General Increases of 10% and 5% are Maintained for 2013/14 Mutual Entries.
The Strike Club, the market leader in the niche area of delay insurance for the marine trades, reports continuing strong demand for its mutual and fixed-premium covers. Shipowners and charterers are boosting the club’s mutual entries as shipping operations are stamped by uncertainty resulting from the widening economic crisis and growing civil unrest, such as the protests by millions against government austerity measures seen in some of Europe’s largest countries last week. All this is fomenting industrial action which can and often does disrupt the maritime supply chain.
Bill Milligan, chairman and chief executive of S.C. Management, said today that all the signs pointed to a continuation of the uncertainty that is undermining attempts to bring stability to the industrial scene. In particular, he pointed to the policy review on ports by the European Commission that could lead to plans to liberalise port employment conditions. “Not surprisingly,” he said, “such threats have incensed dockworker unions, which have pledged to fight any such moves.
“In a further ominous sign we have seen increasing labour unrest in South America where there have been strikes and demonstrations by transport and other workers, particularly in Brazil, Chile and Argentina, marching in solidarity with European workers.”
Like other mutual insurers, the club is suffering from low fixed income investment returns. However, at their recent board meeting in Luxembourg, the directors noted the club’s fixed-premium war risks and loss of earnings business continued to make a welcome contribution to offset investment negativity. More than 1,000 vessels are now covered for war risks and some 700 for loss of earnings. War risks provide cover up to $200m, and LoE cover up to $3.375m, using standard market wordings, for periods up to 180 days.
In addition, the club offers bespoke fixed-premium cover for other delay risks in excess of or outside the mutual rules, such as delays up to 180 days, plus expenses, caused by discovery of drugs or contraband on board.
In the 2012/13 policy year to date, the mutual business has seen normal levels of ship-related claims (Class lll) from events such as collision, grounding, machinery damage, crew strikes, pollution and piracy which is now causing growing concern, having spread from the Indian Ocean to the west coast of Africa. But there have been higher levels of shore-related claims (Classes l and ll ) from a wide range of causes, including general, port, land transport, customs and pilot strikes, port closures, blockades by fishermen, physical obstructions and mechanical equipment breakdowns, as well as political and civil unrest.
At this preliminary stage, the club is not anticipating large claims from Hurricane Sandy.
The directors have agreed a general increase of 10% for Classes l and ll for the new policy year commencing February 1, 2013, and a general increase of 5% for Class lll (in both cases the increases are the same as for 2012 policy year). All three classes are subject to a full review of each member’s exposure, cover, deductibles and record. Further, some members have records which will require increases well above the figures declared, the directors said.
A release call of 30% is set across the three classes.
At the board meetings in Luxembourg, Johan Hagn-Meincke of Clipper Group was elected chairman, succeeding Costas Los of Vrontados SA, who will remain a director. Hans Olsen of Leonhardt & Blumberg was re-elected a vice-chairman and Alain Le Guillard of Louis Dreyfus Armateurs was elected a vice-chairman. Also, Steve Scheidegger of Bunge SA in Geneva joined the two Bermuda boards and will be nominated for the Luxembourg board at the next AGM.
In Standard & Poor’s latest report in August, the club maintained its rating of BBB+ with stable outlook. The Strike Club is now in its 55th year of business. -ends-
NOTES:
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 war, civil war, piracy, kidnap, ransom, officer or crew strikes, collision, grounding, drugs on board, stowaways, machinery damage etc., leading to a ship going off-hire
FIXED-PREMIUM BESPOKE DELAY RISKS COVER
• The club now offers bespoke 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$3.375m limit each incident
• Cover on terms to meet charterers’ particular requirements
FIXED-PREMIUM WAR RISKS COVER
• US$200m limit each incident
• Cover for owners and for charterers, with terms tailored to meet individual requirements
