London P&I Club’s capital position remains strong despite heavy cost of claims

THE London P&I Club has issued an advance summary of its result for the 2018/2019 financial year, ahead of the publication of its annual report.

With free reserves of $168.8m, the club’s capital position remains strong, despite an overall deficit for the financial year of $25.8m. Net earned premiums increased by 3.3% but there was an increase in the cost of claims, which included two International Group Pool claims involving the club’s members as well as increased activity on the pooling system generally and a rise in the cost of the club’s retained claims.

The growth in claims activity came during a period when premium rates remained under intense pressure and, as a result, the combined ratio increased to 140.1%. The club’s investment portfolio, however, did produce a return of 3.0%, or $8.2m.

Ian Gooch, CEO of the club’s management team, says, “The 2018/2019 financial year was an extremely challenging one for the P& I sector generally. On a positive note, the London Club continues to see strong levels of support from new as well as existing members and assureds and, following the February 2019 renewal, its combined entered tonnage increased to over 60m gt. This reflected year-on-year tonnage growth of more than 7% in the mutual membership and further positive progress in the club’s fixed premium lines of business.”

www.londonpandi.com

London P&I Club advocates old-school approach to identifying problems

THE London P&I Club says its Ship Inspection Programme has revealed a frequent failure to observe basic onboard procedures, with potentially costly consequences for owners and operators.

In the latest issue of its StopLoss Bulletin, the club says, “With increased commercial pressure on the master of a ship, some simple and potentially ‘old-school’ habits often fall by the wayside. For instance, we consider that one of the most useful tools for maintaining a quality operation and safe working environment is the weekly captain’s rounds.”

The club cites examples of issues that may slip past the daily team, but be spotted by the master. These include an untidy paint locker with opened and part-used tins of paint lying around, presenting a fire risk, mooring ropes left uncovered on mooring drums, open to degradation in sunlight, and a perished rubber gasket on the engine room escape hatch.

The club says, “Many findings identified during a ship inspection are easily detectable by the ship’s officers and crew. It is relatively rare that findings are latent. The master is the overseeing eye, carrying enhanced responsibility for all shipboard activities, coupled with a motivating role as the ship’s focal point.

“Not all ships’ operational programmes allow for regular ‘Sunday Routines’ but, when an opportunity exists, an hour spent touring the ship with the chief officer can enable the master to detect housekeeping issues as they develop. The experienced eye of the master can not only detect these issues at an early stage, but can also help the chief officer populate the weekly job list.”


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London P&I Club reports increased free reserves for 2016/2017

THE London P&I Club has issued an advance summary of its result for the 2016/2017 financial year, ahead of the publication of its annual report. The Club recorded an overall surplus of $27.3m, increasing the free reserve to $188m. The combined ratio was 97.9 per cent. The positive technical performance was supplemented by an investment return of 8.4 per cent.

Ian Gooch, CEO of the Club’s management team comments: ‘There were various drivers behind this positive result with the claims environment – which remained benign by longer-term historic standards – being an important factor, even though it was not as favourable as the 2015/2016 year. In particular, we saw a notable reduction in retained claims in the band between $500,000 and $1m and in the level of claims falling on the International Group Pool’.

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ITIC reports on costly transhipment errors by ship agents

International Transport Intermediaries Club (ITIC) says it continues to deal on a regular basis with claims resulting from errors by agents involving transhipment cargoes.

In one case, an agent in Argentina failed to declare a cargo as transhipment cargo within fifteen days of the vessel’s arrival at Buenos Aires. This was the result of a simple oversight in the agent’s office. The obligation to make the declaration was strictly enforced and an automatic penalty of one per cent of the value of the goods was immediately imposed, amounting to $122,204. The agent who had failed to make the necessary declaration had to pay the sum demanded by the authorities.

In another case, an agent in the Dominican Republic was involved in the transhipment of two containers arriving from Cuba with a final destination of Haiti. Under Dominican customs law, in common with many customs regimes, cargo awaiting re-exportation can only be held in storage without paying the relevant customs duties if time limits and other regulations are complied with.

