Mutual Insurance - what is it?
Mutual insurance is different from commercial insurance
It is essentially co-operative self-insurance (a “Club”) The insured are also the insurers The insured's own the insurance fund The aim of a mutual is to cover losses, not make a profit
UK P&I CLUB
The Clubs in the Maritime Field
The Clubs insure 95% of all ocean-going ships The Clubs have cooperated for over 100 years (Pooling Agreement 1899) The Clubs’ boards of directors comprise a hugely influential body of ship-owners The Clubs have consistently acted in the interests of the maritime community
UK P&I CLUB
Typical Club Structure
MEMBERS
Elected Directors
Controlling Policy
Appoinment Managers
Day-to-day Management
UK P&I CLUB
Function Of Club Managers
Underwriting Arrange cover; process entries, allocate calls, draw up/dispatch debit notes: Claims Handle and reimburse claims, provide advice, approve some contracts/indemnities, decide on deviation cover, approve costs/fees;guarantees Investment Generate investment income on Club funds within delegated guidelines Loss Prevention Legal/technical publications, claims analysis
UK P&I CLUB
Club Financial Structure
OBJECTIVE
Premiums + Investment Income = Claims + Expenses
SURPLUS = Premiums + Investment Income > Claims + Expenses
Transfer to Reserves Return to Members
DEFICIT = Premiums + Investment Income < Claims + Expenses
Transfer from Reserves/ Reinsurance Further call on Members
UK P&I CLUB
RISKS: Protection & Indemnity
P&I Insurance is insurance in respect of 3rd party liabilities P&I Insurance is not
hull and machinery insurance, war risk insurance, loss of profit/freight insurance, detention insurance, strike insurance defence
UK P&I CLUB
Core Covers in P&I
Third Party Liabilities in respect of:
Injury, illness or loss of life of passengers Loss or damage to personal effects Injury, illness or loss of life of crew Pollution and environmental damage
UK P&I CLUB
Core Covers in P&I (cont.)
Third Party Liabilities in respect of:
Collision Dock and other Property Damage Fines Legal costs “Omnibus cover”
UK P&I CLUB
The World’s Largest P&I Club
Figures in millions GT
International Group - Owned & Chartered - February 2002
UK Britannia Gard Steamship Mutual Japan Club Standard Skuld W oE NoE London Swedish Club American Club Shipowners 0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000
UK P&I CLUB
Members by Trade Type - Tonnage
Chemical 1.0 % Gas Carrier 7.0 % Reefer 1.1 % Passenger 5.1 % Ro/Ro 2.4 % Bulk Carrier 27.3 %
Age Profile of the Club
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1996 2001 2002
25 plus 20 - 24 years 15 - 19 years 10 - 14 years 5 - 9 years 0 - 4 years
The Club’s tonnage age profile has reduced in the critical 15 - 19 year age band from 24% to 19% to 17%.
UK P&I CLUB Tonnage under 10 years old increased from 31% to 40% to 41%
UK Club Reinsurance Structure
US$ 4.5bn
US$ 3,030m US$ 2,030m
US$ 1500m US $ 1470m US$ 1000m
Overspill pool with other Clubs - cover available from UK Club catastrophe reserve & Swiss Re contract UK Club’s Overspill Reinsurance Group’s excess R/I
Oil Pollution
US$ 1,000m US$ 530m US$ 30m US$ 5m
UK P&I CLUB US$ 500m US$ 25m
Pool Retention Club Retention
Safeguarding Member Quality
Six full-time inspectors conduct 500 ship visits a year. Over 5,000 ships inspected since 1990. Only 3% of inspections led to adverse report and the number of inspections generating a high rating with no comment was up from 51% to 53% Unsatisfactory findings lead to independent condition surveys and restricted cover. Surveys leading to a repair being required fell from 45% in 2000 to 40% in 2002
UK P&I CLUB
Crew Risk Management Programme
Enhanced pre-employment medical examinations (PEME) Significant pre-existing illnesses and repatriation avoided Available in ten crew-supply countries Unique cost-saving service Development into postrepatriation care
UK P&I CLUB
Publications & Videos
VIDEOS
Tanker Matters Bulk Matters Container Matters Any fool can stuff a container ....
BOOKS & MULTIMEDIA
Major Claims Analysis The Human Factor Port State Control Carefully to Carry Loss Prevention News UK Club News
UK P&I CLUB
Loss Prevention
Seminars & Workshops around the world Weekly Loss Prevention Bulletins
Books, magazines & videos
Full-time department in London & specialist regional managers
UK P&I CLUB
Advice & Information
Concentration of expertise available to all members regardless of size or premium contribution Databases - Pollution legislation, conventions and procedures, legal and technical enquiries etc. Past Projects - Millennium Bug (Ship 2000), ISM, STCW etc.
