly here to help!

16

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

FIXED PREMIUM P&I INSURANCE EXPLAINED


WHAT IS FIXED PREMIUM INSURANCE?
Fixed premium P&I insurance indemnifies ship owners, operators and charterers for third party liabilities arising from a fortuitous event or a marine peril.
Third party risks include a carriers liability to a cargo owner for damage to cargo, a ships liability after a collision, environmental pollution, the ships
liability to its crew, fines and war risks etc. The term fixed premium means exactly that, as the terms and conditions offered by a commercial insurance
company, do not expose clients to potential excess supplementary calls, unlike IG Group Clubs.
The premiums involved in this market sector are often more competitive, compared to an IG Group Club option, as insurance packages are specifically
tailored to meet the demands of the risk entailed, on a reduced limit of liability basis.
DO IG P&I CLUBS PROVIDE FIXED PREMIUM INSURANCE?
Fixed premium insurance contracts are typically provided by insurance companies or underwriting agents outside of the International Group of P&I Clubs,
however some of the IG P&I Clubs do provide Owners P&I fixed premium terms for some longstanding fleets, US flagged fleets and Government fleets,
which have been approved by the International Group.
A number of P&I Clubs, such as American, Gard, Skuld, SOP and Steamship Mutual also have fixed P&I premium facilities in place for smaller inland
craft and U.S. yachts. AJG will focus on these facilities in our AJG International Group Club P&I Review 2013 which will be published towards the end
of this year. All of the IG Clubs provide alternative fixed insurance products, such as Charterers Liability Insurance and other marine related products,
which do not fall under the conventional IG Group P&I product or IG group reinsurance programme.
DIFFERENCES BETWEEN COMMERCIAL P&I MARKETS AND IG
GROUP CLUB P&I INSURANCE?

THE OMNIBUS RULE - The fixed premium market does not benefit
from the IG Club Omnibus Rule, which allows the individual IG Club
boards to decide whether they can indemnify a Member in difficulty.

GENERAL INCREASES - The fixed premium market does not adopt


the annual general increase philosophy, which is a tradition practiced

UNDERWRITING FOR PROFIT - IG Group Clubs are focused on

amongst most of the IG P&I Clubs. Renewals are instead underwritten

not for profit service, whereas a commercial insurance company

on the assureds individual merits and loss record, although there may

can be more profit focused, which is an important factor to consider,

be increases sought on the basis of exposure, operating costs or the

when handling claims to ensure that the claimant is indemnified at an

overall performance of the insurers portfolio.

appropriate level. This is where a strong broker like AJG will add value!

ANNUAL MANDATORY REQUIREMENTS - Over the last few years we

SERVICE PHILOSOPHY - In an IG Group Club, the managers are

have seen many P&I Clubs insert annual mandatory uplifts/ requirements,

the servants of the Club, the overall control of the Clubs are in the

which are often non-negotiable, such as deductible increases etc.

hands of its Members and its ship owner boards, who decide on policy

This is a practice which the commercial market does not follow.

changes, scope of cover, claims payments and premiums calls.

PROSPECTS FOR SUPPLEMTARY OR EXCESS CALLS - IG Group

LIMITS OF LIABILITY - Without access to the International Group

Clubs have the power to make excess supplementary calls if there

Pool, fixed premium coverage will be limited to a specific limit of

is a need to raise funds, which are non-negotiable. The non-mutual

liability, however clients may still be exposed to catastrophes, which

commercial insurance companies do not have this capability.

could potentially exceed smaller limits. Choosing the appropriate level


of cover is something that AJG can help you with.

RELEASE CALLS The Commercial Market gives clients freedom


to change insurer without having to release themselves from future

BLUE CARDS - Some fixed premium insurance companies issue

liabilities to supplementary calls or excess supplementary calls, which

blue cards which are not approved by a number of flag states or port

is inherent within the IG Club rules.

authorities. It is vital to ensure that Bunker Blue Cards and/or


CLC Blue Cards are accepted by the shipping authorities prior to trading.

COMPETITION - The commercial insurance companies are able to


offer independent terms as well as competing with each other to win

CERTIFICATES OF FINANCIAL RESPONSIBILITY (COFR) A

business. All of the non-IG facilities are free from the constraints of

requirement under the US OPA 90 Act (United States Oil Pollution

the International Group Agreement, something which the IG Clubs

Act), where any vessel over 300 GT requires a valid COFR and COFR

voluntarily abide by.

guarantee cover in place. Guarantee coverage is provided by several


COFR guarantee companies, which require letters of undertaking by an

SECURITY GUARANTEES IG P&I Clubs have an integral advantage

International Group P&I Club, most of the fixed premium facilities are

over the commercial insurance market, with the ability to put up an

not approved by these guarantee companies. Therefore it is important

immediate letter of guarantee to secure the release of an arrested vessel,

to check this prior to trading to U.S. waters.

without additional cost. However, fixed premium insurers typically need to


contact their reinsurers to obtain security guarantees, which can take time

of premium returns or not calling budgeted supplementary calls in full to

onto the assured. It is important to note that the ability of each individual

the Membership if the Club has experienced a good underwriting year.

insurance company differs, when it comes to issuing letters of security.

18

DIVIDENDS - Some of the P&I Clubs pass back dividends, in the form

and may come with additional costs, which would ordinarily be passed

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I MARKET FACILTY VARIATIONS


FIXED PREMIUM P&I PROVIDERS
There are three facility types that offer fixed premium
P&I insurance, as follows:
THE INTERNATIONAL GROUP OF P&I CLUBS
All of the International Group of P&I Clubs offer
alternative fixed premium solutions for their clients. These
may include non-pooled insurance products such as
charterers liabilities, offshore P&I, contractual liabilities,
specialist operations etc., however, some of the IG P&I
Club managers can provide fixed premium P&I covers
aimed at smaller tonnages on a limited liability basis.
INSURANCE COMPANIES
Insurance companies are business entities that generally
look at multiple lines of insurance, be it marine or
non-marine related risks. Insurance companies that
provide marine insurances typically can provide hull
and machinery, cargo, ports and terminals, kidnap

and ransom covers etc. some of these companies also


provide fixed cost P&I insurance. In the past some of
the demutualised P&I facilities and managing general
agents have been purchased by independent insurance
companies.
MANAGING GENERAL AGENTS (MGA)
An MGA is an individual or business entity appointed by
an insurance company to conduct and arrange insurance
contracts on their behalf. An MGA generally acts as a
fronting company for the insurer, as well as providing
the insured with evidence of cover within the defined
underwriting authority. MGAs also service policies and
most importantly handle claims. Traditionally MGAs were
formed where insurance companies wanted to expand
their markets, but did not have their own resources or
technical knowledge to open and staff offices, therefore
utilising the services of an MGA.

The following table identifies the current facilities that are able to provide fixed premium P&I insurance:
International Group P&I Club

Insurance Company

Managing General Agent

Gard Offshore

British Marine
(a brand of QBE Europe)

Carina
(Lloyds of London)

Japan Club Naiko (Coastal) Class


Japan Club Gaiko (Ocean Going) Class

Navigators P&I
(Navigators)

Charterama BV
(Royal Sun Alliance)

North of England
and Sunderland Marine

Ingosstrakh Insurance Co.

Charterers P&I Club


(Munich Re)

Shipowners P&I Club

Raetsmarine BV
(Amlin Europe)

Eagle Ocean Marine


(American Club)

Skuld P&I Club

Rosgosstrakh Ltd

Hanseatic P&I
(Lloyds of London)

Standard P&I Club

Hydor AS
(Brit Syndicate)

Steamship Yacht Facility

Lodestar Marine Ltd


(Royal Sun Alliance)

Swedish Club Offshore

Norwegian Hull Club


(Lloyds of London)

West of England P&I Club

Osprey Underwriting Agency


(Lloyds of London)

19

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

COMMERICIAL P&I MARKET TODAY


MORE CAPACITY AND MORE COMPETITION
THAN EVER BEFORE
The commercial P&I market has more than doubled
in size since 2009, with seventeen non-IG P&I fixed
premium and charterers liability specialist markets
competing for business. With the over-supply of choice,
we at AJG have observed P&I fixed rates reducing year
on year, providing owners, operators and traders with an
opportunity to reduce operating expenditure annually. In
the last three years the market has seen more of the IGP&I Clubs awaken in their attempts to diversify into this
market sector, to increase revenues and free-reserves.
In response to this change in appetite, the wellestablished commercial market facilities claim not
to be intimidated by this change in stance, however
they generally see it as an opportunity for the shipping
community to become more aware of alternative P&I
products and markets available.
The commercial market is still aimed at the smaller
vessel operators, short-trade vessels, principally operating
in coastal or inland waters typically within a tonnage
range below 10,000 GT. Market facilities are available
for vessels up to 40,000 gross tons (higher GT caps
and limits are also available depending on the facility).
For charterers liabilities, there are no vessel type or
size restrictions among the specialist charterers liability
facilities. Limits up to USD 1 Billion are available,
however typically the larger limit of choice is USD 500

million, where the majority of assureds are usually


insured below USD 50 Million. All fixed premium facilities
target ship owners, operators, charterers and traders
emanating from all geographical areas (subject to EU/US
Sanctions), however certain facilities tend to shy away
from passenger, cruise and U.S. flagged, trans-Atlantic
and trans-Pacific business. Coverage for over-age and
non-IACS classed tonnage is also available from the
majority of fixed premium facilities.
WHY CHOOSE FIXED PREMIUM?
We at Arthur J. Gallagher believe that some of the key
advantages of insuring with a fixed premium insurer
are that they can offer certainty of cost and lower,
more accessible limits of liability, with no liabilities for
unbudgeted supplementary calls or annual general
increases. Not all of the alternative non-IG facilities offer
fixed premium covers, some are mutual. In addition to
this there are also exclusive charterers liability specialist
insurers, which cater for charterers and traders. The
fixed premium P&I market has continued to evolve
considerably over the last five years, with more new
entrants than exits from this industry sector. This is
perhaps to be expected given the IG Group systems
workings and the competitive nature of the
commercial market.
The following table provides a snapshot for the last
five years market development:

NON-IG MARKET DEVELOPMENT (YEARS 2009 2015)


ESTABLISHED
MARKET (10yrs +)

INTERMEDIATE
(5-10yrs)

NEW ENTRANT (<5yrs) SPECULATIVE

MARKET EXIT

British Marine (QBE)


(Est. 1876)

Norwegian Hull Club


(Est. 2008)

Lodestar Marine Ltd


(RSA) (Est. 2012)

London P&I Club

Terra Nova Insurance Co.


(2006)

Ingosstrakh
(Est. 1974)

Charterama BV (RSA)
(Est. 2009)

India Ocean P&I Club


(Est. 2013)

UK P&I Club

Axa Corporate Solutions


(2008)

China P&I Club


(Est. 1984)

Hydor (Brit Syndicate)


(Est. 2009)

Carina Tindal Riley


(Est. 2013)

InterCoastal Shipowners BV
(2011)

Charterers P&I Club


(Munich Re) (Est. 1986)

Eagle Ocean Marine


(Est. 2010)

Skuld P&I Club (Fixed)


(Est. 2013)

South of England Mutual


(2011)

Osprey Underwriting
Agency (Est. 1991)

Rosgosstrakh P&I
(Est. 2010)

North Group (Sunderland


Marine Merger) (Est. 2014)

Ceylon P&I Club


(2012)

Standard Club Fixed Facility


(Est. 2014)

HEMPIRA (2014, due to


consolidation with Aigaion)

Raetsmarine BV (Amlin)
(Est. 1993)
Korea P&I Club
(Est. 2000)
Navigators P&I
(Est. 2004)
Hanseatic P&I
(Est. 2005)

20

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

2014

COMMERCIAL P&I MARKET NEWS


REVIEW OF THE LAST 12 MONTHS

OCTOBER

Navigators P&I announce the recruitment of Jason Riley from the UK P&I Club

MSA of P.R. China approves Blue Cards issued by Hanseatic P&I. Chinese flagged
vessels may now be underwritten by Hanseatic P&I accordingly.

2015

NOVEMBER
DECEMBER

Royal Sun Alliance provides the first USD 500M of cover for Lodestar Underwriting
Agency, where previously only offered the first USD 100M.

JANUARY

Lodestar announce ability to offer coverage up to Panamax size vessels


(40,000GT/75,000 DWT)

Mr Bay Moon appointed as Chief Operating Officers of the Korean P&I Club

FEBRUARY

Navigators P&I announce their ability to offer USD 1 Billion limit of liability

Lodestar Ltd announce their ability to offer USD 1 Billion limit of liability

RaetsMarine BV announce their ability to offer USD 1 Billion limit of liability

Jason Riley joins as the International Head of Navigators P&I

MARCH

Lodestar Post Renewal Report: Pleasingly the hard work has once again paid off with
premium retention exceeding 97%. Weve also welcomed 36 new Assureds and 213
new vessels, pushing us over the 2,000 insured vessels mark for the first time.

APRIL

Hanseatic Underwriters changed to a 100% Lloyds of London consortium.

MAY
JUNE

The Norwegian Hull Club is upgraded by the Standard & Poors (S&P) to an A rating.

JULY

Hanseatic Underwriters and its corporate body ZAM, the German fixed premium
facility announce that Mr Tobias Braun will assume the role as Managing Director and
joins the Board of Directors with effect from 1st July 2015.

AUGUST

SEPTEMBER

Mitsui Sumitomo acquires Amlin for 3.5bn, market sources suggest that Amlin will
remain as the go-to London syndicate at Lloyds. We at AJG do not expect to see any
major changes at RaetsMairne.

21

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

COMMERCIAL P&I MARKET OVERVIEW

FACILITY

CARRIER

ANNUAL PREMIUM
INCOME 2014 (USD)

TONNAGE/VESSELS
INSURED

BRITISH MARINE

QBE Insurance (Europe) Ltd

US$ 97,500,000

10,600,000 GT

US$ 52,500,000 (P&I)


US$ 26,000,000 (CL)

15,500,000 GT

US$ 32,323,000

21,090,000 GT

US$ 30,000,000

3,500,518 GT

US$ 28,300,000

12,200 VSL

US$ 27,500,000

2,100 VSL

US$ 19,500,000 (P&I)


US$ 1,350,000 (CL)

2,850,000 GT

US$ 20,000,000

1,900,000 GT

US$ 16,500,000

4,200,000 GT

US$ 14,000,000

1,657,000 GT

US$ 10,500,000

10,500 VSL

US$ 10,000,000

3,000,000 GT
4,825 VSL

US$ 9,000,000

1,557 VSL

US$ 7,000,000

898,000 GT

US$ 6,200,000

2,044,000 GT

S&P: A+
RAETSMARINE BV

Amlin Europe N.V.


S&P: A+

KOREAN P&I CLUB

Mutual Insurance Company


AMB: A-

LODESTAR LTD

Royal Sun Alliance


S&P: A

CHARTERERS P&I

Great Lakes/ Munich Re


S&P: AA-

OSPREY

Lloyds of London
S&P: A+

HANSEATIC P&I

Insurance Consortium
See Page 72.
S&P: Various A Rated

NAVIGATORS P&I

Navigators Insurance Co.


S&P: A

INGOSSTRAKH

Ingosstrakh
S&P: BBB-

HYDOR A/S

Lloyds of London
(Brit Syndicate 2987)
S&P: A+

CHARTERAMA BV

Royal Sun Alliance


S&P: A

CARINA

Lloyds of London
S&P: A+

NORWEGIAN HULL CLUB

Norwegian Hull Club


S&P: A

EAGLE OCEAN MARINE

American Club
S&P: BBB-

ROSGOSSTRAKH LTD

Rosgosstrakh Ltd Local


Rating: BB-/RU AA

22

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

AVERAGE RATE PER


GT/ PER VESSEL

MAXIMUM
LIMIT

MAX SIZE VESSEL

COVER AMENDMENTS
IN 2014

LOCATION

US$ 9.20 PGT


7,300 VSL

US$ 1 Billion

No Cap. However focus


on small & medium GT

US$ 3.39 PGT

US$ 1 Billion

<40,000 GT

US$ 1.533 PGT

US$ 1 Billion

No limit

US$ 8.57 PGT

US$ 1 Billion

<40,000 GT Non-Tanker
<10,000 GT Tanker

US$ 2,320 PV

US$ 500 Million

No limit

LONDON, UK

US$ 13,095 PV

US$ 500,000
Million

<25,000 GT Non-Tank
<10,000 GT - Tankers

LONDON, UK

US$ 6.842 PGT

US$ 500 Million

<30,000 GT Bulkers
<20,000 GT Tankers

N/A

HAMBURG,
GERMANY

US$ 10.53 PGT

US$ 1 Billion

<10,000 GT

Limit increased to USD


1B from USD500M.