The agent maintained regular contact with the shipper, who was waiting for relevant documentation to be provided by the consignee in Haiti. The agent also obtained an extension of the time limit for storage of the containers, but unfortunately made a typographical error in an email sent to the shipper which noted that the extension expired on 26 January, when it should have stipulated 6 January. As a result, the cargo was impounded by customs when the containers were not exported before the deadline. Ultimately, a penalty of just over $25,000 was settled by the agent.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com



For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

London P&I Club maintains financial strength despite impact of large claims

THE London P&I Club’s 2015 Annual Report highlights an unusual run of expensive claims in the 2014/15 policy year, with progress in other areas meaning that the free reserves stand at a healthy $157.4m.

Ian Gooch, chief executive of the club’s management team, says, “During the course of the last policy year, the club was required to respond in respect of fourteen claims in excess of $1m, two of which are expected to exceed the $9m retention level and have accordingly been notified to the International Group Pool. This was an extremely unusual experience; to put it in perspective, there has only been one other policy year in the past ten in which the number of the club’s claims in the band in excess of $1m exceeded eight at expiry.”

Ian Gooch adds, “Notwithstanding the detrimental effect of this intense claims activity, positive developments in a number of areas mitigated the overall impact, which was a small deficit of $3.2m. Churn remains a part of our operating environment, but there was further growth in the club’s premium income along with an increase in the owned and especially the charterers entries from markets including Singapore and Turkey, where we have been working to increase our profile and outreach. The club’s total combined entry is in excess of 50m gt. There was also positive investment performance involving a 5.5 percent return on the club’s invested assets and cash, augmented by a revaluation gain in the value of the London office.”

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Naval architects count the cost of ship design errors

 

 

International Transport Intermediaries Club (ITIC) says recent claims experience demonstrates that naval architects need to be aware of the need to protect against their exposure to liability for damages resulting from errors in design work.   ITIC cites by way of example a case involving the operator of a passenger and ro-ro ferry service which appointed a naval architect to design a landing craft ferry. The design was to be based on that of an existing vessel operated by the company. Prior to beginning the design work, the parties entered into a design agreement under which the naval architect’s liability was limited to approximately $750,000.   Shortly after the vessel was launched, the operator noticed various issues relating to its performance, including vibration, lack of manoeuvrability and stopping capability. The vehicle loading ramp was also at an excessive angle in certain conditions, making the loading of vehicles difficult and, in some cases, impossible. The operators took the view that urgent rectification work was required so that improvements could be made before the approaching summer season.   The vessel was drydocked and third-party experts were engaged to provide a report detailing the extent of the problems and their potential causes. Based on the findings of the report, the operators brought a claim for $3.5m against the naval architect, alleging that the performance issues were attributable to design errors. The operators subsequently acknowledged that the naval architect’s liability was limited to $750,000.   ITIC appointed an expert naval architect to inspect the vessel and comment on the extent to which the apparent performance issues could be attributed to design errors. The expert found that the naval architect was at fault, but that the claimant had incurred significantly more costly and extensive rectification work than was necessary. ITIC entered into negotiations with the operators in order to resolve the matter, and the claim was settled for slightly less than the limit of liability under the contract.   In another case reported by ITIC, a naval architect entered into a contract with a shipyard to design the structure and access arrangements for new lifeboats and their davits to be fitted to a specific vessel. The naval architect undertook the design analysis, using data received from the manufacturer of the lifeboats, and produced design drawings.   It was understood that the yard was to seek classification society approval of these designs before starting the build work under the terms of the yard’s contract with the shipowner. However, due to time restraints and pressure from the shipowner, the yard decided to start building prior to obtaining class approval.   The lifeboat support structure was manufactured and installed by the yard according to the naval architect’s design. The yard subsequently noticed that the davits were flexing under operation, even without the lifeboats. An internal investigation within the naval architect’s office determined that an error had occurred whereby information provided by the lifeboat manufacturer had not been converted correctly by the naval architect’s computer program, with the result that the calculations were out by a factor of 1000. This error was not identified during the naval architect’s quality assurance process and, as a result, the structural platform, as designed and built, was not fit for purpose.   The yard raised a formal complaint advising the naval architect that the work on the davit support structure had to be rectified because of the error. A few months later it claimed that rectification had cost £347,254. ITIC assessed the claim and was also able to raise arguments that the contract terms excluded some components of the claim and that the yard should not have started construction before the classification society had approved the designs. A settlement was eventually agreed at £255,000.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com