UK P&I CLUB
Loss Prevention Developments
New website area
Benchmarking Good Practice Technical Reports
na hi y C an m er G il az Br ium lg Be rea Ko S K U s ly nd Ita rla he et N n pa Ja SA U
UK P&I CLUB
Major and Minor Claims Percentages
2%
28%
72%
98%
By Value Minor Claims % UK P&I CLUB
By Number Major Claims %
Main Types of Major P&I Claims
2% 8% 1% 2%
39%
23%
2% 5% 10% 8%
Cargo Collision Property Damage Pollution Fines Crew Injury Wreck Removal Non-Crew Injury Other Unrecoverable GA
UK P&I CLUB
Main Causes of Major P&I Claims
8% 5% 5% 2% 25% Deck Officer Error Crew Error Various Other Causes Structural Failure 14% Shore Error Pilot Error Mechanical Failure 17% 10% 14% Equipment Failure Engine Officer Error
UK P&I CLUB
Human Factors
Fatigue Morale Motivation Loyalty Training Standards of Certification
Experience Conditions Environment Language Management Policies
UK P&I CLUB
Causes of Crew Injury Claims
%
40 35 30 25 20 15 10 5 0 Crew error No help Equipment Failure Officer Error Structural Failure
Number Value UK P&I CLUB
Location of Crew Injuries
50 45 40 35 30 25 20 15 10 5 0 W e a t h e r E n g in e Dec k Room H o ld A s h o re C a b in G a lle y Tw e e n Dec k O ther
Number Value UK P&I CLUB
Collisions - Visibility and Sea State
Rough 6% Moderate 19%
Poor 38%
Good 56%
Slight 38%
Fair 6%
Calm 37%
Visibility
Sea State
UK P&I CLUB
Tanker Claims
A number % of all large claims in each particular country)
25 20 15 10 5 0
US
ina Ch any rm Ge l i az Br m u lgi Be a ore SK UK ds ly Ita rlan the Ne n pa Ja A
UK P&I CLUB
As % Claims in country As % of all Large Claims
US Claims Statistics
UK P&I CLUB
THOMAS MILLER (AMERICAS) INC.
Full Claims Handling Service 24 Hours a day in YOUR time zone
New Jersey , Miami and San Francisco
UK P&I CLUB
AMERICAS REGION
• 25 experienced claims handlers in New Jersey, Miami and San Francisco • Full authority for Claims and Guarantees • Immediate response on major casualties • Monitoring attorney performance & cost • Contact with agencies (e.g. Coast Guard)
• Loss Prevention on board Cruise Ships
UK P&I CLUB
Claims Exposure in USA -The reason for local service
25% Industry claims in USA
$ncreasing exposure of Ship-owners in USA
$ 14m a year in legal / survey fees
UK P&I CLUB
Major Claims ($100,000 +) in USA 1987/2002
1014 Claims -- $422M 20% of all Major Claims 40% Personal Injury, 25% Cargo 5%Pollution, Collision, Dock Damage Numbers Decreasing - Average Value Increasing
UK P&I CLUB
US Seamen Accident Type
60 350 50 300
250 40 200 30 150 20 100
10
T h o u s a n d s
50
0
0
%
t r ll y r) de jec Fa wa he d b t g & a n O L p gO ll ( Ga Sli om llin Fa r m f a F ll ro ll f Fa by k Fa ruc St
Number % Amount Paid % Amount Paid %
UK P&I CLUB
US Seamen – Type of Injury
35 30 25 20 400 15 300 10 5 0 200 100 0 800 700 600 500
T h o u s a n d s
ck e ath oin Kne e r Ba G D
%
s k Leg njurie Ne c eI l p i lt Mu
Number % Amount Paid % Amount Paid %
UK P&I CLUB
US Gulf Claims Since February 2000
1,532
47.87 Month
UK P&I CLUB
Claim Since February 2000 cont..,
1,532 TEXAS FLORIDA
CLAIMS 567 255
LAWSUITS 289 164
LOUISIANA
ALABAMA MISSISSIPPI
612
84 14
219
16 2
1,532
UK P&I CLUB
690
Mediation
TEXAS
FLORIDA LOUISIANA ALABAMA MISSISSIPPI
289
164 219 16 2
-
122
111 73 4 0
UK P&I CLUB
4 Factors Influencing Claims Trends In The US Gulf
1. Corporate 2. Legal 3. The Insurance Market A New Type of Owner Is it possible to try a case? Hard or soft Market…..
Does It Really Make A Difference? 4. Personalities How so few influence so much?