LONDON, UK

US$ 3.93 PGT

US$ 1 Billion

<10,000 GT

US$ 8.45 PGT

US$ 1 Billion

25,000 GT

Limit increased to USD


1B from USD500M.

BERGEN,
NORWAY

US$ 1,000 PV

US$ 350 Million

No limit

Limit change from USD


150M to USD 350M

ROTTERDAM, NL

US$ 3.33 PGT

US$ 500 Million

<5,000 GT

US$ 5,780 PV

US$ 500 Million

No Limit

Limit increased to USD


500M. S&P A Rated.

OSLO, NORWAY

US$ 7.795 PGT

US$ 500 Million

<12,500 GT

Increase in vessel GT
covered

NEW YORK, USA

US$ 3.033 PGT

US$ 500 Million

Tankers <8,500 GT
All others <25,000 GT

LONDON, UK

Limit increased to USD


1B from USD500M.

ROTTERDAM, NL

SEOUL, KOREA

Limit change from USD


500M to USD 1B

LONDON, UK

MOSCOW, RUSSIA

LONDON, UK

MOSCOW, RUSSIA

23

INTRODUCTION TO FACTS & FIGURES


The information contained in the Arthur J. Gallagher P&I
facts and figures pages has been compiled by the various
insurance providers contained in this report. As part of
our assessment in choosing an appropriate fixed premium
insurer(s) for our clients, amongst other key factors
such as claims service, pricing, flexibility etc. AJG also
considers the following parameters as essential indicators
in the selection process.
Reinsurance Carrier: The underlying security or
insurance company providing the market capacity.
Standard and Poors (S&P) Rating: Arthur J. Gallagher
operates a market security policy which sets a minimum
standard for insurance markets which can be included
on its acceptable market security list. A number of
criteria are utilised to evaluate the financial condition of
these markets and one of the criteria used is the ratings
allocated by either Standard & Poors (S&P) or A M Best.
The AJG (UK) security policy sets a minimum rating level
of A- from these agencies as an indicator of acceptable
security. See Page 70 for more information on this policy.
The specified rating attached to each facility is a credit
rating based on S&Ps independent opinion regarding the
ability of an issuer, corporation or association to meet
its financial obligations. Such ratings are provided by
organisations such as S&P and AM Best, also known
as credit rating agencies. Each organisation applies its
own merits in measuring credit and use a rating scale to
publish their individual findings. Ratings are expressed as
a letter grade for example AAA being the highest level.

Maximum Limit of Liability Available: It is very


common to see a limit of liability in insurance contracts,
which stipulate limitations on the maximum amount
payable under the contract. Further, the cost of defence,
supplementary payments, and punitive damages may or
may not be paid in addition to the limits. Separate limits
often apply to claims for pollution and/or passenger or
seamen claims. An annual aggregate limit may also be
offered, which puts a maximum on the amount an insurer
must pay in any one policy period.
Vessel Type/ Size (GT) Cap: This is the maximum size
(gross ton) of vessel that can be insured by the facility.
Facility Location(s): The primary business location of the
facility and various support and claims offices available.
Local claims liaison offices are important to ensure that
clients in different time zones can access claims or loss
prevention assistance in a timely manner.
Geographical Spread of Business: This is an indicator
to show where business revenues derive from a
geographical overview.
Type of Entered Vessel: This indicator demonstrates what
type of vessel a facility tends to write.
Annual Premium Income, Gross Tonnage and Premium
Per GT Development Indicators: AJG analyses three key
performance indicators over a twelve month period to
determine a financial year result. Historical information
can be in the industry statistic pages 54-69.

02 MARKET FACTS

& FIGURES

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

BRITISH MARINE

Reinsurance Carrier: QBE Insurance (Europe) Ltd


Standard and Poors Rating: A+
Maximum Limit Offered: USD 1 Billion
Vessel Type/ Size Cap: Up to 10,000 GT and Charterers up to 30,000 GT
Facility Location: London, United Kingdom

www.britishmarine.com

INTRODUCTION
Established in 1876, British Marine is a specialist hull &
machinery, protection and indemnity and legal expenses
insurer for small to medium sized vessels. At the turn of
the 21st Century British Marine was de-mutualised and
more recently in 2005 the privately held fixed premium
insurer was successfully acquired by the QBE Group. With
effect from 31st March 2010, all of British Marines assets
and liabilities, including its current and past contracts of
insurance and reinsurance were transferred to QBE Insurance
(Europe) Limited. The British Marine brand name has now
become a trading name for QBE.
Today British Marine provides fixed cost P&I insurance
solutions, as well as H&M and charterers liability insurance
products, offering P&I limits up to USD 500 million (limits
up to USD 1 Billion are also available). The insurer typically
writes vessels up to 10,000 GT, with 90% of their portfolio
consisting of medium size merchant vessels and the balance
of the portfolio being made up of fishing vessels and super
yachts. On the Charterers Liability side, limits for P&I are
available up to USD 100 million with Charterers Damage
to Hull being limited up to USD 50 million. There is
however a guideline tonnage maximum level of 30,000 GT.

GEOGRAPHICAL SPREAD OF BUSINESS

12%
North America
3% Africa

BRITISH MARINE SAYS


The proliferation of fixed premium providers following
the British Marine business model has gathered pace
and a number of new P&I facilities surfaced during 2013
to compete in the small and medium-sized ships sector.
British Marines renewing business, and other tonnage
within our appetite considering a change of insurer was
strongly contested and, with most ship owners continuing
to experience difficult trading conditions, price was often
a decisive consideration. We were well satisfied with
a successful renewal. Business retention was at its
long-term historical level, with overall renewing premium
flat. We were disappointed not to renew the cover for a
number of owners, predominantly because we considered
that the competitive terms we were asked to match in
order to retain the business were unsustainable. We
welcomed 32 new Assureds, and 10 existing Assureds
added tonnage to their British Marine placement. In all,
a further 194 vessels and 680,000 GT was introduced.
Pleasingly, among our new Assureds were two large fleets
and a number of small operations which returned to British
Marine following an interlude insured elsewhere.

TYPE OF ENTERED VESSEL

3%
Yatchs

34%
Northern
Europe

7%
Tankers

3% Australia
8%
Fishing

1%
Dredgers

23%
General
Cargo

5% South
America
8%
Tugs &
Barges

11%
Middle East

22%
Bulkers
13%
Southern
Europe

26

19%
Far East

28%
Others

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

-2.5%

-9.1%

PREMIUM INCOME (US$)


2013 PY: 100,000,000
2014 PY: 97,500,000

+1.2%

GROSS TONNAGE (GT)


2013 PY: 11,000,000
2014 PY: 10,000,000

AVERAGE RATE PER GT (PGT)


2013 PY: US$ 9.09
2014 PY: US$ 9.20

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

130,000,000

100%

120,000,000

80%
110,000,000
60%
100,000,000
40%

2014

2013

2012

2011

2010

80,000,000

2009

0%

2008

90,000,000

20%

P&I

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

150,000,000

10.50
10.00
9.50

100,000,000

9.00
8.50

50,000,000

2014

2013

2012

2011

2010

2009

7.50

2008

2014

2013

2012

2011

2010

2009

2008

8.00

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 93,007,720 125,000,000 133,500,000 125,000,000 106,000,000 100,000,000 97,500,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
11,000,000
13,500,000 13,520,000 12,600,000 12,000,000 11,000,000 10,000,000

27

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

CARINA

Reinsurance Carrier: Lloyds of London


Standard and Poors Rating: A+
Maximum Limit Offered: Up to USD 500 Million
Vessel Type/ Size Cap: Up to 5,000 GT
Facility Location: London, United Kingdom

www.carinapandi.com

INTRODUCTION
Carina is one of the most recent fixed premium new entrants
starting in the early part of 2013. The facility is managed by
Tindall Riley Marine (UK) Limited (who are the managers of
the Britannia P&I Club), trading as Carina Managers. This
facility offers fixed premium P&I coverage for Owners and
Charterers of smaller vessels ranging up to 5,000 gross tons,
operating in domestic or inland waters, worldwide. Policy
limits of up to USD 500 million are available for Owners,
whereas Charterers will be able to purchase limits up to USD
50 million.

CARINA SAYS
Over the past 12 months, the facility has seen its book
of business grow by 50 % in terms of tonnage. This has
been due to existing insureds adding to their existing
fleets and new insureds purchasing cover from Carina. The
products offered include owners and charterers P&I cover
of up to USD500 million and a variety of ancillary covers.
Last year we launched the Carina Yachts P&I Cover, which
is a fixed-premium product for yacht owners, managers
and charterers. Once again, all policies are backed by
underwriters at Lloyds.

The focus of the facility targets small ship sector operators


only. Legal Defence Cover is also available together with
additional ancillary covers that may be required. Carina will
benefit from Tindall Riley Marine Limiteds vast experience in
underwriting, claims and support services. Carinas polices
are backed by Lloyds of London syndicates, which hold an
S&P A+ rating.

The vast majority of shipowners insured by Carina trade


regionally. Around 75% of insured ships are below 500
g.t.; most of these ships are harbour craft or operate in
inland waterways.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

7%
South America

We are very pleased with Carinas excellent renewal


retention rates in a market that is extremely competitive.
Our aim continues to be the provision of a first class
service to insureds and their brokers.

2%
Others

4%
Northern
Europe

4% General Cargo
9%
Tankers

5%
Russia &
Ukraine

4%
Passenger
2% Fishing
4% Tug

26%
Far East

58%
Southern
Europe

28

75%
Barges

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

+8%

+37.9%

+50%

PREMIUM INCOME (US$)


2013 PY: 7,250,000
2014 PY: 10,000,000

GROSS TONNAGE (GT)


2013 PY: 2,000,000
2014 PY: 3,000,000

AVERAGE RATE PER GT (PGT)


2013 PY: 3.62
2014 PY: 3.33

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

11,000,000
10,500,000

100%

10,000,000
9,500,000

80%

9,000,000
8,500,000

60%

8,000,000
40%

7,500,000

6,500,000

2014

2013

7,000,000

20%

6,000,000

0%
P&I

GROSS TONNAGE

AVERAGE RATE PER GT

3,500,000

3.70

3,000,000
3.60
2,500,000
3.50

2,000,000
1,500,000

3.40

1,000,000
2014

2013

2014

3.30
2013

500,000

3.20

PREMIUM INCOME DEVELOPMENT USD


Policy Year:

2011

P&I Premium Income

2012

2013
7,250,000

2014
10,000,000

GROSS TONNAGE DEVELOPMENT USD


Policy Year:

2011

Gross Tonnage

2012

2013
2,000,000

2014
3,000,000

29

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

EAGLE OCEAN MARINE

Reinsurance Carrier: American P&I Club


Standard and Poors Rating: BBBMaximum Limit Offered: Up to USD 500 Million
Vessel Type/ Size Cap: Up to 25,000 GT
Facility Location: New York, United States of America

www.eagleoceanmarine.com

INTRODUCTION
Eagle Ocean Agencies, Inc. is an affiliated company of The
Shipowners Claims Bureau, Inc., who are the managers of
the American P&I Club, and Atlantic Marine Associates, Inc.,
which is a general marine adjusting and claims handling
company. In 2010, the Directors of the American P&I Club
formed a separate fixed premium facility, namely Eagle
Ocean Marine, offering Protection and Indemnity and Freight,
Demurrage and Defence insurance solutions. The facility is
primarily focused on operators of smaller ships, below 12,500
gross tons, operating in regional waters, with policy limits being
available up to $500 million for P&I and $2 million for FD&D.
P&I coverage is available to operators on a worldwide basis;
however coverage is not available to operators based in the
U.S.A. or trading exclusively in U.S. waters (this is however
dealt with by Eagle Ocean Agencies the sister company of
SCB). At present the facility is more Far East focused, with
70% of their portfolio emanating from this region.

EAGLE OCEAN MARINE SAYS


EOM continues to make steady progress. The market
remains soft, not assisted by the continued increase in
capacity and the weak freight market. Fixed price P&I
insurance appeals to an increasingly large number of
operators who like the certainty of cost and who are now
attracted to the higher limits of liability on offer. Since
February 2015 EOM has increased its capacity to offer
cover up to $ 500m. This gives EOM the ability to compete
for accounts requiring higher limits. The drive for higher
limits is primarily fuelled by commercial pressure placed
on ship operators by their contracting partners. The outlook
for the fixed premium facilities remains bright and EOM
is well placed to compete in what remains a challenging
market. EOM remains fully committed to providing a first
class product at sustainable rates.

The agency re-structured its insurance and reinsurance


arrangements, with American Steamship Owners Mutual
Protection and Indemnity Association, Inc. providing the
primary security. This in turn will allow Eagle Ocean to put
up American Club security guarantees up to its primary
limits, as well as providing American Club blue cards.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

1% Fishing

6%
South America

7%
Containers

6%
Southern Europe

32%
Tugs & Barges
10%
Bulkers

3% Middle
East

5%
Others

15% Africa

70%
Far East

30

35%
General Cargo

10%
Tankers

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

8.8%

+7.6%

+18.2%

PREMIUM INCOME (US$)


2013 PY: 6,500,000
2014 PY: 7,000,000

GROSS TONNAGE (GT)


2013 PY: 760,000
2014 PY: 898,000

AVERAGE RATE PER GT (PGT)


2013 PY: 8.55
2014 PY: 7.80

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

8,000,000

100%
6,000,000
80%
4,000,000

60%
40%

2,000,000
20%

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

1,000,000

12.00

2014

2013

FD&D

2012

2010

P&I

2011

0%

800,000
11.00
600,000
10.00
400,000

2014

2013

2012

8.00

2011

2014

2013

2012

2011

2010

2010

9.00

200,000

OWNED P&I PREMIUM INCOME USD


Policy Year: 2010 2011 2012 2013 2014
P&I Premium Income
P&I Claims Incurred

500,000 5,000,000 6,000,000 6,500,000 7,000,000


50,000 3,000,000 5,500,000 1,000,000
800,000

ENTERED GROSS TONNAGE USD


Policy Year: 2010 2011 2012 2013 2014
Gross Tonnage

50,000 461,000 601,000 760,000

898,000

31

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

Reinsurance Carrier: Allianz Global Corporate


& Speciality AG and Lloyds of London
Standard and Poors Rating: AA or A+
Maximum Limit Offered: Up to USD 500 Million
Vessel Type/ Size Cap: Up to 25,000 GT
Facility Location: Hamburg, Germany

HANSEATIC UNDERWRITERS
www.hanseatic_pandi.com

INTRODUCTION
Hanseatic P&I celebrate its 10th anniversary this year. The
insurance consortium was originally supported by five German
insurance companies but has developed substantially in recent
years and as of April 2015 the primary USD50m layer became
a 100% Lloyds placement. The facility writes up to a limit of
USD500m with A+ or AA security throughout.
The consortium is managed under the brand name Hanseatic
Underwriters by Zeller Associates Management Services
GmbH of Hamburg. Hanseatic P&I provide ship owners
and charterers liability as well as inland craft P&I cover. The
consortium also provides FD&D legal expenses insurance,
either as an additional or a separate cover, under the brand
name Hanseatic Defence.
The core risk appetite of Hanseatic P&I is small and medium
size general cargo and container vessels, as well as liquid
cargo and dry bulk. Additionally Hanseatic has expertise in
traditional, offshore and specialist vessels of any type. The
underwriting philosophy at Hanseatic was originally focused
on German and Northern European interests and expanded
its operation with regional offices in London and Shanghai. At
present, Hanseatic P&I core business emanates from all parts
of Europe, Far East, Middle East, Africa, Australia and South
America.

GEOGRAPHICAL SPREAD OF BUSINESS

HANSEATIC SAYS
The business continues to grow on the back of sensible
and sustainable pricing and the on-going development of
our geographical presence has been highly encouraging.
We have managed a growth in written business of over
10% in 2014 and anticipate another 15% overall in 2015.
The underwriting result has also developed exceptionally
well. We have always believed that a cautious and
technically sound approach to our operations would
reward our participants, a view reflected in their continued
support. Being able to offer a fully Lloyds-backed product,
with a team which adds benefit for our clients by both
its general marine expertise as well as specific insurance
pedigree, bodes well in the actual market environment.
We are the only international P&I insurer to have been
approved by China beyond the International Group
clubs which tells its own story. This is a good year to be
celebrating the 10th anniversary of Hanseatic Underwriters
Made in Germany.