 

 

For more information:                             

Charlotte Kirk                                              

ITIC                                                               

Tel. +44 (0)20 7338 0150                          

Fax. +44 (0)20 7338 0151                         

charlotte.kirk@thomasmiller.com                       

 

FONASBA endorses ITIC' s post-fixture clause

ITIC has recommended that brokers place a post-fixture clause at the end of recap messages in order to reduce the chances of exposure to severe financial loss as a result of important messages being overlooked.

The following wording was endorsed by FONASBA at its recent annual general meeting in Gothenburg:

“Important: Operations

It is essential that all messages in respect of operations be sent to the relevant email addresses (ops@broker.com). We can accept no responsibility for delay or other consequences if messages are sent to any other email address within the company. Please ensure that all important operational messages are followed up with a telephone call, especially after office hours.”

ITIC says, “Shipbrokers receive a vast number of messages every day. It is not surprising that messages sometimes get missed. The failure to spot and pass on a post-fixture message can have severe financial consequences. In one case, a broker failed to pass on berthing instructions. The vessel remained at anchorage and a substantial demurrage claim was passed to the broker. In another case, a broker received instructions from the time-charterer to notify the owner that the vessel should change direction. This message was not passed on for two days, during which time the ship had been steaming in the wrong direction. The broker received a claim for the costs incurred and the time lost.”

Use of ITIC’s post-fixture clause should lessen the chances of a claim as a result of an important message being missed among the large number of market circulars and negotiation messages received during the average day.


ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

London P&I Club warns on failure to preserve VDR data

THE London P&I Club says failure to preserve Voyage Data Recorder (VDR) data in the event of an incident can compromise the owner’s position in the event of a claim

In the latest issue of its StopLoss Bulletin, the club says that its ship inspection programme confirms that the operation of VDR units is generally well-understood by its shipowner members. But it notes that there have nevertheless been instances where masters have failed to perform the steps required to preserve VDR data, or failed to recognise circumstances in which such data – and particularly voice traffic on VHF and on the bridge – may be very valuable in the defence of a claim.

In one instance, a ship heading into port was presented with a ‘head-on’ situation as described in Rule 14 of the International Rules for the Prevention of Collisions at Sea. Although it was a departure from the rules, a deal was struck on the VHF between the two ships, involving an alteration of course. The ships subsequently collided, resulting in a substantial claim on the club.

The club says, “The master did not save the VDR data, presumably because the data could have been incriminating and used against him. While the same information was not likely to have reversed any liability for the incident, it may have been useful evidence to assist in reaching an amicable settlement. The effect on the settlement of the claim cannot now be quantified, although it stands to reason that the shipowner would have preferred the master to have saved the information. In an attempt to protect himself, the master may have exposed the owners to a larger settlement.”

In another incident, a container ship entered with the club was forced, due to impending poor weather, to depart from a container berth with many of its containers unlashed. Unfortunately, when the ship was exposed to the poor weather, a number of the unlashed containers were lost overboard. The club says, “In some ways, understandably, the master did not consider this situation to be one where VDR data ought to be saved. But, during the handling of the ensuing claim, the club felt that the VDR data would probably have represented a valuable narrative of the exchanges between the port authorities and the bridge team and could have helped greatly in the claim negotiation.”

The club notes that onboard emergency guidance manuals usually contain aide memoir sheets to assist the master with those structured and ordered tasks which need to be taken in priority order, and are aimed at ensuring that steps are not missed in an emergency. It advises its members to consider the insertion or addition of VDR data saves in an appropriate position on such lists.

www.londonpandi.com

London P&I Club reports increased free reserves

THE London P&I Club’s result for the 2013/2014 financial year produced an overall surplus of $6.6m, increasing the free reserve to $160.6m.

