Marine insurance costs to rise as claims hit 15-year high

THE increase in claims for protection and indemnity (P&I) insurance in 2006/7 policy year ending February 20 has the been the highest in 15 years, resulting in a record payout of more than US$550 million, reports the International Group of P&I Clubs' Pool.

Accordingly, company directors agreed to a general increase in premium ratings of 10 per cent. "An increase of 17.5 per cent was required," said a group communique issued after a board meeting in Bermuda recently. "However, a straight general increase would impact unfairly and it would be more equitable to reflect the cost of pool claims separately."

The increase in claims was attributed to a growing world fleet, larger ships, strong freight markets that pressures owners and charterers to deliver, problem in getting quality crews, sustained commodity prices, stormy weather and higher salvage costs, said group claims director Christopher Brown.

"There were a disproportionate number of groundings in the 2006 year following adverse weather, inappropriate crew response or mechanical troubles. Unusually, collisions were not the dominant form of loss and there was no major tanker spill. Salvage costs were particularly high," said Mr Brown.

"Clearly, there is an irregular but unmistakable upward cost trend. Claims appear to rise faster in real terms than the world fleet has increased. As more ships are launched, the P&I industry will need to monitor this carefully," he said.

Four new directors were elected to the UK P&I Club Board at the AGM in Bermuda on October 22. They are Faisal Ali of Kuwait Oil Tanker Co, SAK; Thomas Held of Neptune Orient Lines Limited; Takashi Kaneko of Nippon Oil Tanker Corporation and Zhang Liang of China Ocean Shipping Company. Tullio Biggi was unanimously re-elected chairman of the UK Club.