TYPE OF ENTERED VESSEL

3% Offshore

4% Australia
5% South
America

14%
Far East

24%
Southern
Europe

32

1% Dredgers
45%
Northern
Europe

3% Fishing
1% Tankers
7% Tugs
& Barges

46%
General
Cargo

15%
Containers

8%
Middle East

2% Others

22%
Bulkers

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

+7.4%

+5.6%

+1.6%

PREMIUM INCOME (US$)


2013 PY: 18,300,000
2014 PY: 19,650,000

GROSS TONNAGE (GT)


2013 PY: 2,700,000
2014 PY: 2,850,000

AVERAGE RATE PER GT (PGT)


2013 PY: 6.78
2014 PY: 6.89

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

90%

25,000,000

80%
20,000,000

70%
60%

15,000,000

50%
40%

10,000,000

30%
20%

Charterers/ FD&D
DTH

War

SOL to
Cargo

H&M

Other
Risks

2014

2013

2012

2011

2010

0
P&I

2009

0%

2008

5,000,000

10%

Ports &
Terminals

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

3,000,000

8.50
8.00

2,500,000

7.50
2,000,000

7.00

1,500,000

6.50
6.00

1,000,000

2014

2013

2012

2011

2010

4.50

2009

2014

2013

2012

2011

2010

2009

2008

5.00

2008

5.50
500,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 7,700,000 11,200,000 14,700,000 15,800,000 19,700,000 18,300,000 19,650,000
P&I Claims Incurred 7,900,000 7,200,000 12,900,000 14,700,000 13,700,000 8,700,000 8,250,000
Surplus/ Deficit
-200,000 4,000,000 1,800,000 1,100,000 6,000,000 9,600,000
11,400,000

CHARTERERS LIABILTIY INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

Charterers Premium Income 1,200,000 850,000 900,000 950,000 1,000,000 1,200,000 1,350,000
Charterers Claims Incurred 1,800,000
700,000 200,000 150,000 170,000 154,000 355,000
Surplus/ Deficit
-600,000
150,000 700,000 800,000 830,000 1,046,000
995,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
1,400,000
1,600,000 1,900,000 2,100,000 2,400,000 2,700,000 2,850,000

33

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

HYDOR AS

Reinsurance Carrier: Brit Syndicate 2987 Lloyds of London


Standard and Poors Rating: A+
Maximum Limit Offered: USD 1 Billion
Vessel Type/ Size Cap: Up to 25,000 GT, Unlimited for Charterers Liability
Facility Location: Oslo, Norway

www.hydor.no

INTRODUCTION
Established in 2010, Hydor is an underwriting agent on
behalf of the Brit Syndicate 2987 (Lloyds of London) offering
fixed premium Owners Protection & Indemnity, Charterers
P&I, FD&D and other marine related insurance products.
Hydor is licensed and regulated by the Financial Supervisory
Authority (FSA) of Norway.
Through Lloyds of London the Brit Syndicate 2987 holds
security ratings from Standard & Poors A+ (Strong). The
fixed premium facility looks at vessels up to 25,000 GT,
providing limits up to USD 1 billion for P&I and Charterers
Liabilities. Whilst Hydor is an underwriting agent for the
Brit Syndicate, the claims service is provided by C Solutions
Limited, which is a legal and claims consultancy staffed by
lawyers from the major UK shipping law firms, former P&I
Club Senior Managers, Master Mariners and Engineers. C
Solutions have been authorised by Hydor to handle all claims
exclusively.

GEOGRAPHICAL SPREAD OF BUSINESS

1%
Middle East

HYDOR SAYS
Hydor AS has the past year further positioned themselves
as a professional fixed priced Owners and Charterers
P&I facility, providing customized solutions for clients
internationally. Hydor AS continues to shape their
competitive edge, thus working with the client, rather than
for the client to sustain in a highly competitive market.
We have seen a shift in focus towards fixed P&I and we
attract new segments which traditionally have been placed
100% in the IG system. Our aim is to be complimentary
to IG and attract those who wants an alternative with 1st
class service and security outside the IG.

TYPE OF ENTERED VESSEL

8%
Tugs & Barges

10% Russia

1% North
America

17%
Fishing

5%
Offshore

3% Africa
3%
Southern
Europe

8%
Tankers

8%
Far East

19%
Containers

9%
South America

65%
Northern
Europe

34

27%
General
Cargo

16%
Bulkers

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

+22.1%

PREMIUM INCOME (US$)


2013 PY: 9,000,000
2014 PY: 14,000,000

GROSS TONNAGE (GT)


2013 PY: 1,300,000
2014 PY: 1,657,000

AVERAGE RATE PER GT (PGT)


2013 PY: 6.92
2014 PY: 8.45

150%

15,000,000

100%

10,000,000

50%

5,000,000

0%

2012

P&I PREMIUM INCOME

2011

BUSINESS PORTFOLIO SPREAD

2014

+27.5%

2013

+55%

P&I

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

2,000,000

10.00

8.00

6.00
1,000,000
4.00

2014

2013

2012

0.00

2011

2014

2013

2012

0%

2011

2.00

OWNED P&I PREMIUM INCOME USD


Policy Year: 2011 2012 2013 2014
P&I Premium Income 2,000,000 5,000,000 9,000,000
14,000,000
P&I Claims Incurred
250,000 750,000 6,000,000 5,000,000
Surplus/ Deficit
1,750,000 4,250,000 3,000,000 9,000,000

ENTERED GROSS TONNAGE USD


Policy Year: 2011 2012 2013 2014
Gross Tonnage

1,000,000 1,200,000 1,300,000 1,657,000

35

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

Reinsurance Carrier: Lloyds of London


Standard and Poors Rating: BBBMaximum Limit Offered: Up to USD 1 Billion
Vessel Type/ Size Cap: No Limit, but 97% of
vessels covered are below 10,001 GT
Facility Location: Moscow, Russia

INGOSSTRAKH INSURANCE CO.


www.ingos.ru

INGOSSTRAKH SAYS
Ingosstrakh continues to apply a particularly thorough
approach to risk assessment, conservative selection
of clients, regular monitoring, purge of portfolio and
implementing preventive measures, which enables
Ingosstrakh to maintain the leading position in the
Russian marine market.

INTRODUCTION
Ingosstrakh Insurance Co. is a private federal level Insurance
Company, which was founded in 1947, based in Moscow,
Russia. The facility offers P&I, FD&D, H&M and other marine
related insurance solutions.
The insurer has an international portfolio, however it holds
a leading share of the Russian P&I Market giving particular
preference to ship owners from Russia, CIS and East
European Countries. The facility offers limits up to USD 1
Billion for P&I and US$ 1 Million for FD&D.
Ingosstrakh covers in excess of 1,000 units, handling a
large range of vessels from smaller inland and coastal craft,
to larger ocean going vessels in excess of 20,000 GT. The
company is rated BBB- by Standard & Poors and a National
Scale rating of ruAA++.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

2% Northern Europe

2% Bulkers

5% South America

3% Dregers

3%
Offshore

1% Middle East
7%
Southern
Europe

53%
Russia

25%
General
Cargo

11%
Tankers

13%
Others

32%
Far East

17%
Tugs &
Barges

27%
Fishing

36

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

16%

24.3%

PREMIUM INCOME (US$)


2013 PY: 21,800,000
2014 PY: 16,500,000

9.88%

GROSS TONNAGE (GT)


2013 PY: 5,001,155
2014 PY: 4,200,000

AVERAGE RATE PER GT (PGT)


2013 PY: 4.36
2014 PY: 3.93

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

30,000,000

100%
25,000,000

80%
60%

Charterer/DTH

FD&D

2014

2013

2012

2011

2010

15,000,000

0%

2009

20%

2008

20,000,000

40%

P&I

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

10,000,000

5.00

8,000,000

4.50

6,000,000
4.00
4,000,000

2014

2013

2012

2011

2010

3.00

2009

2014

2013

2012

2011

2010

2009

2008

2008

3.50

2,000,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 25,400,000


27,250,000 23,000,000 19,228,453 23,523,685 21,800,000 16,500,000
P&I Claims Incurred 19,500,000
25,000,000 16,200,000 16,075,518 17,326,411 14,000,000 15,800,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
7,895,016
5,879,400 6,024,524 4,730,800 5,001,155 5,001,155 4,200,000

37

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

Reinsurance Carrier: Royal Sun Alliance Group


Standard and Poors Rating: A
Maximum Limit Offered: USD 1 Billion
Vessel Type/ Size Cap: Up to 40,000 for non-tanker
vessels and up to 10,000 GT for tankers
Facility Location: London, United Kingdom

LODESTAR LTD
www.lodestar-marine.com

LODESTAR SAYS
3 years in to our adventure we are delighted with our
progress in a very tricky market. We continue to grow at a
steady pace focusing on quality business aided by sensible
pricing and a robust loss prevention survey program. We
maintain that price is not always the defining factor when
choosing Lodestar, demonstrated by a +95% retention
record of renewing business. Whilst we continue to provide
a quality service with A rated security (RSA) we cant
afford to stagnate and have been busy developing our
offering over the last 12 months. Headline improvements
include the ability to insure dry cargo/bulker vessels up
to 40,000GT and to offer limits of liability up to USD 1
Billion. We listen to our clients and act on their requests!
We are very excited about the next 12 months having
reached a point of maturity and have plenty of more
improvements in the pipeline which we hope will benefit
current and new clients wishing to insure with Lodestar.

INTRODUCTION
Lodestar Marine Limited (Lodestar) was established in 2012,
providing fixed premium P&I insurance solutions. Lodestar is
a partnership, backed by Tawa Plc, part of Groupe Artmis,
a family owned investment company with consolidated
assets in excess of Euro 27 Billion. Lodestar comprises of
a team of experienced underwriters and claims executives
plus in-house surveyors, supported by further administration
staff based in Gloucester, under contract with Pro Insurance
Solutions Limited. The facility will write Fixed Premium P&I
risks, with limits up to USD 500 Million in co-operation with
RSA and other A rated insurers who will provide security.
Typical vessels insured by Lodestar will not exceed 10,000
gross tons.
A global network of over 250 Correspondents has been
established. In the event of a claim, security can be
provided by either a letter of undertaking or bank guarantee.
Furthermore, Lodestar is in the process of finalising
Flag State approval for the issuance of Blue Cards with
acceptance already received from a number of Authorities
including United Kingdom, Netherlands, Hong Kong and
Australia etc. Lodestar is authorised and regulated by the
FSA as an appointed representative of Pro Insurance
Solutions Limited.

GEOGRAPHICAL SPREAD OF BUSINESS

1% North America

TYPE OF ENTERED VESSEL

1% Australia

4% Yachts

6% Africa

2% Dredgers

9% Fishing

14%
Northern
Europe

29%
Southern
Europe

4%
Others

43%
Dry Cargo
19%
Tugs &
Barges

19%
South
America

7%
Middle East

38

23%
Far East

12%
Offshore

7%
Tankers

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

5.51%

+20%

+27%

PREMIUM INCOME (US$)


2013 PY: 25,000,000
2014 PY: 30,000,000

GROSS TONNAGE (GT)


2013 PY: 2,756,154
2014 PY: 3,500,518

AVERAGE RATE PER GT (PGT)


2013 PY: 9.07
2014 PY: 8.57

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

100%

40,000,000

80%

30,000,000

60%
20,000,000
40%

Charterers/DTH

Other Risks

FD&D

2014

2013

2012

0%

2011

10,000,000

20%

P&I

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

4,000,000

9.50

3,000,000
9.00
2,000,000
8.50

2014

2013

8.00

2012

2014

2013

2012

1,000,000

OWNED P&I PREMIUM INCOME USD


Policy Year:
P&I Premium Income

2008
2009 2010 2011 2012 2013 2014
-

16,500,000 25,000,000 30,000,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
-

1,777,512 2,756,154 3,500,518

39

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

NAVIGATORS P&I

Reinsurance Carrier: Navigators Insurance Company


Standard and Poors Rating: A
Maximum Limit Offered: Up to US$ 1 Billion
Vessel Type/ Size Cap: Up to 10,000 GT
Facility Location: London, United Kingdom

www.navpandi.com

INTRODUCTION
Established in 2004, the Navigators Insurance Group set
up a fixed premium P&I facility protecting ship owners,
managers and charterers against liabilities arising out of
operating their vessels. Today Navigators P&I, based in
London, offers fixed-cost Protection & Indemnity cover to
vessels in coastal, short-sea and limited Ocean trades. The
facility offers limits up to USD 1 billion and looks to insure
vessels up to 10,000 gross tons. Navigators underwriting
profile looks at all types of vessels, excluding passenger
vessels and those with U.S. Flag, cover is also available
on a worldwide trading basis, excluding U.S. waters. In
addition to Owners P&I, Navigators can also offer contractual
liabilities as an extension of the main P&I coverage.
Charterers Liability is also available to vessels below 10,000
GT. Furthermore, in addition also offers coverage for bunker
convention and MLC 2006 risks. Navigators have office
locations in US, London, Antwerp, Stockholm, Copenhagen
and Lloyds representative offices in Shanghai and Rio. More
recently Navigators have opened office locations in Rotterdam
and Milan and also looking to shortly expand in Paris and
Dubai. Furthermore, as part of the companys expansion
strategy Navigators is in the process of establishing a
separate European Insurance Company in London enabling
the acceptance of business from any EU country.

NAVIGATOR SAYS
Navigators P&I division celebrated our 10th anniversary
in November, confirming us as one of the more established
Fixed Premium providers in the Market. We remain one of
the few non-MGA providers, giving us long-term stability
that few in the marketplace enjoy; we are fully in control of
our own destiny. With the recent hire of Jason Riley from
the UK Club, to head up the operation, our P&I product is
undergoing a series of enhancements. There are a number of
projects in the pipeline that will take us forward in line with
the changing needs of our clients. Now being able to offer
cover up to $1bn, we are becoming a very credible threat to
the P&I Clubs, although for the time being we will stick to
our core vessel tonnage category of around 10,000 GT. The
soft market conditions make it difficult in a very crowded
Market, especially as most of the P&I Clubs themselves
have woken up the threat on their doorsteps, and Owners
still look to price being a significant factor in their insurance
decision making. More owners realise that in their particular
trade they may not need to pay for such high limits, so our
bespoke cover offers a sensible option. Whilst Navigators
has not grown in market share over the last few years, we are
confident that if we stick to our principals, and do not get
into growth for growths sake, we will prevail as one of the
stronger Fixed Premium providers.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

2% Container
10% Europe

10%
Fishing

16% Other

3%
Others
31%
General
Cargo

6%
Tankers

8%
South America

4%
Bulker

15%
North America

51%
Far East

40

44%
Tugs & Barges

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

6.6%

0.5%

PREMIUM INCOME (US$)


2013 PY: 21,430,000
2014 PY: 20,000,000

1.8%

GROSS TONNAGE (GT)


2013 PY: 2,000,000
2014 PY: 1,900,000

AVERAGE RATE PER GT (PGT)


2013 PY: 10.72
2014 PY: 10.53

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

29,000,000
28,000,000

100%

27,000,000
26,000,000

80%

25,000,000

60%

24,000,000
23,000,000

40%

2014

2013

2012

2011

2010

20,000,000

2009

21,000,000

0%

2008

22,000,000
20%

P&I

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT


12.00

3,000,000
2,500,000

11.50

2,000,000
11.00
1,500,000
10.50
1,000,000

2014

2013

2012

2011

2010

9.50

2009

2014

2013

2012

2011

2010

2009

2008

2008

10.00

500,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 28,200,000


25,000,000 24,000,000 22,500,000 22,000,000 21,430,000 20,000,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
2,450,000
2,300,000 2,100,000 2,200,000 2,100,000 2,000,000 1,900,000

41

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

Reinsurance Carrier: Lloyds of London (various syndicates)


Standard and Poors Rating: A+
Maximum Limit Offered: Up to US$ 500 Million
Vessel Type/ Size Cap: Up to 25,000 GT (dry bulk)
and 10,000 GT all other vessel types
Facility Location: London, United Kingdom

OSPREY UNDERWRITING
AGENCY LTD
www.special-risks.co.uk

INTRODUCTION
Established in 1991, Osprey Underwriting Agency is a
specialist P&I fixed premium insurance provider and is the
oldest P&I fixed premium insurer in London. The Agency
provides insurance services to ship owners on a variety of
vessel types and operations, with a focused portfolio of tugs,
barges and fishing vessels. The facility caters for vessels of
up to 25,000 GT, engaged in the carriage of dry cargoes and
up to 10,000 GT for all other vessel types. Osprey avoids
writing tankers carrying persistent cargoes and passenger
vessels. For business emanating from the USA the policy
limit is USD 1 Million.
Coverage can be provided on a worldwide basis, which is
backed up by an extensive global network of correspondents
and Lloyds agents. Osprey is actively looking to expand
its non-US book of business with a focus on Asia, whilst
maintaining its leading position as providers of U.S. Primary
P&I Insurance.
OSPREY SAYS
The past year has continued to be a competitive
environment for the development of new business, with
competing markets more determined on market share at
any price. That said we have been successful in positive
expansion, albeit with high regard for risk and exposure.
Our proportion of Non US business has increased as we
have sought to continue the development of this part of

GEOGRAPHICAL SPREAD OF BUSINESS

our account. We are fortunate to have the backing of our


Lloyds Syndicate support firmly behind our longer term
aims and ambitions. Fortunate also to be unique in the
market as a Lloyds Cover Holder offering the excellent A+
rated security and a name that is recognised worldwide. In
addition to P&I, the Agency continues to offer P&I war risks,
Hull & Machinery to USD5m value, Marine General Liability
and Maritime Employers liability coverage. We offer an
MLC financial guarantee product that is already compliant
with the proposed amendments due to be implemented by
December 2016 as well as the provision of Blue Cards that
Owners are required to provide in respect of Wreck Removal
and Bunker Pollution conventions, all secured by Lloyds. In
the US we have continued to reduce our market share in the
fish boat account due to the performance of certain sectors
of the industry, though it still remains a significant proportion
of our US business. We of course also have the benefit of a
Claims Service office in the U.S. providing dedicated local
claims support to all of Ospreys U.S. Clients and also those
who may visit/trade to the U.S. Our US account remains the
most significant part of our overall account, which does set
us apart from our fixed premium peers and allows Osprey to
offer a truly worldwide spread of account. Market conditions
remain soft across all classes and we continue to see what
we perceive as unsustainable premium rating for long term
commercial success in certain sectors.

