Marine insurance broker Wilson Europe has criticised the management of protection and indemnity mutual insurers, claiming they are cutting out shipowner members from important decisions.
Wilson managing director Julian South believes P&I managements often confer with a clique of shipowners on their executive board rather than the whole members’ board.
“It seems now that it is the accepted practice of club managers to concentrate their attention on their small executive boards for the big decisions,” he said.
“These boards consist of only a few shipowners and often conflicted club representatives, and decisions are taken at the apparent exclusion of the whole board, who are only informed after the ship has sailed.”
South also accused P&I managers of overloading board members with documents on matters such as corporate governance that are a distraction.
“In some areas, it seems governance is being used by the managers as an opportunity to delegate too many unnecessary, inefficient and bureaucratic processes, which cause massive distractions for the directors,” he argued.
“This results in the avoidance or dilution of key operational engagement and decision-making by many of the directors, resulting in corporate governance not always delivering its intended safeguards.”
P&I executives contacted by TradeWinds said each club has different management, board structures and approaches. But most suggested it is unlikely that club management would deliberately seek to distract their board members.
The full members’ board can include up to 40 shipowners, compared with about 10 on the executive board.
The decision to merge the North P&I Club and the Standard Club, which was cited by South, was approved by the executive boards of each club, but it had to win the approval of both clubs’ members before it could go ahead.
Facing challenges
In its overview of the P&I market, Wilson highlighted the improvement in the underwriting performance of the International Group’s 13 members after they increased net premium increase by an average of 12.4%.
However, the clubs have also reported a combined deficit of $230m and a 5.3% fall in free reserves.
Heading towards next year’s renewal, the broker said that P&I clubs still face challenges despite no International Group of P&I Clubs pooled claims being reported this year.
“The reported absence of International Group pool claims in the current year adds a restrained sense of optimism that things are improving, although inflation and lack of investments income will be cited as reasons for caution,” Wilson said.