There was an increase in P&I claims costs within the club’s retained layers in the financial year. The club’s management team notes that this was driven by an increase in the cost of claims in the higher-severity bands, which overshadowed an encouraging outturn for claims within the lower-severity layers, particularly at the day-to-day attritional level.

There was a reduction in the level of claims involving the International Group Pool compared to the very high levels recorded for 2011/2012 and 2012/2013, although the cost remained relatively high.

In the year to 20 February 2014, the London Club recorded a return on invested assets and cash of approximately $24.4m, or 7.0 per cent, reflecting positive performance across each major asset class, in particular the equity component of the portfolio.

Over the course of the policy year there was steady growth in the entry of ships with the club, from existing as well as from new members based in countries which included China, Greece, Singapore, Turkey, and the UK.

Going into the current policy year, the club’s owned mutual entry had increased by approximately 2m gt to 43.1m gt, in addition to which the charterers’ facility continues to perform steadily.

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ITIC says broker follow-up is vital in fluctuating markets

ITIC says that the failure of shipbrokers to follow up on time-sensitive messages can have serious financial consequences, particularly in fluctuating spot markets.

In its latest Claims Review, ITIC cites the case of a ship fixed for a trip time charter for two voyages, with an option for a third. The option was to be declared by the charterers on completion of loading for the second voyage. The fixture had been negotiated through brokers in two different offices of the same company. The third trip option was exercised by charterers on a Friday afternoon, and the broker who received the message forwarded it to his colleague in the other office. Unfortunately, that broker did not immediately pass it on to the owners.

The ship completed the second voyage on the Sunday, but it was not until Monday that the message declaring the option was passed on to the owners. On the following Wednesday, the owners argued that, because they had not received the notice until the day after loading had been completed, the declaration was invalid. They therefore expected redelivery of the ship on completion of the second voyage.

The spot market at the time was extremely volatile, but rising. Therefore the owners wanted the ship redelivered. The charterers, on the other hand, clearly wanted to retain the ship to maximise the profit from the final voyage. The market changed again, however, and after a week the owners confirmed that they would allow the third voyage. But the business available to the charterers was by this stage less profitable than at the time they had declared the option, and they subsequently claimed lost profits against both the owners and the brokers.

The brokers argued that the majority of the delay was caused by the unreasonable conduct of the owners in refusing to agree to the third voyage. A settlement was ultimately agreed, with the brokers’ contribution reflecting their delay in passing on the message, but not the subsequent fall in the market.

In another case handled by ITIC, a shipbroker fixed an extension of a charter in direct continuation, but forgot to include the charterer’s ‘subject to 24 hours reconfirmation’ in the negotiation. The owners subsequently claimed that the subject was not part of the negotiations they had seen and considered themselves fully fixed. The charterers failed to perform the extension and redelivered the ship to the owners, who then fixed the ship to a different charterer for a shorter period and at a lower rate. The owners brought a damages claim against the charterers, who in turn brought a claim against the shipbroker. ITIC settled the claim for $140,000.

ITIC says, “Time-sensitive messages should always be followed up with a telephone conversation to ensure that they have been received and acted upon.”

Copies of the ITIC Claim Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

London P&I Club reports increased free reserves

THE London P&I Club’s result for the 2012/2013 financial year was a surplus across all classes of $9.4m, increasing the free reserve to $154m.

Claims experience over the financial year was mixed. In the retained layer there was an encouraging picture at the attritional level, involving claims up to $100,000. There was also a continued moderation of claims in excess of $1m, but there were additional indications of increasing claims cost and activity in the band between $100,000 and $1m. Meanwhile, the club’s management team notes that adverse claims experience within the International Group’s Pool layers means that 2012/13 is looking likely to prove the most expensive year on record for claims on the pooling system.

In the year to 20 February 2013, the London Club recorded a return on invested assets and cash of approximately $23.7m, or 6.9 per cent, reflecting positive results across the whole of the asset base and, in particular, benchmark-beating performance by the investment-grade fixed income holdings, which form the lion’s share of the portfolio.

Over the course of the policy year the club secured additional entries from many existing members as well as from new members in countries which included Germany, Greece, India, Turkey, the United Arab Emirates and Ukraine.