TYPE OF ENTERED VESSEL

2%
General Cargo

2% Other

24%
Others
40%
Tugs &
Barges

32%
Asia/
Middle East

18%
Offshore
6%
South America
6%
Europe

42

54%
North
America

16%
Fishing

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

21.8%

26.5%

PREMIUM INCOME (US$)


2013 PY: 30,000,000
2014 PY: 27,500,000

GROSS TONNAGE (GT)


2013 PY: 1,800
2014 PY: 2,100

+6.3%

60%

40,000,000

40%

35,000,000

20%

30,000,000

25,000,000

0%
H&M

Other Risks

2014

45,000,000

2013

80%

2012

50,000,000

2010

100%

2009

P&I PREMIUM INCOME

2008

BUSINESS PORTFOLIO SPREAD

2011

AVERAGE RATE PER GT (PGT)


2013 PY: 16,667
2014 PY: 13,095

P&I

VOLUME OF BUSINESS UNDERWRITTEN

AVERAGE PREMIUM PER VSL

4,000

18,000

17,000

3,000

16,000
2,000
15,000
1,000

2014

2013

2012

2011

2010

2009

13,000

2008

2014

2013

2012

2011

2010

2009

2008

14,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 31,000,000 36,000,000 40,500,000

41,100,000

38,400,000

30,000,000 27,500,000

VOLUME OF BUSINESS UNDERWRITTEN USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

Number of Vessels On-Risk 2,350


2,660 2,849 3,095 2,450 1800 2100

43

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

RAETSMARINE BV

Reinsurance Carrier: Amlin Europe N.V.


Standard and Poors Rating: AMaximum Limit Offered: Up to US$ 1 Billion
Vessel Type/ Size Cap: Up to 40,000 GT. Unlimited for Charterers Liability
Facility Location: Rotterdam, Netherlands

www.raetsmarine.com

RAETSMARINE SAYS
Fixed premium P&I has developed into our mature market
and has become a real alternative to the IG Clubs for
small to medium size tonnage. The best proof of this is the

diversification of some members of the International Group


into fixed premium. The question to be answered in the near
future is how the members of these Clubs will react on the
fixed premium placements within these Clubs. IG Clubs will
have to come up with an explanation why some are in the
mutuality and others are fixed premium as they are servicing
both markets. Our clients are facing a difficult economic
environment and an increasing complexity of marine risks.
This next to the increasing limits on conventions and the
increasing cost of casualties. Our solution to that is to
work closely together with our clients on risk management
and tailor-made insurance solutions in order to keep the
insurance cost as low as possible and at the same time give
our clients seamless cover. Despite pressure on the rates
and increased competition we see plenty of opportunities
of growing in our markets as clients are looking for service
and solutions to their problems. RaetsMarine will continue
to develop new products and tailor-made solutions, together
with our service proposition to our clients. This has always
been the approach of RaetsMarine and is in our DNA. This
approach has proven to be rewarded by our clients and is
reflected by high retention rates.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

INTRODUCTION
RaetsMarine BV was founded in 1993, initially writing
charterers liability insurance. RaetsMarine BV were
independent underwriting agents of Amlin Corporate
Insurance BV before they were absorbed by Amlin Europe
N.V. in 2013, RaetsMarine continues to be responsible for
P&I, FD&D, Charterers Liability insurances. The Owners
P&I facility targets small to medium sized vessels, up to
40,000 GT, as well as supply vessels, fishing boats, tugs
and barges and other specialist units. For Charterers Liability,
RaetsMarine has no restrictions on vessel type, size, age or
territory. The facility currently serves over 1,000 charterers,
including traders, operators, NVOCCs and others chartering
vessels, offering limits up to US$ 500 Million (for both
owned and chartered business). RaetsMarine BV owned is
a cover holder at Lloyds, where RaetsMarine writes on the
Amlin Syndicate 2001 which is A+ rated by S&P.

2% Africa

2% Offshore

1% North America

1% Russia & CIS


5% South
America

46%
Europe

1% Dredgers
3% Fishing
1% Containers

2% Yatchs
29%
Others

6% Tankers

5%
Middle East

17%
Tugs &
Barges

34%
Far East

19%
General
Cargo

20%
Bulkers

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

+0.9%

2.3%

PREMIUM INCOME (US$)


2013 PY: 52,000,000
2014 PY: 52,500,000

44

+0.02%

GROSS TONNAGE (GT)


2013 PY: 15,360,000
2014 PY: 15,000,000

AVERAGE RATE PER GT (PGT)


2013 PY: 3.38
2014 PY: 3.39

MARKET FACTS & FIGURES

P&I PREMIUM INCOME

TONNAGE DEVELOPMENT

57,000,000

20,000,000

AVERAGE RATE PER GT

VESSELS ON RISK (CL ONLY)

5.80

25,000

2014

2013

2012

2011

2014

2013

2012

22,000,000

5,000,000
2011

27,000,000

2010

0%

32,000,000
2009

10%

10,000,000

37,000,000

War

FD&D

20%

42,000,000
SOL to Cargo

30%

Ports & Terminals

40%

15,000,000

2010

47,000,000

2009

50%

2008

52,000,000
Charterers/DTH

60%

2008

70%

P&I

BUSINESS PORTFOLIO SPREAD

20,000

4.80

15,000
3.80

27,000,000

2014

1,400.00

2014

28,000,000

2013

AVERAGE PREMIUM PER VSL

2013

CL PREMIUM INCOME

2012

2011

5,000

2010

2014

2013

2012

2011

2010

2009

1.80

2008

2.80

2009

10,000

1,300.00

26,000,000
1,200.00
25,000,000

2012

2011

2010

1,000.00

2009

2014

2013

2012

2011

2010

23,000,000

1,100.00
2009

24,000,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 28,600,000


35,500,000 36,400,000 51,700,000 50,000,000 52,000,000 52,500,000
P&I Claims Incurred 11,553,523
11,074,573 12,290,837 25,766,775 18,892,617 18,214,323 21,638,190
Surplus/ Deficit
17,046,477
24,425,427 24,109,163 25,933,225 31,107,383 33,785,677 30,861,810
CHARTERERS PREMIUM INCOME USD
Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 24,500,000


24,500,000 26,000,000 25,700,000 27,000,000 25,500,000 26,000,000
P&I Claims Incurred 11,298,008 8,678,617 12,661,622 10,028,183 11,144,971 8,357,932 7,226,730
Surplus/ Deficit
13,201,992
15,821,383 13,338,378 15,671,817 15,855,029 17,142,068 18,773,270
ENTERED GROSS TONNAGE (SO ONLY) USD
Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
5,298,502 12,178,942 11,390,104 16,262,048 15,806,600 15,366,000 15,500,000

NO. CHARTERER VESSELS INSURED USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

# vessels

18,061 22,371 23,783 23,000 21,000 21,500

45

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

ROSGOSSTRAKH LTD
www.rgs.ru

Reinsurance Carrier: Reinsurance Treaty


Standard and Poors Rating: BB-/RuAA (P&I Reinsurance Treaty A+)
Maximum Limit Offered: Up to USD 500 Million
Vessel Type/ Size Cap: Tankers up to 8,500 GT and All other vessels up to 25,000 GT
Facility Location: Moscow, Russia

INTRODUCTION
Successor of Soviet State Insurance Company Gosstrakh
established in 1921. Rosgosstrakh today is a private
company and a major insurance provider in the Russian
market. 43 million individual and 240 000 corporate
clients are served by RGS with 4 000 offices and 100
000 personnel. RGS has exceptionally strong assets in the
region of US$ 2.8 billion with charter capital of US$ 160
million. RGS P&I represents fixed premium facility targeting
small to medium sized vessels, up to 25 000 GT with
worldwide trading. The US$ 500 million capacity is placed
with reinsurers at Lloyds. RGS has a growing P&I portfolio
of predominantly Russian and FSU Clients. The current
P&I book of RGS represents over 1,800 units generating
US$ 6.2 million P&I premium. RGS also provides cover for
Charterer`s Liability, FD&D, marine hull, cargo and other
marine related insurance solutions.

ROSGOSSTRAKH LTD SAYS


We see the ongoing competition among fixed-premium
providers, specifically after new facilities were launched
and softened the market in terms of premium rates. This
however doesnt affect our book as we feel strong being a
niche player, while being first choice Insurer for the Russian
shipowners. During the past year we kept growing our P&I
book and strengthened our position in the Russian market.
RGS today is the leading P&I insurance provider with the
largest share for inland Russian fleets and a growing portfolio
for FSU clients.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

1% Far East

I would expect no further growth in number of P&I providers,


not counting those IG Clubs who have not yet launched their
fixed premium facility. In regards to the Russian marine
insurance market, we feel, there will be fewer number of
players in the next couple of years. It is becoming more
difficult however to keep the level of premium rates within
overall decline in the shipping industry.

2% Dredgers

4% Northern Europe

1% Bulkers

1% Offshore

2% Middle East

12% Tugs &


Barges

7% Southern
Europe

33%
Tankers

6%
Fishing

22%
Others

86%
Russia

46

23%
General Cargo

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

10.1%

+29.1%

+43.5%

PREMIUM INCOME (US$)


2013 PY: 4,800,000
2014 PY: 6,200,000

GROSS TONNAGE (GT)


2013 PY: 1,424,486
2014 PY: 2,044,800

AVERAGE RATE PER GT (PGT)


2013 PY: 3.37
2014 PY: 3.03

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

8,000,000

100%
6,000,000
80%
60%

4,000,000

40%
2,000,000
2014

2013

2012

2011

2010

0
P&I

2009

0%

2008

20%

Charterers/DTH

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

2,500,000

4.500

2,000,000
4.000
1,500,000

1,000,000
3.500

2014

2013

2012

2011

2010

2009

3.000

2008

2014

2013

2012

2011

2010

2009

2008

500,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income


P&I Claims Incurred
Surplus/ Deficit

744,480 1,943,532 3,286,643 3,885,055 4,008,499 4,800,000 6,200,000


101,532 274,745 195,519 2,090,796 975,731 1,366,700
1,207,000
642,948 1,668,787 3,091,124 1,794,259 3,032,768 3,433,300 4,993,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
235,258 562,170 1,038,500 1,055,019 1,002,000 1,424,486 2,044,800

47

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

KOREAN SHIPOWNERS
MUTUAL P&I

Reinsurance Carrier: Lloyds of London, Korean Re and Kuwait Re


Standard and Poors Rating: A- (excellent)
Maximum Limit Offered: USD 1 Billion
Vessel Type/ Size Cap: No Limit
Facility Location: Seoul, Korea

www.kpiclub.or.kr

INTRODUCTION
The Korea Shipowners Mutual P&I Association was
established in 2000, offering fixed premium P&I solutions,
as well as other marine related insurances. KPI operates as a
mutual organisation (not for profit), covering in excess of 996
vessels, commanding a collective market share of 21 Million
GT, with a premium income of approximately US$ 31.8
million (based on 2014 results). The facility offers P&I limits
of liability up to US$ 1 Billion, backed by reinsurers from
Lloyds of London, Korean Re and Kuwait Re.
KPI targets a large tonnage range of merchant vessels
ranging up to 100,000 GT for dry cargo vessels and up
to 10,000 GT for tanker tonnages. The majority of their
portfolio consists of Korean Members, which makes up 93%
of the Club.

GEOGRAPHICAL SPREAD OF BUSINESS

0.2%
Middle East

KOREAN P&I CLUB SAYS


In our view, the biggest challenge in the P&I market sector
is increasing size of the marine accident, in particular
wreck removal or oil pollution clean-up costs to which limit
of shipowners liability regime is not applied. Also, there
was the Sewol ferry incident last year which triggers our
high attention to substantial safety issues. Actually, safety
recognition of people and the industry in Korea has improved
a lot. About 70 laws related to maritime industry were
revised and laws related to safety have been strengthened
enormously.
In Korean market, Korean shipowners sold many aged small
and middle sized vessels of which P&I premium are high and
limitedly purchased newly built large sized vessels. There
have been fierce price competitions for newly purchased
vessels. Facing the cramped domestic market environment,
we are going to extend KP&Is membership in Asia and
greatly looking forward to overseas markets to secure future
growth, and accomplish the vision Acceptable to the world.
So far, 48 vessels from China, Taiwan, Vietnam, Indonesia,
UAE, and Singapore have been entered to KP&I. Partnerships
with foreign insurance companies would bring us to achieve
a remarkable growth and we will not stop continuing to try to
become a reliable partner of Global Shipping Industry.

TYPE OF ENTERED VESSEL

99.8%
Far East

9% Tugs &
Barges
22%
Bulkers

8%
Tankers

11%
Containers

16%
Fishing
13%
General
Cargo

21%
Others

48

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

11.9%

+2.2%

+15.9%

PREMIUM INCOME (US$)


2013 PY: 32,119,000
2014 PY: 31,812,000

GROSS TONNAGE (GT)


2013 PY: 18,192,000
2014 PY: 21,090,000

AVERAGE RATE PER GT (PGT)


2013 PY: 1.711
2014 PY: 1.508

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

120%

40,000,000

100%
30,000,000
80%
20,000,000

60%
40%

FD&D

Charterers/DTH

2014

2013

2012

2011

2010

2009

0%

2008

10,000,000
20%

P&I

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

25,000,000

3.00

20,000,000
2.00

15,000,000

10,000,000
1.00

2014

2013

2012

2011

2010

2009

0.00

2008

2014

2013

2012

2011

2010

2009

2008

5,000,000

OWNED P&I PREMIUM INCOME USD


Policy Year:

2008
2009 2010 2011 2012 2013 2014

P&I Premium Income 13,248,000


19,509,000 26,002,000 28,894,000 29,653,000 32,119,000 31,323,000
P&I Claims Incurred 7,734,000 10,619,000 10,477,000 20,161,000 15,715,000 19,705,000 23,632,000
Surplus/ Deficit
5,514,000 8,890,000 15,525,000 8,733,000 13,938,000 12,414,000 7,691,000

ENTERED GROSS TONNAGE USD


Policy Year:
Gross Tonnage

2008
2009 2010 2011 2012 2013 2014
4,996,000 7,338,000 8,685,000 10,007,000 11,043,000 18,192,000 21,090,000

49

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

CHARTERAMA BV

Reinsurance Carrier: Royal Sun Alliance


Standard and Poors Rating: A
Maximum Limit Offered: Up to USD 350 Million
Vessel Type/ Size Cap: No restrictions
Facility Location: Rotterdam, Netherlands

www.charterama.com

INTRODUCTION
Charterama BV was established in March 2009, based in
Rotterdam, Netherlands, as an underwriting agency offering
a full range of Charterers P&I coverage. The facility is able
to respond worldwide, with their extensive global network
of correspondents. Charterama BV is backed by its primary
carrier Royal Sun Alliance, who holds an A Standard and
Poors rating. The facility specialises in Charterers Liability,
Damage to Hull and FD&D coverage, offering limits up to
US$ 350 Million and US$ 2 Million for FD&D, additional
covers, such as War and Bunkers insurance are also
available. The facility has grown tremendously from a
premium income of US$ 3 Million in 2009, to US$ 10.5
Million in 2014. More recently in April 2014, Charterama
BV opened a new office in Hong Kong, to expand their
network and support services in Asia where 12% of the
agencies portfolio current emanates from.

