LOSS PREVENTION
As important as responding to Members’ claims is the Club’s capacity to avoid losses. The shipment of iron ore fines and nickel ore from India and Indonesia respectively has presented unique challenges in that regard.
The past two years have seen a number of instances where these cargoes have been loaded onto ships with a moisture content that exceeds the limit that is safe for carriage at sea. Following departure from the load port, these cargoes have been prone to liquefaction, which can seriously compromise a ship’s stability. At least 4 ships are reported to have capsized within the last year whilst carrying nickel ore cargoes, with a loss of 48 lives. There have also been a number of
“near misses” with iron ore fines loaded in India following on from two well documented losses in previous years.
The Club has assumed a leading role in investigating these incidents and implementing measures which can be taken to reduce the risk of dangerous cargoes being loaded. These include detailed guidance for owners on the enquiries that should be made into these cargoes prior to shipment, and procedures for sampling and testing cargoes. These measures have not always been welcomed by the shippers of the cargoes who have frequently sought to circumvent the proper testing procedures. However, the inescapable fact is that no ships have been lost where these procedures have been followed.
JAPANESE EARTHQUAKE AND TSUNAMI
Shipping is an unpredictable business operating in a volatile world. No greater demonstration of unpredictability came with the Japanese earthquake and tsunami. The impact of these tragic circumstances on the Club will in all likelihood be minor, with property insurers bearing the majority of the losses involved.
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INDUSTRY MATTERS
In August, the European Commission announced a formal investigation into certain aspects of the Group’s claims sharing and reinsurance arrangements, focussing on release call practices, the quotation procedures under the IGA, and access to reinsurance facilities provided by the commercial markets. A position paper has been used to assist Members in understanding the background, the issues raised and the IG’s response. Commission requests for information have provided a useful opportunity to substantiate theory with empirical data. It remains to be seen whether the concerns of the Commission can be alleviated, but in the meantime shipowners’ organisations have expressed their own concerns that the benefits of the Group arrangements should not be jeopardised.
Directors highly value the international nature of the Club and its Board, and the opportunities provided thereby to discuss shipping matters without regard to the divisions of politics. The ban under the EC Sanctions Regulations on provision of insurance to Iranian entities—even where engaged entirely in legal trades— brought an untimely end to a relationship with a longstanding Member and was much regretted. Sanctions regimes are blunt tools and it was necessary to make a number of Rule changes to protect the Club from the sanctions risks that could arise from activities of Members, or from gaps in Pooling or reinsurance coverage.
Meanwhile, the problems of piracy have remained a constant theme for Board attention. A number of entered ships were hijacked and in some cases were used by pirates as mother ships, as pirate tactics evolved to overcome limitations of poor weather and to extend their range of attacks to areas distant from naval forces. Although claims on the Club have been largely restricted to crew injury and, fortunately, for the most part have not been serious, the risks to crew have grown substantially
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