Marine Supply Chains Face Increasing Disruptions
The Strike Club, the market leader for insuring shipowners and charterers seeking insurance protection against delays in the marine trades, is experiencing a stronger uptake of its covers, whether for mutual entries or for the fixed-premium covers for war risks, loss of earnings (LoE) and bespoke delay risks. LoE business is particularly strong, and the club now offers an increased limit of US$4m each incident (up from $3.375m).
The club, now in its 56th year of trading, has an S&P rating of BBB+ with stable outlook. This was re-confirmed by the rating agency after it announced new criteria for the rating of insurance companies, including 14 marine mutual insurers.
The agency said the stable outlook reflected its view that the club’s risk-based capital adequacy is resilient at extremely strong levels, and that it will maintain its market leadership in the niche area of strike and delay insurance.
When the club’s annual general meetings were held in Stockholm, the managers were able to report that the aggregate mutual total tonnage entered during the 2012/13 year had grown to 170m dwt, against the previous year’s total of 145m dwt. Europe continues to represent the largest proportion of the club’s premium at 37%, although Asian take-up continues to show promising year-on-year growth.
“The current policy year, that commenced on February 1, 2013, has potential for further growth, ” said Bill Milligan, chief executive of S.C. Management, speaking in Monaco, where the administrative office is located.
He commented: “The Strike Club has made significant progress over the past two to three years, as ship operators have sought financial protection to fall back on when unexpected delays pile up, an unhappy feature of this increasingly volatile and hostile environment. Political risks are becoming an increasing concern for many ship operators. The political situation in Egypt is a particular worry at the moment, with fears of possible disruption at ports and the Suez Canal.
“Economies around the world remain under pressure, to say the least, leading to widespread social unrest and harsh markets. It is little wonder that strikes and lockouts are spreading in the face of rising joblessness, poor conditions and soaring living costs.
“Looking at the wider picture, the economic downturn and inevitable cost-cutting are resulting in breakdown and disruption in marine supply chains, which are now highly complex.
“Despite the abysmal trading conditions for most shipowners, the P&I clubs are finding that claims are rising, not falling as might be expected, and The Strike Club is no exception in this situation.”
In Stockholm, the club’s directors noted that under Classes l and ll (shore-related risks) the 2011/12 policy year was closed in April 2013 with a call of 20%. After 15 months, claims for 2012/13 were somewhat higher than originally forecast, but nevertheless the release call was maintained at 30%. For the current year, and despite claims setbacks in the first few months, with a miners’ strike in Colombia, widespread port strikes in Chile and a prolonged port strike in Hong Kong, the release call was kept at 30%.
Under Class lll (ship-related risks), the first few months of the new policy year had seen claims in line with forecasts, and the release call was maintained at 30%, the same as for the 2012/13 year. -ends-
MUTUAL DELAY INSURANCE
- Classes l & ll cover a ship during or following delays caused by a wide variety of onshore incidents such as strikes (either at the port or elsewhere in the cargo supply chain), war, civil war, riots, fire, earthquake, port closure, obstruction, imposition of export controls, etc.
- Class III covers the costs of delays resulting from a wide variety of onboard incidents, such as officer or crew strikes, collision, grounding, drugs on board, stowaways, machinery damage, war, civil war, piracy, special risks, etc., leading to a ship going off-hire
FIXED-PREMIUM TAILORED DELAY RISKS COVER
- The club now offers tailored cover for other delay risks in excess of, or outside, the mutual rules, for example a delay up to 180 days, plus expenses, caused by discovery of drugs or contraband
FIXED-PREMIUM LOSS OF EARNINGS COVER
- US$4m limit each incident
- Cover on terms to meet charterers’ particular requirements
FIXED-PREMIUM WAR AND PIRACY RISKS COVER
- US$200m limit each incident
- Cover for owners and for charterers, with terms negotiated to meet individual requirements