ROSGOSSTRAKH LTD SAYS


Service and knowledge/experience: our main strengths.
Despite a highly competitive market we are glad to attract
quality clients, whos choice is not driven by price only.
We take our clients serious and we get respect in return.
Also the combination of having an office in Hong Kong, the
strong security of RSA and our increased limits contributed
to being a recognized provider in the higher segment of the
charterers liability market with top end operators/traders
amongst our clients.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

1% Australia

1% Tugs & Barges

2% Middle East

47%
Bulkers

12%
Far East

18%
Tankers

81%
Europe

50

2% Others

2% Containers

5% North America

30%
General
Cargo

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

+16%

+5%

PREMIUM INCOME (US$)


2013 PY: 9,000,000
2014 PY: 10,500,000

+5.2%

NO OF VESSELS INSURED
2013 PY: 10,000
2014 PY: 10,500

AVG PREMIUM PER VSL (US$)


2013 PY: 950
2014 PY: 1,000

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

80%

12,000,000
10,000,000

60%
8,000,000
6,000,000

40%

4,000,000
20%

Charterers/DTH

FD&D

War

2014

2013

2012

2011

0%

2010

2009

2,000,000

Other Risks

TONNAGE DEVELOPMENT

AVERAGE RATE PER GT

12,000

1,300

10,000
1,200
8,000
1,100

6,000
4,000

1,00
2014

2013

2012

2011

2010

900

2009

2014

2013

2012

2011

2010

2009

2,000

OWNED P&I PREMIUM INCOME USD


Policy Year: 2009 2010 2011 2012 2013 2014
Charterers Premium Income

3,000,000 5,000,000 6,000,000 8,000,000 9,500,000


10,500,000

ENTERED GROSS TONNAGE USD


Policy Year: 2009 2010 2011 2012 2013 2014
No. Vessels

2,500 4,000 5,800 8,300 10,000


10,500

51

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

CHARTERERS P&I CLUB

Reinsurance Carrier: Munich Re


Standard and Poors Rating: AAMaximum Limit Offered: Up to USD 500 Million
Vessel Type/ Size Cap: No restrictions
Facility Location: London, United Kingdom

www.exclusivelyforcharterers.com

INTRODUCTION
The Charterers P&I club was founded in 1986, as a mutual
insurance company, specialising in charterers liability
insurance and defence coverage. In 1999 the Club was
demutualised and an underwriting agency was formed,
backed by Lloyds of London security, offering fixed premium
charterers liability and other marine related products. In
2009 the agency switched its security to Great Lakes
Munich Re Group, which holds an S&P AA- rating. Michael
Else & Co., are the managers of the Club and provide
all underwriting and claims support, though its global
correspondent network. The facility provides limits of liability
up to USD 500 million for charterers liability and up to USD
2 million for FD&D. The agency employs experience maritime
lawyers and commercial claims handlers, with offices in
London, Shanghai and a claims handling office in Dubai. In
the late part of 2013, the managers of the Charterers P&I
Club set up a strategic hub in Dubai as Sextant Marine to
service the overseas markets more efficiently.

CHARTERERS P&I CLUB SAYS


Despite an intensively competitive market and a persistent
downturn in the shipping industry, the Charterers P&I Club
goes from strength to strength and is expecting to grow by
over 20% by the end of 2015. The Club has strongly defined
USPs, its policies are underwritten 100% by the Munich
Re Group with an S&P rating of AA- and Michael Else and
Company enjoys an excellent reputation for professionalism
and service. The Charterers P&I Club is the largest and
most well-resourced specialist in the Charterers market.
Its success lies in the quality of the product and the scale
and depth of experience of a well-resourced team. The
restructuring of the business into three hubs one team
across offices in London, Dubai and Shanghai has enhanced
the regional distribution model and enabled the provision of
more locally tailored services. Risk consultants and client
servicing Managers are also employed in the Americas and
Australasia. This, combined with a significant investment in
new staff and infrastructure has underpinned the successful
performance against current trends. The Charterers P&I
Club is the obvious choice for professional charterers that
understand the value to them of its specialisation and want
the highest quality without the compromise and conflict of
being insured by an Owners P&I Club.

GEOGRAPHICAL SPREAD OF BUSINESS

TYPE OF ENTERED VESSEL

2% North America

2% South America

5%
Tankers

4% Africa
9%
Southern
Europe

13%
Liner
42%
India/Asia

12%
Australia/
New Zealand

16%
General
Cargo

3%
Middle East

26%
Northern
Europe

52

2% Others

64%
Bulkers

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

0.5%

100%

29,000,000

80%

28,000,000

60%

27,000,000

40%

26,000,000

20%

25,000,000

0%

24,000,000
P&I

2009

P&I PREMIUM INCOME

2008

BUSINESS PORTFOLIO SPREAD

2014

AVG PREMIUM PER VSL (US$)


2013 PY: 2,256.00
2014 PY: 2,320.00

2013

NO OF VESSELS INSURED
2013 PY: 12,500
2014 PY: 12,200

2012

PREMIUM INCOME (US$)


2013 PY: 28,200,000
2014 PY: 28,300,000

2011

+4.1%

2010

+3.6%

Charterers/DTH

VESSELS ON RISK

AVERAGE PREMIUM PER VESSEL

13,000

2,600

12,500

2,500

12,000
2,400
11,500
2,300
11,000

2014

2013

2012

2011

2,100

2010

2014

2013

2012

2011

2010

2009

10,000

2009

2,200

10,500

CHARTERERS LIABILTIY INCOME USD


Policy Year:
Charterers
Premium Income

2008
2009 2010 2011 2012 2013 2014
25,500,000
28,000,000 27,000,000 25,500,000 27,200,000 28,200,000 28,300,000

NO. VESSELS INSURED USD


Policy Year:
No. Vessels

2008
2009 2010 2011 2012 2013 2014
- 11,000 11,500 11,000 12,000 12,500 12,200

53

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

NORWEGIAN HULL CLUB

Reinsurance Carrier: Lloyds of London


Standard and Poors Rating: A
Maximum Limit Offered: USD 500 Million
Vessel Type/ Size Cap: No restrictions
Facility Location: Oslo, Norway

www.norclub-no

INTRODUCTION
In 2008 the Club commenced underwriting Charterers
Liability risks, today their portfolio commands a premium
income of around US$ 9 Million, with approximately 150
charterers & traders clients. The Clubs charterers facility
offers limits up to US$ 500 Million for traditional Charterers
P&I and Damage to Hull. FD&D for charterers is also
available in addition to the Clubs extensive marine insurance
product range. The Norwegian Hull Club has a large share
of the Norwegian ocean hull market and ranks amongst the
largest pure marine underwriters in the world.

NORWEGIAN HULL CLUB SAYS


The Norwegian Hull Clubs P&I facility is exclusively for
charterers, including chartering operations for commodity
traders and producers.
The P&I team has considerable experience in bulk and
tanker trades and, as an integrated part of one of the worlds
leading marine underwriters, is able to draw on the technical
and nautical expertise available within the rest of the Club.
The considerable resources of the Clubs Loss Prevention
Department are also available. The team has significant
knowledge and experience of maritime law and is able to
offer extensive advice and assistance to its chartering clients
regarding all pre- and post-fixture issues.
With its exclusive focus on chartering clients, the facility
is able to avoid conflicts within the Club between owners
and charterers P&I interests and the tension that inevitably
results from a provider concentrating on its owner clients.
The Clubs remains committed to be a long-term strategic
partner to its chartering clients, not a pure capacity provider
and the decision in 2014 to alter the focus of its portfolio
away from small-scale traders and towards industrial clients
has had a positive impact in a difficult market.

GEOGRAPHICAL SPREAD OF BUSINESS

17%
South America

TYPE OF ENTERED VESSEL

13%
Others

31%
Europe

3% North
America
1%
Middle
East

20%
General
Cargo

66%
Bulkers
48%
Asia-Pacific

54

MARKET FACTS & FIGURES

TWELVE MONTH DEVELOPMENT PERFORMANCE INDICATORS

10%

13.5%

+4.1%

PREMIUM INCOME (US$)


2013 PY: 10,000,000
2014 PY: 9,000,000

NO OF VESSELS INSURED
2013 PY: 1,496
2014 PY: 1,557

AVG PREMIUM PER VSL (US$)


2013 PY: 6,684
2014 PY: 5,780

BUSINESS PORTFOLIO SPREAD

P&I PREMIUM INCOME

80%

14,000,000
12,000,000

60%

10,000,000
8,000,000

40%
6,000,000

H&M

Other Risks

War

2014

2013

2012

2011

2010

0%

2009

2,000,000

2008

4,000,000

20%

Charterers/DTH

VESSELS ON RISK

AVERAGE PREMIUM PER VESSEL

2,500

7,700
7,200

2,000

6,700
1,500
6,200
1,000
5,700
500

2014

2013

2012

2011

2010

2009

4,700

2008

2014

2013

2012

2011

2010

2009

2008

5,200

OWNED P&I PREMIUM INCOME USD


Policy Year:
Charterers
Premium Income

2008
2009 2010 2011 2012 2013 2014
4,800,000 8,700,000 9,500,000 11,000,000 11,500,000 10,000,000 9,000,000

ENTERED GROSS TONNAGE USD


Policy Year:
No. Vessels

2008
2009 2010 2011 2012 2013 2014
890 1,340 1,630 1,880 1,960 1,496 1,557

55

INTRODUCTION
Examining and comparing industry statistics on the
various International Group Clubs is relatively easy
due to the transparent and consistent nature in which
the Clubs report on account. By contrast, analysing the
various commercial markets is a more difficult task due
to individual markets willingness to release accurate
premium, GT and claims figures. Furthermore, markets
may also supply information with inconsistent data, as
any declared information may also include other marine
lines, such as H&M, war and charterers liability etc.

03 INDUSTRY

STATISTICS

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I OWNED PREMIUM INCOME DEVELOPMENT

USD 000
INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
British Marine
$310,000

$93,000 $125,000 $133,500 $125,000 $106,000 $100,000 $97,500

-2.50%

-36.92%

RaetsMarine
$28,600 $35,500 $36,400 $51,700 $50,000 $52,000 $52,500 0.96%
$300,000
Lodestar
-
-
-
- $16,500 $25,000 $30,000 20.00%
$290,000
Osprey Underwriting Agency
$31,000 $36,000 $40,500 $41,100 $38,400 $30,000 $27,500 -8.33%

-47.27%

$280,000
Navigators

$28,200 $25,000 $24,000 $22,500 $22,000 $21,430 $20,000 -6.67%

-20.00%

$270,000
Hanseatic Underwriters $7,700 $11,200 $14,700 $15,800 $19,700 $18,300 $19,500 6.56%

24.62%

Ingosstrakh Insurance Co
$25,400 $27,250 $23,000 $19,228 $23,523 $21,800 $16,500 -24.31%
$260,000

-39.39%

Hydor AS
$250,000
Carina
$240,000
Eagle Ocean Marine
$230,000
Rosgosstrakh Ltd
TOTAL
$220,000
AVERAGE
$210,000
2008

30.67%

- $2,000 $5,000 $9,000


$14,000 55.56%

- - - - -
$7,250
$10,000
37.93%
-

- $500 $5,000 $6,500 $6,500 $7,000 7.69%

92.86%

$744 $1,943 $3,286 $3,885 $4,008 $4,800 $6,200 29.17%

47.00%

$214,644 $261,893 $275,886 $286,213 $291,631 $296,080 $300,700

1.56%

$30,663 $37,413 $34,486 $31,801 $29,163


$26,916.36
$27,336.36 1.56%
2009

2010

2011

2012

8.99%
8.99%
2014

2013

MARKET VARIANCE ON 2014 POLICY YEAR BY PREMIUM INCOME (US$)

$120,000
2013

2014

$100,000

$80,000

$60,000

$40,000

$20,000

$0

58

British Marine RaetsMarine

Lodestar

Osprey
Underwriting
Agency

Navigators

Hanseatic
Ingosstrakh
Underwriters Insurance Co

Hydor AS

Carina

Eagle Ocean
Marine

Rosgosstrakh
Ltd

INDUSTRY STATISTICS

PREMIUM INCOME DEVELOPMENT (US$)

$310,000
$300,000
$290,000
$280,000
$270,000
$260,000
$250,000
$240,000
$230,000
$220,000
$210,000

2008

2009

2010

2011

2012

2014

2013

MARKET SHARE BY PREMIUM INCOME (2014)

$120,000

2% Eagle Ocean Marine

2%
Rosgosstrakh Ltd

3% Carina
$100,000

$40,000

$20,000

$0

2014

5% Hydor AS
32%
British
Marine

$80,000

$60,000

2013

5% Ingosstrakh
Insurance Co
6%
Hanseatic
Underwriters
7%
Navigators

British Marine RaetsMarine

Lodestar

9%
Osprey
Underwriting
Agency

Osprey
Underwriting
Agency

10%
Lodestar

Navigators

Hanseatic
Ingosstrakh
Underwriters Insurance Co

Hydor AS

Carina

Eagle Ocean
Marine

Rosgosstrakh
Ltd

17%
RaetsMarine

59

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I OWNED GT DEVELOPMENT

GT 000
INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result

TOTALS
25,000
2008
2009
AVERAGE

Tonnage (000s)

5,298 12,178 11,390 16,262 15,806 15,366 15,500 0.87% 26.52%


$7.800
50,000
11,000 13,500 13,520 12,600 12,000 11,000 10,600 -3.64% -27.55%
$7.600
Ingosstrakh Insurance Co
7,895 5,879 6,024 4,730 5,001 5,001 4,200
-16.02% -43.43%
43,000
$7.400
45,000
Carina
- - - - -
2,000
3,000
50.00%
41,000
$7.200
39,000
Hanseatic Underwriters 1,400 1,600 1,900 2,100 2,400 2,700 2,850 5.56% 33.33%
$7.000
40,000
37,000
Lodestar
-
-
-
- 1,777 2,756 3,500
27.00%
$6.800
35,000
Rosgosstrakh Ltd
235 562 1,038 1,055 1,118 1,424 2,044
43.54% 49.22%
$6.600
35,000
33,000
Navigators
2,450 2,300 2,100 2,200 2,100 2,000 1,900
-5.00%
-10.53%
$6.400
31,000
Hydor AS
-
-
- 1,000 1,200 1,300 1,657
27.46%
$6.200
30,000
29,000
Eagle Ocean Marine
- - 50 470 650 590 898
52.20%
94.43%
$6.000
27,000
USD Per Ton

RaetsMarine
47,000
British Marine
45,000

28,278 36,019 36,022 40,417 42,052 44,137 46,149


4.56% 21.94%
$5.800
25,000
2010
2011
2012
2013
2014
2008 2009 2010 2011 2012 2013 2014
4,713 6,003 5,146 5,052 4,672 4,414 4,615 4.56% -11.51%
Average Rate PGT
Total Owned GT