There was also a relatively high level of ships withdrawn during the year, some sold for further trading but many for scrapping. As a result there was a small increase in the club’s owned entry to approximately 41.5m gt. In addition, the charterers’ facility continued to make steady progress. www.londonpandi.com

London P&I Club issues warning on bagged rice cargoes

THE London P&I Club has advised shipowners to seek advice before loading bagged rice cargoes in view of the inherent risks associated with the trade and an increase in the severity of claims in recent years.

In the latest issue of its StopLoss Bulletin, the club notes that poor freight markets have seen an increase in the number of owners employing their ships in the bagged rice trades. It says the size of individual consignments being shipped from S E Asia to the Middle East and sub-Saharan Africa has also increased, magnifying inherent risks and contributing to an elevation in the severity of claims notified to the club. Moreover, owners often have to settle claims in the first instance before seeking a contribution from charterers, where possible.

The club says the fact that bagged rice is usually shipped nowadays on conventional bulk carriers up to supramax size introduces a greater practical challenge for owners. “In addition,” it notes, “there has been little improvement in efficiencies at ports of loading and discharge. The combined effect of port congestion and lengthy voyages from the Far East to West Africa often results in cargoes remaining on board for prolonged periods.

“Prolonged storage on board increases the risk of condensation and damage where there is a high pre-shipment moisture content or poor stowage or ventilation during the voyage. Certificates of quality upon shipment usually record pre-shipment moisture levels and may provide scope to rely on an inherent vice defence. However, inadequate stowage or ventilation will increase owners’ exposure to bill of lading claims.

“Handling damage and cargo shortages also tend to be endemic in this trade. In some ports, the stevedores may be in a monopoly position, meaning there is no competition, and ship operators effectively have no choice. Stevedores are usually unskilled and provided with only rudimentary equipment for slinging bagged cargo loads. They often receive bonuses for prompt discharge, with the result that preservation of the cargo can be sacrificed in the interests of maintaining a quicker cargo outturn.

“Pilferage at some West African ports is also widespread. In addition, owners can encounter difficulties with inaccurate tallies. Both loading and discharging operations require careful supervision, including performance of tallies and cross-checking figures with other interested parties. It is usually best to appoint independent surveyors who can dedicate their time to these tasks. Sealing cargo-hold openings and performing draft surveys may also assist in defending shortage claims.”

The club urges owners entering this trade to give careful consideration to the allocation of risk under the relevant charter party, as well as to the suitability of the ship and the capabilities of the hold ventilation system. It says members should notify the club in advance of loading rice cargoes to discuss appropriate loss prevention measures.”

www.londonpandi.com

Ship agents count the cost of avoidable errors

International Transport Intermediaries Club (ITIC) has emphasised how avoidable errors can prove expensive for ship agents.

In the latest issue of its Claims Review, ITIC recounts how a ship agent at a tidal port in Japan was asked to provide a tide table to enable the owner of a ship to calculate the permissible drafts for the dates that its ship was due to berth at the port. The ship agent duly scanned the tide table and sent it electronically to the owner. The ship arrived at the port with a draft of 8.56 m, but was informed by the port authorities that the permissible draft was only 7.8 m.

It emerged that the agent had inadvertently sent the owner the tide table for 2012 instead of 2011. The two tide tables were kept together in the same file and, during the scanning process, the corner of the tide table had folded over, thereby obscuring the year. The excess draft meant that the ship could only discharge for about four hours in the morning and two hours in the afternoon. The ship had to shift anchorage three times during the four days it took to discharge, which was twice as long as it should have taken.

The owner claimed the pilotage and towage costs involved in shifting to the anchorage three times, plus two days’ hire, additional bunker consumption, and additional stevedoring, for a total of $143,000. It was agreed by the owner that some of the costs would have been incurred in any event, and the claim for additional costs was settled at $120,000.

In another case reported by ITIC, shipowners appointed a port agent for a bunker call by their vessel. The agent failed to complete the required customs formalities in time to book the berth, a mistake which went unnoticed until the vessel was approaching the port. After being notified by the agent of the mistake, the shipowner decided to divert the vessel to another port around 500 km north of the original port as the bunker berth at the first port was not due to become free for another five days. The ship agent also operated within the second port and the bunkering proceeded without incident.

