Hutchison leaves TT Club for cheaper insurance

Marine insurance mutual TT Club has lost its biggest terminal member with the defection of Hutchison Port Holdings to a rival commercial carrier of coverage.

TT Club spokesman Ian Lush confirmed that Hutchison, the largest port terminal operator in the world, put out a competitive tender and selected a cheaper insurance provider in June.

He did not disclose where Hutchison took its insurance business and Hutchison’s press office did not respond to repeated e-mail and phone requests for comment. But the Bow Wave, a London-based newsletter devoted to transport insurance, noted in tabloid fashion in July that HPH left TT Club for Lloyd's Market. A spokesman at Lloyd's claimed he was unable to confirm the huge new piece of business.

An industry source with insurance contacts said the winning insurance carrier offered HPH premiums that were several million dollars less than those available through the TT Club.

Hutchison, which handles more containers per year that any other marine terminal operator, still has a foot in the insurance cooperative with some entities in its corporate structure still insured with TT Club, Lush said.

The move is a major blow to the TT Club’s ports portfolio because it represents such a large piece of revenue and puts HPH CEO John Meredith in an unusual position because he sits on the TT Club board. 

HPH operates 292 berths in 47 ports located in 24 countries around the world, representing about 12 percent of the world's container terminal capacity. Last year it handled a total of 66.3 TEU worldwide.

It is the second time in recent years that HPH has broken from the self-insurance pool operated by TT Club. In 2004, HPH returned to the fold after a one year split in favor of what it believed were lower prices from rival insurer Wavelength, a consortium backed by Lloyd's underwriters. 

Mutual insurance associations differ from commercial insurers in that they are owned by the members themselves who as policyholders can vote on the direction of the company. The non-profit insurance co-ops exist to serve the members, such as paying or fighting claims, whereas the main business focus of commercial insurers is to maximize returns for shareholders.

We're not in the business of creating a premium that is market beating, Lush said. A commercial entity [on the other hand] can buy business. Despite HPH's defection, TT Club's membership is stable, he added. The association had a 95 percent retention rate during the last renewal period and a consistent rate of 92 percent during the past decade.