MARKET VARIANCE ON 2014 POLICY YEAR BY GROSS TONNAGE

18,000

2013

2014

16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0

60

RaetsMarine

British Marine

Ingosstrakh
Insurance Co

Carina

Hanseatic
Underwriters

Lodestar

Rosgosstrakh
Ltd

Navigators

Hydor AS

Eagle Ocean
Marine

INDUSTRY STATISTICS

GROSS TONNAGE DEVELOPMENT

AVERAGE RATE PER GT VS OWNED GT

47,000

$7.800

45,000

$7.600

43,000

$7.400

41,000

45,000

USD Per Ton

37,000
35,000
33,000

$7.000

40,000

$6.800
$6.600

35,000

Tonnage (000s)

$7.200

39,000

$6.400

31,000
29,000

$6.200

27,000

$6.000

25,000

50,000

2008

2009

2010

2011

2012

2013

$5.800

2014

30,000

2008 2009 2010 2011 2012 2013 2014


Average Rate PGT

25,000

Total Owned GT

MARKET SHARE BY GROSS TONNAGE (2014)

2%
Eagle Ocean Marine

4% Hydor AS

18,000
16,000

2013

2014

4% Navigators

14,000

4%
Rosgosstrakh Ltd

12,000
10,000

34%
RaetsMarine

8%
Lodestar

8,000
6,000

6%
Hanseatic
Underwriters

4,000
2,000
0

RaetsMarine

7%
Carina

British Marine

Ingosstrakh
Insurance Co

Carina

Hanseatic
Underwriters

Lodestar

Rosgosstrakh
Ltd

Navigators

Hydor AS

Eagle Ocean
Marine

9% Ingosstrakh
Insurance Co
23%
British Marine

61

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I OWNED AVERAGE P&I RATE PER GT DEVELOPMENT

USD PER GT
INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
Navigators
$310,000

$11.510 $10.870 $11.429 $10.227 $10.476 $10.715 $10.526 -1.76%

British Marine
$290,000
Lodestar

-8.57%

$8.455 $9.259 $9.874 $9.921 $8.833 $9.091 $9.198 1.18%


-

- $2.000 $4.167 $6.923 $8.449 22.04%

-7.35%

- $9.285 $9.071 $8.571 -5.51%

$280,000
Hydor AS

Eagle Ocean Marine


$270,000

- $10.000 $10.638 $10.000 $11.017 $7.795 -29.24%

-28.29%

Hanseatic
$260,000
Ingosstrakh

$5.500 $7.000 $7.737 $7.524 $8.208 $6.778 $6.842 0.95% -13.08%


$3.217 $4.635 $3.818 $4.065 $4.704 $4.359 $3.929 -9.88%

2.81%

$250,000
RaetsMarine

$5.398 $2.915 $3.196 $3.179 $3.163 $3.384 $3.387 0.09%

5.65%

Carina
$240,000

- - - - -
$3.625
$3.333
-8.05%

Rosgosstrakh Ltd
$230,000
TOTALS

$3.166 $3.457 $3.166 $3.682 $3.585 $3.371 $3.033


-10.01%

-4.37%

$7.590 $7.271 $7.659 $7.082 $6.935 $6.708 $6.516 -2.87% -14.92%

$220,000
VARIANCE -4.21% 5.33% -7.54% -2.07% -3.27% -2.87% -2.87% -14.92%

$210,000
2008
2014
2009
2010
2011
2012
2013

AVERAGE RATE PER GT DEVELOPMENT (LAST 12 MONTHS)

$12.000
2013

2014

$10.000

$8.000
2014
Average

$6.000

$4.000

$2.000

$0.000

62

Navigators

British Marine

Lodestar

Hydor AS Eagle Ocean Marine Hanseatic

Ingosstrakh

RaetsMarine

Carina

Rosgosstrakh Ltd

INDUSTRY STATISTICS

AVERAGE RATE PER GT DEVELOPMENT (US$)

$310,000
$290,000
$280,000
$270,000
$260,000
$250,000
$240,000
$230,000
$220,000
$210,000

2008

2009

2010

2011

2012

2014

2013

OWNED P&I MARKET CYCLE

6%
$12.000
2013

4%

2014

$10.000
2%

Percentage

$8.000
0%
2014
Average

-2%
$6.000
-4%
$4.000
-6%
$2.000
-8%
$0.000
-10%

Navigators
2009 British Marine

Lodestar
2010

Hydor AS Eagle
Ocean Marine Hanseatic
2011
2012 Ingosstrakh

RaetsMarine
2013

Carina

Rosgosstrakh
Ltd
2014

63

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I CHARTERERS & TRADERS


PREMIUM INCOME DEVELOPMENT

USD 000

Charterama BV
$78,000
Charterers P&I Club
$76,000
RaetsMarine BV
Norwegian Hull Club
$74,000

- $3,000 $5,000 $6,000 $8,000


$10,000
$10,500 5.00%
$12,000
$25,000 $28,000 $27,000 $25,500 $27,200 $28,200 $28,300 0.35%
$11,800
$0 $24,500 $26,000 $25,700 $27,000 $25,500 $26,000 1.96%
$11,600
$4,800 $8,700 $9,500 $11,000 $11,500 $11,000 $9,000 -18.18%
$11,400

52.38%
48,000
4.59%
46,000
0.00%
44,000
-5.56%
42,000
33.33%

USD Per Ton

Hanseatic Underwriters $1,200 $850 $900 $950 $1,000 $1,200 $1,350 12.50%
$11,200
$72,000
TOTAL
$31,000 $65,050 $68,400 $69,150 $74,700 $75,900 $75,150 -0.99%
$11,000

40,000
9.87%

$70,000
VARIANCE
109.84% 5.15% 1.10% 8.03% 1.61% -0.99% -0.99%
$10,800

$10,600
$68,000
$66,000
$64,000

2009

2010

2011

2012

2013

2014

38,000
9.87%
36,000

$10,400

34,000

$10,200

32,000

$10,000

2009

2010

2011

2012

Average Premium Development

2013

2014

Tonnage (000s)

INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result

30,000

Number of vessels on risk

MARKET VARIANCE ON 2014 POLICY YEAR BY PREMIUM INCOME (US$)

$30,000
2013

2014

$25,000

$20,000

$15,000

$10,000

$5,000

$0

64

Charterama BV

Charterers P&I Club

RaetsMarine BV

Norwegian Hull Club

Hanseatic Underwriters

INDUSTRY STATISTICS

PREMIUM INCOME DEVELOPMENT PER GT


VS NUMBER OF VESSELS ON RISK

$78,000
$76,000
$74,000

48,000

$11,800

46,000

$11,600

44,000

USD Per Ton

$11,400

$72,000
$70,000

42,000

$11,200

40,000

$11,000

38,000

$10,800

36,000

$10,600

$68,000
$66,000
$64,000

$12,000

2009

2010

2011

2012

2013

$10,400

34,000

$10,200

32,000

$10,000

2014

2009

2010

2011

2012

Average Premium Development

2013

2014

Tonnage (000s)

PREMIUM INCOME DEVELOPMENT (US$)

30,000

Number of vessels on risk

MARKET SHARE BY PREMIUM INCOME (US$)

$30,000

2% Hanseatic
Underwriters

2013

12% Norwegian
Hull Club

$25,000

2014

14%
Charterama BV

$20,000

$15,000

$10,000

$5,000

$0

35%
RaetsMarine BV

Charterama BV

Charterers P&I Club

RaetsMarine BV

Norwegian Hull
Club
38%

Hanseatic Underwriters

Charterers
P&I Club

65

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I CHARTERERS & TRADERS


NUMBER OF VESSELS INSURED DEVELOPMENT

INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
Charterama BV 2,500 4,000 5,800 8,300
10,000
10,500 5.00% 61.90%
Charterers P&I Club 11,000 11,500 11,000 12,000 12,500 12,500 0.00%

8.00%

RaetsMarine BV 18,061 22,371 23,783 23,783 21,000 21,000 0.00%

-6.53%

Norwegian Hull Club

890 1,340 1,630 1,880 1,960 1,496 1,557 4.08% -4.69%

Hanseatic Underwriters - - - - - - -
TOTAL

890 32,901 39,501 42,463 46,043 44,996 45,557 1.25%

15.33%

VARIANCE
3596.74%
20.06% 7.50% 8.43% -2.27% 1.25% 1.25% 15.33%

MARKET SHARE BY NUMBER OF VESSELS INSURED

3% Norweigan
Hull Club
23%
Charterama BV

46%
RaetsMarine BV

27%
Charterers
P&I Club

66

INDUSTRY STATISTICS

NUMBER OF VESSELS INSURED DEVELOPMENT

$50,000
$48,000
$46,000
$44,000
$42,000
$40,000
$38,000
$36,000
$34,000
$32,000
$30,000

2009

2010

2011

2012

2013

2014

MARKET VARIANCE ON 2014 POLICY YEAR BY NUMBER OF VESSELS INSURED

$25,000
2013

2014

$20,000

$15,000

$10,000

$5,000

$0

Charterama BV

Charterers P&I Club

RaetsMarine BV

Norwegian Hull Club

Hanseatic Underwriters

67

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

P&I CHARTERERS & TRADERS


AVERAGE PREMIUM PER VESSEL DEVELOPMENT

INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
Charterama BV

- $1,200 $1,250 $1,034 $964 $1,000 $1,000 0.00% -25.00%

Charterers P&I Club

- $2,545 $2,348 $2,318 $2,267 $2,256 $2,264 0.35%

RaetsMarine BV

- $1,357 $1,162 $1,081 $1,135 $1,214 $1,238 1.96%

6.13%

$5,393 $6,493 $5,828 $5,851 $5,867 $7,353 $5,780


-21.39%

-0.83%

Norwegian Hull Club

-3.70%

Hanseatic Underwriters - - - - - - -
TOTAL

$5,393 $11,595 $10,588 $10,284 $10,233 $11,823 $10,282 -14.98%

-2.89%

VARIANCE
114.98% -8.68% -2.87% -0.50% 15.54%
-13.03%
-14.98%

-2.89%

AVERAGE PREMIUM PER VESSEL DEVELOPMENT (LAST 12 MONTHS)


$8,000
2013

2014

$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0

Charterama BV

Charterers P&I Club

RaetsMarine BV

Norwegian Hull Club

Hanseatic Underwriters

AVERAGE PREMIUM PER VESSEL DEVELOPMENT (US$)

$12,000
$11,800
$11,600
$11,400
$11,200
$11,000
$10,800
$10,600
$10,400
$10,200
$10,000

68

2009

2010

2011

2012

2013

2014

INDUSTRY STATISTICS

NON-IG MUTUAL P&I PREMIUM INCOME DEVELOPMENT

USD 000
INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
China P&I Club

$34,941 $44,802 $51,148 $60,012 $67,090

Korean P&I Club

$13,248 $19,509 $26,002 $28,894 $29,653 $31,127 $32,323 3.84%

TOTAL

$48,189 $64,311 $77,150 $88,906 $96,743 $31,127 $32,323

19.56%

VARIANCE 33.46% 19.96% 15.24% 8.81% -67.83% 3.84%

MARKET VARIANCE ON 2014 POLICY YEAR BY PREMIUM INCOME (US$)


$32,500
2013

2014

$32,000

$31,500

$31,000

$30,500

Korean P&I Club

PREMIUM INCOME DEVELOPMENT (US$)

$30,000

$25,000

$20,000

$15,000

$10,000

2008

2009

2010

2011

2012

2013

2014

69

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

NON-IG MUTUAL P&I GT DEVELOPMENT

USD 000
INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
China P&I Club
Korean P&I Club
TOTAL

16,510 17,880 24,010 27,800 31,340

4,996 7,338 8,685 10,007 11,833 18,192 21,090 15.93%

58.82%

21,506 25,218 32,695 37,807 43,173 18,192 21,090

VARIANCE 17% 30% 16% 14% -58% 16%

MARKET VARIANCE ON 2014 POLICY YEAR BY GROSS TONNAGE

$22,000
2013
$21,000

$20,000

$19,000

$18,000

$17,000

$16,000

Korean P&I Club

GROSS TONNAGE DEVELOPMENT

$24,000

$19,000

$14,000

$9,000

$4,000

70

2008

2009

2010

2011

2012

2013

2014

2014

INDUSTRY STATISTICS

NON-IG MUTUAL P&I


AVERAGE P&I RATE PER GT DEVELOPMENT

USD PER GT
INSURER
2008 2009 2010 2011 2012 2013 2014 Variance on 5 Year Cumulative

2013 PY
Result
China P&I Club

$2.116 $2.506 $2.130 $2.159 $2.141

Korean P&I Club

$2.652 $2.659 $2.994 $2.887 $2.506 $1.711 $1.533


-10.43% -95.34%

TOTAL

$4.768 $5.164 $5.124 $5.046 $4.647 $1.711 $1.533

VARIANCE 8.31% -0.78% -1.52% -7.92%


-63.18%
-10.43%

AVERAGE RATE PER GT DEVELOPMENT (US$)

$1,750
2013

2014

$1,700
$1,650
$1,600
$1,550
$1,500
$1,450
$1,400

Korean P&I Club

AVERAGE RATE PER GT DEVELOPMENT (LAST 12 MONTHS)

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

2008

2009

2010

2011

2012

2013

2014

71

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

RATING AGENCY ANALYSIS


Arthur J Gallagher (UK) Ltd (AJG (UK)) operates a market security policy which sets a minimum standard for
insurance markets which can be included on its acceptable market security list. A number of criteria are utilised to
evaluate the financial condition of these markets and one of the criteria used is the ratings allocated by either Standard
& Poors (S&P) or A M Best. The AJG (UK) security policy sets a minimum rating level of A- from these agencies as an
indicator of acceptable security.
Accordingly where a security fails to meet the minimum criteria, we would direct your attention to your P&I Insurers
financial strength rating, where and when it falls below an S&P or AM Best A- rating and where this security no longer
qualifies for inclusion on the AJG (UK) market security list; requesting that you advise us if you wish us to attempt to
source an alternative market. In some cases it may be possible to arrange P&I cover with an S&P or AM Best A rated
carrier on similar terms.
This is something that we can discuss with you on an individual case by case basis. It is important that you carefully
consider maintaining your insurance with your current P&I insurer where the rating is below the AJG(UK) minimum of
A- and that should you decide to do so that you also understand that AJG (UK) are not responsible for the continuing
performance of any security and that any future credit risk associated with renewing the policy with your current insurer
will be borne by the assured. We would, therefore, draw your attention to the following ratings and respectfully request
that, if you require us to look at other options in respect of your risk here, you advise us accordingly as soon as possible.
Standard and Poors Ratings

72

P&I FACILITY

CURRENT RATING

P&I FACILITY

CURRENT RATING

BRITISH MARINE

A+

INGOSSTRAKH

BBB-

CARINA

A+

KOREAN P&I CLUB

UNRATED BY S&P

CHARTERAMA BV

LODESTAR LTD

CHARTERERS P&I CLUB

AA-

NAVIGATORS P&I

EAGLE OCEAN MARINE

BBB-

NORWEGIAN HULL CLUB

HANSEATIC P&I

OSPREY

A+

HELLENIC P&I

UNRATED BY S&P

RAETSMARINE BV

A-

HYDOR AS

A+

ROSGOSSTRAKH LTD

BB-

Ratings BBB or higher are regarded as


having financial security characteristics
that outweigh any vulnerabilities, and
are likely to have the ability to meet
financial commitments.

A: Strong financial security


characteristics, but is somewhat
more likely to be affected by adverse
business conditions than are insurers
with higher ratings.

BB: Marginal financial security


characteristics. Positive attributes exist,
but adverse business conditions lead
to insufficient ability to meet financial
requirements.

AA: Very Strong financial security


characteristics.

BBB: Good financial security


characteristics, but is more likely to be
affected by adverse business conditions
than are higher rated insurers.

B: Weak financial security


characteristics. Adverse business
conditions will likely impair the ability
to meet financial commitments.

Ratings BB or lower are regarded as


having vulnerable characteristics that
may outweigh the strengths.

+ or signs show relative standing


within the major rating category.

04 MAJOR LIMITING

CONVENTIONS
AND STATUTES
AFFECTING P&I RISKS
DEVELOPMENTS IN THE LAST 12 MONTHS

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

DEVELOPMENTS IN THE PAST 12 MONTHS


COMINGS AND GOINGS
The past 12 months has seen the introduction of the
Nairobi International Convention on the removal of
Wrecks (2007) in April 2015 and the introduction of
new, 51% higher, limits of liability under the LLMC
1996: both are covered later in this section.