When the time came to settle invoices totalling $26,000 from the various service providers in the second port, the owners refused to pay, claiming that these additional costs had been incurred as a result of not being able to call at the original port. The costs were in fact the normal charges relating to bunker calls, such as tugs, security charges and pilotage, and would have been payable by the owners in any event, even if the vessel had been able to call at the original port. However, the vessel had been delayed by two days and it had incurred estimated costs that exceeded this amount for fuel and other services, as a result of having to travel 500 km to the second port.

Rather than enter into a dispute with the owners, the ship agent paid the port costs for the bunker call, and was reimbursed by ITIC. www.itic-insure.com

Copies of the ITIC Claims Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com.

For more information:                             

Charlotte Kirk                                              

ITIC                                                               

Tel. +44 (0)20 7338 0150                          

Fax. +44 (0)20 7338 0151                         

charlotte.kirk@thomasmiller.com      

London P&I Club sets general increase for next policy year

THE London P&I Club has set a general increase of 12.5 per cent in annual P&I call rates for the 2013/2014 policy year.

Commenting on the background to the decision, Ian Gooch, chief executive of the Club’s management team, says, “Claims in the Club’s retention layer for the current policy year show some encouraging signs, especially at the attritional level, where increased deductibles seem to be playing a part. Although claims in the highest band, in excess of $1m, are running at a moderate level, this band is volatile and has been very expensive in other, recent years. Overall, there remain clear signs of a strong inflationary trend, particularly in the cost of individual larger cases, something which may be reflected by the experience of the International Group Pool this year. The claims picture there is extremely unfavourable, both in terms of claim frequency and average claims severity.”

With regard to investments, the London Club year-to-date return stood at 4.05 per cent at 20 August, and the Club says a cautious approach to planning for the part to be played by investment contributions continues to be required in the current uncertain and low-growth environment.

Gooch concludes, “The Committee recognised the depressed market conditions in different shipping sectors. But, with claims increasing, the Committee considers it to be in the best interests of Members and Club to safeguard its financial strength and move to more balanced underwriting performance. It is against this and the said background that the decision was taken to set a general increase in annual call rates for the 2013/2014 policy year of 12.5 per cent. The Committee also emphasised that attention should be paid to the adjustment of rating and deductible levels for individual Members, where their record and/or exposure to risk requires it.” www.londonpandi.com

ITIC says ship managers must beware increase in claims by owners

International Transport Intermediaries Club (ITIC) says it has seen a noticeable increase in claims against ship managers by shipowners who are going through difficult financial times.


In the latest issue of its Claims Review, ITIC notes that, as result of their financial difficulties, owners resist paying for the full maintenance of their ships and also end up owing ship managers not only for their own fees but also for disbursements paid on owners’ behalf. When ship managers try to collect the funds due, they are faced with a claim for negligence in the management of the ship. In ITIC’s experience, once shipowners fail to put managers in funds, the situation rarely improves, and usually deteriorates. The resulting claims are time-consuming and costly to defend.


ITIC says that it is of the utmost importance that ship managers’ records and correspondence with shipowners are clear and in good order. By way of illustration it cites a dispute between the manager and owner of a ship involving a balance of funds owed to the manager. It was agreed that those funds would be put into an escrow account. The matter remained idle for five months, until the owner raised a claim against the ship manager, through its lawyers, for alleged negligence. The owner claimed that the ship manager was in breach of its duty to maintain the ship in an efficient, employable state and that, as a result, it had suffered significant losses. The claim put forward by the ship owner was in excess of $17m and included alleged losses in respect of the vessel’s future employment, expenses paid by the shipowner for repairs/spares/drydockings, reduction in the vessel’s market value, and other additional damages.


The ship manager rejected these allegations in full and lawyers were appointed by ITIC to defend its position. The manager maintained that the vessel’s condition had deteriorated due to age, constraints of trade, and expenditure and maintenance restrictions imposed by the owner. The manager further stated that the owner was fully aware of the deficiencies and the condition of the ship when it was taken under management. Despite this, the owner had not taken the necessary steps to facilitate remedial action.