MARITIME LABOUR CONVENTION (MLC)


As reported last year, the MLC came into force on 20
August 2013 having presented the Clubs with a couple
of coverage dilemmas. Most liabilities under the MLC fell
under normal Club cover, but there are a number of areas
which were considered likely to cause problems.

At the same time, the end of 2014 saw the 1971 IOPC
Fund being wound up. This proved to be a far from
formal matter, being agreed only by majority vote (2914). The decision had been opposed by the P&I Clubs,
not least on the grounds that there were still pollution
cases outstanding involving them.

The MLC requires financial security to be in place to


cover abandonment and repatriation of crew where the
shipowner becomes insolvent. This issue was addressed
by extending Club cover to insure this aspect of credit
risk, on a non-pooled basis.

The Fund, which has paid out in excess of $ 350 million


in compensation since its creation, had latterly been
embroiled in a long standing dispute with Gard over
the Nissos Amorgos claim. This claim was eventually
settled in April 2015, but claims cooperation between
the P&I Clubs and the successor Funds is still somewhat
sensitive. The Clubs are presently reviewing settlement
guidelines and potentially the need for contractually
binding agreements to underpin the continuance of
interim payments.
SANCTIONS
Maintaining the trend of recent years, sanctions continue
to be used on an ever expanding basis. 2014 saw the
creation or extension of sanctions by the EU, USA and
some other individual states: the principal targets of
these sanctions remain unchanged Cuba, North Korea,
Iran and similar so called rogue states. In the past
12 months sanctions have been imposed or extended
against Russia, Ukraine Crimea and Syria. However the
recently renegotiated JPOA agreement concerning Iran
promises an easing of circumstances in the future. In turn
the western bloc sanctions have spawned tit for tat
sanctions, in particular by Russia.
Primarily the sanctions are used to prompt regime
change, enforce foreign policy objectives or to avoid
financing of terrorism. As such, they appear to be
part of the international economic, and hence trade,
environment, in one form or another, for the foreseeable
future, with economic pressures being used to enforce
political objectives.

76

When it came into force, the MLC did not, extend the
financial security requirements to encompass unpaid
wages in the event of shipowner insolvency. However
in June 2014 the Special Tripartite Committee of the
ILO approved a number of amendments to the MLC
which will effectively extend liability under the MLC to
encompass loss of up to 4 months wages in the event
of shipowner insolvency, and to require certification and
securitisation thereof.
This obligation is not part of current P&I cover unlike
most of the original elements of the MLC which are
presently covered. Indeed, the risk is essentially a
financial guarantee risk and relates to the owners
solvency rather than any characteristic of their fleet.
Nevertheless the Clubs boards have individually
considered the implications of this and have agreed to
find a P&I solution to the new requirements: at least up to
the individual club retention.

MAJOR LIMITING CONVENTIONS & STATUTES AFFECTING P&I RISKS

1. CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS (LLMC),


1976 (IN FORCE 1 DEC 1986)
This convention applies to all vessels involved in incidents in signatory states, except such incidents to which the
Civil Liability Convention (See Section 2) applies. In effect it replaced the 1957 Brussels Convention.
At 14 August 2015, it has been ratified by 53 states, covering 53.68% of world tonnage.
The right to limit losses under this convention is lost if the incident involves a personal act or omission carried out
intentionally or recklessly and with the knowledge that loss would result.
Liability under the convention is calculated in accordance with the following formulae (note that, at 14 August 2015,
SDR 1 = approximately US$ 1.40):
1.1 PERSONAL INJURY / LOSS OF LIFE
VESSEL SIZE

FORMULA

500 GT or less

Minimum SDR 333,000

501-3,000 GT

Add SDR 500 per GT to the above sum

3,001-30,000 GT

Add SDR 333 per GT to the above aggregate

30,001-70,000 GT

Add SDR 250 per GT to the above aggregate

70,001 GT or more

Add SDR 167 per GT to the above aggregate

EXAMPLE
25,000 GT

SDR 8,909,000

75,000 GT

SDR 21,409,000

1.2 PROPERTY
VESSEL SIZE

FORMULA

500 GT or less

Minimum SDR 167,000

501-30,000 GT

Add SDR 167 per GT to the above sum

30,001-70,000 GT

Add SDR 125 per GT to the above aggregate

70,001 GT or more

Add SDR 83 per GT to the above aggregate

EXAMPLE
25,000 GT

SDR 4,258,500

75,000 GT

SDR 10,508,500

77

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

1A. 1996 PROTOCOL TO THE 1976 LLMC (IN FORCE 13 MAY 2004)
This amends the limits of compensation payable and has been adopted by 52 states encompassing 53.58% of world
tonnage at 14 August 2015. Until 8 June 2015 (see below) these limits were as follows:
1A.1 PERSONAL INJURY / LOSS OF LIFE
VESSEL SIZE

FORMULA

2,000 GT or less

Minimum SDR 2,000,000

2,001-30,000 GT

Add SDR 800 per GT to the above sum

30,001-70,000 GT

Add SDR 600 per GT to the above aggregate

70,001 GT or more

Add SDR 400 per GT to the above aggregate

EXAMPLE
25,000 GT

SDR 20,400,000

75,000 GT

SDR 50,400,000

1A.2 PROPERTY
VESSEL SIZE

FORMULA

2,000 GT or less

Minimum SDR 1,000,000

2,001-30,000 GT

Add SDR 400 per GT to the above sum

30,001-70,000 GT

Add SDR 300 per GT to the above aggregate

70,001 GT or more

Add SDR 200 per GT to the above aggregate

EXAMPLE

78

25,000 GT

SDR 10,200,000

75,000 GT

SDR 25,200,000

MAJOR LIMITING CONVENTIONS & STATUTES AFFECTING P&I RISKS

1B. 2012 AMENDMENTS TO THE 1996 PROTOCOL (IN FORCE 8 JUNE 2015)
This further amended the limits of compensation payable. It was dealt with via the tacit acceptance system
whereby it was deemed acceptable to all contracting states after 18 months following notification, and entered
into force after a further 18 months: it thus came into force on 8 June 2015. The increased limits are 51% higher and
are now as follows:
1B.1 PERSONAL INJURY / LOSS OF LIFE
VESSEL SIZE

FORMULA

2,000 GT or less

Minimum SDR 3,020,000

2,001-30,000 GT

Add SDR 1,208 per GT to the above sum

30,001-70,000 GT

Add SDR 906 per GT to the above aggregate

70,001 GT or more

Add SDR 604 per GT to the above aggregate

EXAMPLE
25,000 GT

SDR 30,804,000

75,000 GT

SDR 76,104,000

1B.2 PROPERTY
VESSEL SIZE

FORMULA

2,000 GT or less

Minimum SDR 1,510,000

2,001-30,000 GT

Add SDR 604 per GT to the above sum

30,001-70,000 GT

Add SDR 453 per GT to the above aggregate

70,001 GT or more

Add SDR 302 per GT to the above aggregate

EXAMPLE
25,000 GT

SDR 15,402,000

75,000 GT

SDR 38,052,000

79

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

2. INTERNATIONAL CONVENTION ON CIVIL LIABILITY FOR OIL POLLUTION


DAMAGE (CLC), 1969 (IN FORCE 19 JUN 1975); PROTOCOL TO CLC, 1992
(IN FORCE 30 MAY 1996)
The Civil Liability Convention covers those who suffer oil pollution damage resulting from maritime casualties involving
oil-carrying ships. The Convention places the liability for such damage on the owner of the ship from which the
polluting oil escaped or was discharged.
The original Convention has been largely replaced by the 1992 Protocol, which has been adopted by 134 states,
encompassing 96.69% of world shipping as at 14 August 2015. 35 states encompassing 2.70% of world shipping
remain under the original 1969 regime. Liability is strict, and insurance is compulsory.
Liability under the convention is calculated in accordance with the following formulae:
2.1 LIABILITY UNDER CLC (1992 PROTOCOL)
VESSEL SIZE

FORMULA

5,000 GT or less

Minimum SDR 3,000,000

5,001 GT or more

Add SDR 420 per GT to the above sum

Maximum

SDR 59,700,000 (equivalent to 140,000 GT)

EXAMPLE
25,000 GT SDR 11,400,000 See earlier comment regarding the mechanics of the calculation
75,000 GT

SDR 32,400,000

Following the spill resulting from the loss of the Erika, the limits were increased under an amendment, without
objection, in 2000 as follows:
2.2 LIABILITY UNDER CLC AS AMENDED IN 2000 (IN FORCE 1 NOVEMBER 2003)
VESSEL SIZE

FORMULA

5,000 GT or less

Minimum SDR 4,510,000

5,001 GT or more

Add SDR 631 per GT to the above sum

Maximum

SDR 89,770,000 (equivalent to 140,000 GT)

EXAMPLE

80

25,000 GT

SDR 17,130,000

75,000 GT

SDR 48,680,000

MAJOR LIMITING CONVENTIONS & STATUTES AFFECTING P&I RISKS

3. INTERNATIONAL CONVENTION ON THE ESTABLISHMENT OF AN INTERNATIONAL


FUND FOR COMPENSATION FOR OIL POLLUTION DAMAGE (FUND), 1992 PROTOCOL
(IN FORCE 30 MAY 1996)
The purpose of this Fund is to provide compensation for pollution damage to the extent that the protection afforded
by the 1969 Civil Liability Convention is inadequate. It is also intended to give relief to shipowners in respect of the
additional financial burden imposed on them by the 1969 Civil Liability Convention, with such relief being subject to
conditions designed to ensure compliance with safety at sea and other conventions.
The Fund is financed by receivers of persistent oil cargoes in signatory states, via a governmental levy. It is managed by
an inter-governmental organisation, the IOPC Funds.
The original 1971 Fund was denunciated in 2002 when the number of contracting states fell below 25, being
effectively replaced by the 1992 Fund which entered into force in 1996. Subsequently the limits in the 1992 Fund
were increased by amendment in 2000, effective November 2003.
114 states have adopted the 1992 Protocol at 14 August 2015 covering 94.16% of the world fleet.
The 2000 protocol increased this maximum sum to SDR 203 million via a tacit approval procedure, inclusive of the
primary contribution under the 1992 CLC Protocol.

4. SUPPLEMENTARY FUND, 2003 (IN FORCE 3 MAR 2005)


The aim of this Fund is to supplement the compensation available under the 1992 Civil Liability and Fund Conventions
with an additional, third tier of compensation. The Protocol is optional and participation is open to all States which are
party to the 1992 Fund Convention. 31 states have adopted the 2003 protocol at 14 August 2015, covering 18.26%
of the world fleet.
As with the 1992 Fund, the Supplementary Fund is financed by levies on receivers of persistent oil cargoes.
The total amount of compensation payable for any one incident will be limited to a combined total of SDR 750 million
inclusive of the amount of compensation paid under the existing CLC/Fund Convention system.

5. TANKER OIL POLLUTION INDEMNIFICATION AGREEMENTS


In recognition of the potential disparities between contributions by shipowners and receivers of cargo towards the cost
of pollution incidents, two agreements came into force in 2006 which sought to remedy the situation.
Under STOPIA, owners of small tankers of 29,548 GT or less indemnify the 1992 Fund for the difference between
their 1992 CLC liability and SDR 20 million.
Under TOPIA, all tanker owners indemnify the 2003 Supplementary Fund in respect of 50% of any claim falling on
that fund.

81

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

6. US OIL POLLUTION ACT (OPA), 1990


The USA is not party to any of the above pollution related conventions, instead there are specific statutes which affect
any vessels discharging oil, oil products or oil by-products in US waters.
The main one of these is OPA 1990, which imposes strict liability the only defence being acts of war, acts of God or
that the loss was caused solely by the actions of a third party. In July 2006, the US Coast Guard & Maritime Transportation Act 2006 amended limits under OPA 1990 as set out in the table below. For non tank vessels the above
increases were immediate, and for tank vessels they came into force in October 2006.
6.1 LIMITS OF LIABILITY UNDER OPA 1990 AS AMENDED IN 2006

VESSEL SIZE

FORMULA

Single Hull Tanker: 3,000 GT or less

US$ 3,000 per GT with minimum US$ 6,000,000

Single Hull Tanker: 3,000 GT or more

US$ 3,000 per GT with minimum US$ 22,000,000

Double Hull Tanker: 3,000 GT or less

US$ 1,900 per GT with minimum US$ 4,000,000

Double Hull Tanker: 3,000 GT or more

US$ 1,900 per GT with minimum US$ 16,000,000

Other Vessels

US$ 950 per GT with minimum US$ 800,000

EXAMPLE
25,000 GT

Single: US$ 75,000,000 Double: US$ 47,500,000

75,000 GT

Single: US$ 225,000,000 Double: US$ 142,500,000

The US Coast Guard has subsequently announced increases in liability limits to reflect inflationary erosions since the
2006 change. These came into effect on a provisional basis on 1 July 2009, and were formally adopted with effect
from 5 February 2010. Further increases are likely every three years.
6.2 AMENDED LIMITS OF LIABILITY UNDER OPA 1990 WITH EFFECT FROM 5 FEBRUARY 2010
VESSEL SIZE

FORMULA

Single Hull Tanker: 3,000 GT or less

US$ 3,200 per GT with minimum US$ 6,408,000

Single Hull Tanker: 3,000 GT or more

US$ 3,200 per GT with minimum US$ 23,496,000

Double Hull Tanker: 3,000 GT or less

US$ 2,000 per GT with minimum US$ 4,272,000

Double Hull Tanker: 3,000 GT or more

US$ 2,000 per GT with minimum US$ 17,088,000

Other Vessels

US$ 1,000 per GT with minimum US$ 854,400

EXAMPLE
25,000 GT

Single: US$ 80,000,000 Double: US$ 50,000,000

75,000 GT

Single: US$ 240,000,000 Double: US$ 150,000,000

Deepwater Port, unless established

US$ 373.800,000

under Reg 33 U.S.C. 2704(d)(2)


LOOP

82

US$ 87,606,000

MAJOR LIMITING CONVENTIONS & STATUTES AFFECTING P&I RISKS

The US has also established an Oil Spill Liability Trust Fund (OSLTF) administered by the National Pollution Funds
Center which supports OPA 90 and is funded by a tax on oil produced and imported into the USA. The OSLTF
responds where a responsible party denies liability or fails to meet that liability or where the first level of liability is
insufficient to fund all claims. It can provide up to $ 1 billion any one oil pollution incident.

7. US COMPREHENSIVE ENVIRONMENTAL RESPONSE,


COMPENSATION AND LIABILITY ACT (CERCLA), 1980
This legislation is focussed on hazardous substances, however there are circumstances where both CERCLA and
OPA could apply to an incident involving a shipowner, operator, bareboat charterer etc. Club cover is discretionary as
regards CERCLA related claims.
Limits of liability are as follows:
a) for vessels over 300 GT carrying a hazardous substance as cargo the greater of US$ 5 million or US$ 300 per GT;
b) for any other vessel over 300 GT the greater of US$ 500,000 or US$ 300 per GT.
These limits did not change when the OPA 90 limits were raised in July 2009.
In respect of obligations under both OPA and CERCLA, Certificates of Financial responsibility (COFRs) are required.
As Clubs are unwilling to certify financial responsibility as required by the US regulators, the COFR is generally
provided by an independent issuing company, and covers the aggregate of the CERCLA and OPA limits of liability.

EXAMPLE
A double hull tanker of 25,000 GT will need a COFR of US$ 55 million, comprising US$ 47,500,000 under
OPA 1990 as amended plus US$ 7,500,000 under CERCLA.

8. ATHENS CONVENTION RELATING TO THE CARRIAGE OF PASSENGERS AND


THEIR LUGGAGE BY SEA (PAL), 1974 (IN FORCE 30 APR 1989) & 2002 PROTOCOL
THERETO (IN FORCE 23 APRIL 2014)
The Convention consolidated and harmonised two earlier Brussels conventions dealing with passengers and luggage,
which were adopted in 1961 and 1967 respectively. It establishes a regime of liability for damage suffered by
passengers carried on a seagoing vessel. It declares a carrier liable for damage or loss suffered by a passenger if the
incident causing the damage occurred in the course of the carriage and was due to the fault or neglect of the carrier.
However, unless the carrier acted with intent to cause such damage, or recklessly and with knowledge that such
damage would probably result, it can limit its liability. For the death of, or personal injury to, a passenger, this limit of
liability is set at SDR 46,666 per passenger.
Liability is however further limited for losses arising from acts of terrorism to the practically insurable amount. As of
2006, this amount is SDR 250,000 per passenger with an aggregate limit of SDR 340 million.
Subsequent to the ratification of this convention (by 26 states to date, covering 32.03% of the worlds fleet) the
limitation amount has become more and more inadequate. A 1990 protocol increasing the limit to SDR 175,000 was
not adopted (being ratified by only 4 minor states) and has been superseded by the 2002 protocol.