Lawyers for the owner aggressively pursued the claim against the manager. However, the manager’s files and correspondence on the ship were in good condition, and a thorough audit trail existed for every decision regarding the running and maintenance of the ship. The ship was eventually scrapped, but the owner continued to maintain that it had a claim against the manager, even though it was unable to provide any proof or to document its losses.


Eventually, after two years, the claim was finalised on a drop-hands basis. The total cost of the legal fees to defend the innocent ship manager was $250,000.


Copies of the ITIC Claims Review can be requested from: chris@merlinco.com
ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com
For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

London P&I Club issues warning on manhole gasket and bilge pump shortcomings

THE London P&I Club has reported a growing incidence of shortcomings with regard to the condition of manhole cover gaskets on board ships.

In the latest issue of its StopLoss Bulletin, the club says that feedback from its Ship Inspection Programme indicates that an increasing number of inspectors are reporting issues in this respect.

The club says it is standard practice for enclosed onboard spaces such as ballast tanks, cofferdams and void spaces to be inspected as part of a prescribed schedule to ensure that the structural condition of the ship in such difficult-to-reach locations remains acceptable. During such inspections, the condition of coatings, sounding pipes, striker plates and other structures within the tanks is usually documented, but the club says that P&I inspections have revealed that the condition of the gaskets at the manhole entrance to tanks is sometimes inadvertently overlooked.

Pointing out the potential adverse consequences for safety, stability and costly cargo damage claims resulting from the ingress of water into cargo holds, the club says, “Owners must ensure that gaskets and associated securing arrangements are considered part of routine tank inspections. Whenever manhole covers are removed, crew should check that they are replaced correctly with gaskets in good condition and tested for integrity where possible.”


Elsewhere in StopLoss, the club says that the ingress of water into cargo holds through bilge pumping systems continues to be a factor in a number of claims. Emphasising that claims of this nature are easily avoided if the crew follow standard practice with regard to the testing and maintenance of bilge systems, the club concludes, “It is good practice for all non-return valves within the bilge system to be overhauled regularly.”

www.londonpandi.com

London Club posts record free reserves to consolidate financial strength

THE London P&I Club consolidated its financial strength by recording an overall surplus of $3.6m for the 2010/2011 year of account. This lifted free reserves to $145.1m, the highest level in the club’s 145-year history.

The club’s continued policy of achieving controlled growth in its membership resulted in a five per cent increase, of almost 2m gt, in owned entered tonnage over the course of the year. The volume of charterers’ business also continued to grow, and these developments produced a total entry of 42.5m gt at year-end, with more ships scheduled to attach during the course of 2011.

Chairman, John M Lyras, writing in the club’s Annual Report for 2011, says, “Advances of this sort, together with further steps to strengthen rating and deductible levels, augment the club’s financial strength for 2011/2012.”

Pointing out that the 2010/2011 policy year saw an unusually high number of claims in excess of $1m, Mr Lyras added, “Our claims exposure – whether to incidents involving our members or other clubs’ members through the International Group Pool – plays the greatest part in the club’s performance.” He emphasised that loss prevention awareness occupies an increasingly important role in the club’s activities, with further attention being given to the dissemination of relevant information through its loss prevention publication and alerts programme, as well as workshops and seminars provided in response to member feedback and requests.

Elsewhere in his comments in the Annual Report, Mr Lyras lamented the “inadequacy” of governmental response to the problem of piracy, and the troubling signs of increased risk to the wellbeing and safety of hostage crew members. The important Best Management Practices produced by the shipping industry and international naval organisations played a significant part in reducing the danger of piracy, but the way in which the risk has developed meant that the ‘industry debate over the potential role to be played by properly trained guards’ was ‘unsurprising’.

On another subject, Mr Lyras also expressed the hope that the provision by the clubs of a very substantial amount of information to those conducting the European Commission review of some of the International Group’s arrangements would help inform the EC case team’s understanding of the unique features of mutual P&I and the important benefits it delivers.

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