83

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

Through 14 August 2015, 23 contracting states, including the European Union, representing 42.23% of world
tonnage have acceded to this protocol.
Notwithstanding the above, the principle provisions of this protocol came into effect within the European Union and the
European Economic Area via the EU Passenger Liability Regulation # 329/2009 on 31 December 2012.

8.1 LIMITS UNDER 2002 PROTOCOL TO PAL


TYPE OF LOSS

LIMIT

Strict Liability Passenger Personal Injury / Death

SDR 250,000 per passenger

Operator Negligence Passenger Personal Injury / Death

SDR 400,000 per passenger

Loss or Damage to Cabin Luggage

SDR 2,250 per passenger

Loss or Damage to Vehicle and Luggage therein

SDR 12,700 per vehicle

Loss or damage to Other Luggage

SDR 3,375 per passenger

9. INTERNATIONAL CONVENTION ON CIVIL LIABILITY FOR BUNKER OIL POLLUTION


DAMAGE, (BUNKERS) 2001 (IN FORCE 21 NOV 2008)
The Bunker Convention reached its required criteria of 18 states ratification in November 2007, and by 28 July 2014
had 77 acceptances covering 90.52% of the world fleet.
The Convention covers pollution caused by spills of oil carried as fuel on board the vessel. The limits are the same as
those imposed under LLMC 1976 as amended by the 1996 Protocol.

10. ILO MARITIME LABOUR CONVENTION (MLC) 2006 (IN FORCE 20 AUGUST 2013)
30 countries were required to ratify the Maritime Labour Convention for it to start the 12 month countdown to coming
into force. On 20th August 2012 the 30th country signed up, being the Russian Federation.
At 14 August 2015 there were 66 ratifications, although in some 16 of these jurisdictions the convention is not yet in
force. In the majority of these 4 cases, in force status is expected within the next 12 months. In 2007 the European
Union authorized its member states to ratify the Convention by the end of 2010, but in a number of EU states this
process is still incomplete. Accordingly the MLC came into force in August 2013.
The Convention is kept under continuous review by a tripartite committee including representatives of shipowners,
seafarers and governments. Following the first committee meeting various amendments were agreed to the liability and
financial security rules, which seem likely to come into force in early 2017
Whilst most liabilities under MLC are typically covered by P&I insurance, the amendments to the financial security
requirements include, inter alia, unpaid crew wages following abandonment which is very much not a traditional P&I
risk. It remains to be seen how this develops.

84

MAJOR LIMITING CONVENTIONS & STATUTES AFFECTING P&I RISKS

11. INTERNATIONAL CONVENTION ON LIABILITY AND COMPENSATION FOR DAMAGE IN


CONNECTION WITH THE CARRIAGE OF HAZARDOUS AND NOXIOUS SUBSTANCES BY
SEA (HNS), 1996 AND PROTOCOL, 2010 (NOT YET IN FORCE)
The original 1996 HNS Protocol established a two tier compensation regime for amounts up to SDR 250 million and
has been ratified by 14 states or 14.14% of world fleet by 14 August 2015.
A Focus Group was established in 2007 in order to address administrative concerns of the ratifying states particularly
in respect of the operations of the 2nd tier of compensation, and the difficulty in establishing how much HNS was
received in any country.
A revised 2010 protocol, based on the findings of the above focus group, was adopted in April 2010, but has not yet
been ratified by any states, with 8 states signing the protocol subject to ratification.
Under this protocol the total compensation remains the same, but the shipowners maximum liability for an incident
involving packaged HNS is increased from SDR 100 million to SDR 115 million. Thereafter compensation would
be paid by a second tier HNS Fund, financed by cargo receivers. The shipowners liability for bulk HNS remains
unchanged at SDR 100 million.
The revised protocol will enter force eighteen months after at least 12 States (including at least 4 with over 2 million
GT) express their consent to be bound by it. Additional conditions relate to cargo receiving country contributions.
11.1 LIMITS OF LIABILITY UNDER HNS 1996

VESSEL SIZE

FORMULA BULK HNS

FORMULA PACKAGED HNS

2,000 GT or less

Minimum SDR 10,000,000

Minimum SDR 11,500,000

2,001-50,000 GT

Add SDR 1,500 per GT to the above

Add SDR 1,725 per GT to the above

50,001 GT or more

Add SDR 360 per GT to the


above aggregate

Add SDR 414 per GT to the


above aggregate

Maximum

SDR 100 million

SDR 115 million

25,000 GT

SDR 44,500,000

SDR 51,175,000

75,000 G

SDR 91,000,000

SDR 104,650,000

EXAMPLE

12. NAIROBI INTERNATIONAL CONVENTION ON THE REMOVAL OF WRECKS


(NAIROBI WRC) 2007 (IN FORCE 14 APRIL 2015)
The Convention provides a sound legal basis for coastal states to remove, or have removed, from their coastlines,
wrecks which pose a hazard to the safety of navigation or to the marine and coastal environments, or both. It makes
shipowners financially liable and requires them to take out insurance or provide other financial security to cover the
costs of wreck removal. It also provides states with a right of direct action against insurers.
The Convention has been adopted by 23 states representing 39.46% of the world fleet at 14 August 2015, however
not all of these states have extended the operation of the convention to their territorial waters.

85

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

13. UN CONVENTION FOR THE INTERNATIONAL CARRIAGE OF GOODS WHOLLY


OR PARTLY BY SEA (ROTTERDAM RULES) 2009 (NOT YET IN FORCE)
In 1996, in order to harmonise liability regimes, the United Nations Commission on International Trade Law
(UNCITRAL) began a review of laws in the area of the international carriage of goods by sea. An additional aim was
to update the regimes to reflect more modern transportation systems. This resulted in the Rotterdam Rules which
became open for signature in September 2009 and will enter into force 12 months after 20 states have ratified it.
By 30 November 2012, 24 nations have signed the Rules, including major shipping nations such as Greece, Norway
and the United States: collectively these signatories account for 25% of world trade. Noticeably none of the major
Asian trading nations have signed the Rules.
The Convention will come into force one year after ratification by the 20th UN Member state. Whilst 24 have signed
the Convention, only 3 states (Congo, Spain and Togo with no new additions this year) have ratified it at 14 August
2015. A recent survey of various jurisdictions on the question of ratification suggests that there is very little progress
being made on the subject within the legislative processes of the countries asked. The European Parliament has
recommended member states to move speedily towards ratification, but lethargy seems to be the watchword, and no
significant progress is expected to be made in the immediate future.
The Rotterdam Rules have eroded some of the traditional defences available to sea carriers, for example the elimination
of the nautical fault defence. The obligation of due diligence has been extended to apply throughout the duration of the
voyage, and limits of liability per package, or unit of weight, have been significantly increased, beyond Hague-Visby
and Hamburg Rules limits.
The table below contrasts the liability under the various regimes:
13.1 CONTRASTING LIABILITY UNDER RULES

86

RULE

LIMITATION OF LIABILITY

LIABILITY FOR DELAY

Hague (1934)

100 per package/unit

N/A

Hague Visby (1968)

Higher of SDR 2 per kg or SDR 667 per


package

N/A

Hamburg (1978)

Higher of SDR 2.50 per kg or SDR 835 per 2.5 times freight on goods delayed
package/shipping unit
subject to an upper limit if lost

Rotterdam (2009)

Higher of SDR 3 per kg or SDR 875 per


package/shipping unit

2.5 times freight on goods delayed not


to exceed limit under rules

US COGSA (1936)

US$ 500 per package/unit

N/A

05

CONTACTS

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

Physical Loss &


Damage to Containers
(Cargo & StockThroughput)

MARINE

Cargo & Stock Throughput

Pharmaceuticals,Commodity
Business, Frozen & Chilled Goods
(Cargo & StockThroughput)

Strikes & Terrorism


(War Risks)

Ports & Terminals

Port Authorities
(Ports & Terminals)

D&O & E&O for Ship Managers,


Marine Surveyors
(Marine Liability)

War Risks
Charterers Liability &
Damage to Hull
(Protection & Indemnity)

88

CONTACTS

Marina Operators Liability


(Marine Liability)

Demolition Risk
(Hull & Machinery)

Ship Repairers Liability


(Marine Liability)

Stevedores

(Ports & Terminals)

Terminal
Operators

(Ports & Terminals)

Yachts

(Hull & Machinery)

Protection &
Indemnity
Marine Liability
Piracy, Kidnap
& Ransom
(War Risks)

Hull & Machinery


Freight Demurrage
& Defence Cover
(Protection & Indemnity)

P&I Offshore &


MOU Cover

(Protection & Indemnity)

AJGINTERNATIONAL.COM
Arthur J. Gallagher (Specialty) is a trading name of Arthur J. Gallagher (UK) Limited which is authorised and regulated by the Financial Conduct Authority. Registered Office:
The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 1193013. www.ajginternational.com

89

COMMERCIAL P&I MARKET REVIEW SEPTEMBER 2015

LONDON MARINE P&I


Malcolm Godfrey
Executive Director
+44 (0)20 7204 1883
malcolm_godfrey@ajg.com

Richard Sturgeon
Divisional Director
+44 (0)20 7204 1887
richard_sturgeon@ajg.com

Wayne Godfrey
Associate Director
+44 (0)20 7204 1841
wayne_godfrey@ajg.com

Lauren Osman
Account Executive
+44 (0)20 7204 1885
lauren_osman@ajg.com

Nicola Ellis
Divisional Director
+44 (0)20 7204 1892
nicola_ellis@ajg.com

Alex Vullo
Associate Director
+44 (0)20 7204 1891
alex_vullo@ajg.com

William Baynham
Associate Director
+44 (0)207 560 3456
william_baynham@ajg.com

Wendy Needham
Account Executive
+44 (0)20 7204 1854
wendy_needham@ajg.com

Nick Roblin
Broker
+44 (0)20 7234 4983
nick_roblin@ajg.com

Vincenzo Corsaro
Technician
+44 (0)207 560 3457
vincenzo_corsaro@ajg.com

Andrew James
Executive Director
+44 (0)20 7204 6059
andrew_james@ajg.com

Matthew McCabe
Executive Director
+44 (0)20 7204 6200
matthew_mccabe@ajg.com

LONDON MARINE DIVISION


SENIOR MANAGEMENT
Jonathan Suckling
Managing Director
+44 (0)20 7204 6091
jonathan_suckling@ajg.com

Malcolm Godfrey
Executive Director
+44 (0)20 7204 1883
malcolm_godfrey@ajg.com

Peter Wilmot
Executive Director
+44 (0)20 7204 1829
peter_wilmot@ajg.com

LONDON MARINE DIVISION


DIRECTORS

90

Paul Brandram
Divisional Director
+44 (0)207 560 3336
paul_brandram@ajg.com

John Glover
Divisional Director
+44 20 7204 8319
john_glover@ajg.com

William Kinnear
Divisional Director
44 (0)20 7560 3338
william_kinnear@ajg.com

Malcolm Peckett
Divisional Director
+44 (0)20 7204 6193
malcolm_peckett@ajg.com

Nicola Ellis
Divisional Director
+44 (0)20 7204 1892
nicola_ellis@ajg.com

Gemma Greenwood
Divisional Director
+44 (0)20 7234 4055
gemma_greenwood@ajg.com

Simon Mauduit
Divisional Director
+44 (0)20 7204 6203
simon_mauduit@ajg.com

Richard Sturgeon
Divisional Director
+44 (0)20 7204 1887
richard_sturgeon@ajg.com

Charles Gibbs
Divisional Director
+44 (0) 207 234 4717
charles_gibbs@ajg.com

Christopher Kearns
Divisional Director
+44 (0)20 7560 3037
christopher_kearns@ajg.com

Nick Paice
Divisional Director
+44 (0)20 7204 6254
nick_paice@ajg.com

Tim Sullivan
Divisional Director
+44 (0)20 7204 6295
timothy_sullivan@ajg.com

CONTACTS

Chris Taylor
Divisional Director
+44 (0)20 7560 3337
Chris_Taylor@ajg.com

Katrina Davis
Associate Director
+ 44 (0)207 234 4716
katrina_davis@ajg.com

Jenny Mankelow
Associate Director
+44 (0)20 7204 6220
jenny_mankelow@ajg.com

Sophia Quentin
Associate Director
+44 (0)20 7560 3657
sophia_quentin@ajg.com

Patrick Wilmot
Divisional Director
+44 (0)20 7560 3655
patrick_wilmot@ajg.com

Wayne Godfrey
Associate Director
+44 (0)20 7204 1841
wayne_godfrey@ajg.com

David Meadway
Associate Director
+44 (0)20 7560 3778
david_meadway@ajg.com

Edward Remnant
Associate Director
+44 (0)20 7204 6033
edward_remnant@ajg.com

William Baynham
Associate Director
+44 207 560 3456
william_baynham@ajg.com

David Gibbs
Associate Director
+44 (0)20 7234 4718
david_gibbs@ajg.com

Deniz Nagatay
Associate Director
+44 (0)20 7234 4719
deniz_nagatay@ajg.com

Paul Tingley
Associate Director
+44 (0)207 234 4720
paul_tingley@ajg.com

Gary Brand
Associate Director
+44 (0)20 7204 6121
gary_brand@ajg.com

Mike Ingham
Associate Director
+44 (0)20 7204 1864
mike_ingham@ajg.com

Anne Paige
Associate Director
+44 (0)20 7560 3058
anne_paige@ajg.com

Alex Vullo
Associate Director
+44 (0)20 7204 1891
alex_vullo@ajg.com

Dave Clark
Associate Director
+ 44 (0)207 234 4717
dave_clark@ajg.com

Richard Lockwood
Associate Director
+44 (0)20 7204 6198
richard_lockwood@ajg.com

Richard Pinkerton
Associate Director
+44 (0)20 7560 3027
richard_pinkerton@ajg.com

David Waller
Associate Director
+44 (0)20 7560 3898
david_waller@ajg.com
Andrew Albins
Operations Director
+44 (0)20 7560 3454
andrew_albins@ajg.com

LONDON MARINE DIVISION


BROKER / ACCOUNT EXECUTIVE / TECHNICIAN
Nick Roblin
Broker
+44 (0)20 7234 4983
nick_roblin@ajg.com

Amanda Gray
Account Executive
+44 (0)20 3425 3289
amanda_gray@ajg.com

Wendy Needham
Account Executive
+44 (0)20 7204 1854
wendy_needham@ajg.com

Brian Webster
Account Executive
+44 (0)20 7560 3037
brian_webster@ajg.com

Angus Blayney
Account Executive
+44 (0)20 7204 8312
angus_blayney@ajg.com

Michael Hutchins
Account Executive
+44 (0)20 3425 3406
michael_hutchins@ajg.com

Lauren Osman
Account Executive
+44 (0)20 7204 1885
lauren_osman@ajg.com

Anneliese Campbell
Account Handler
+44 (0)20 7560 3378
anneliese_campbell@ajg.com

Melanie Buitendag
Account Executive
+44 (0)20 3425 3195
melanie_buitendag@ajg.com

Isabel James
Account Executive
+44 (0)20 7204 6210
isabel_james@ajg.com

Clare Stewart
Account Executive
+44 (0)20 7560 3388
clare_stewart@ajg.com

Vincenzo Corsaro
Technician
+44 (0)207 560 3457
vincenzo_corsaro@ajg.com

Liera Doyle
Account Executive
+44 (0)20 7204 8321
liera_doyle@ajg.com

Richard Landers
Account Executive
+44 (0)20 7204 1890
richard_landers@ajg.com

91

Arthur J. Gallagher (UK) Limited is authorised and regulated by the Financial Conduct Authority.
Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 1193013. www.ajginternational.com
The information contained in this market has been compiled by Arthur J. Gallagher from information provided by each insurer. This does not purport to be comprehensive or to give
legal advice. While every effort has been made to ensure accuracy, Arthur J. Gallagher cannot be held liable for any errors, omissions or inaccuracies contained within the document.
Readers should not act upon (or refrain from acting upon) information in this document without first taking further specialist or professional advice.

AJGINTERNATIONAL.COM