International Group of P&I Clubs chairman Paul Jennings has used a YoutTube video to provide his view of a dramatic rise in pool claims costs over the past two years.
The grouping of 13 protection and indemnity insurers, which share the cost of claims over $10m in a pooling system, have been hit by massive pollution and wreck removal bills for casualties such as the 7,700-ceu Golden Ray (built 2017) and 203,000-dwt Wakashio (built 2007).
The P&I related costs for the Golden Ray wreck removal, which is entered with North P&I Club where Jennings is chief executive, is estimated at $800m, making it the second-largest pool claim ever.
The upcoming renewal of the International Group’s two-year reinsurance deal, which covers claims in excess of $100m, is expected to contribute to considerably higher premiums for shipowners at next February's P&I renewal.
Joined by International Group chief executive Nick Shaw in the YouTube video, Jennings explained that number pool claims has not risen, but it is the cost of the individual claims that had seen a marked increase.
Shaw pointed out the number of claims which require the International Group to call on its reinsurance cover has remained consistent at one and a half to two claims a year.
Explaining the situation over the Golden Ray Jennings said: “I am satisfied we are dealing with this as prudently as we possibly can.”
He said that costs had exceeded expectations largely due to measures to protect the environment at the US port of Brunswick, where the ship grounded, and unforeseen developments such as the onset of the coronavirus pandemic.
Beyond control
“It is a large number and it has increased because of a lot of things beyond our control or expectation,” he said of the costs.
Jennings said that the highly publicised claim for the 20,388-teu Ever Given (built 2018) in the Suez Canal had been settled at a “sensible figure”, demonstrating the value of the International Group claims-handling process.
He said the final sum was confidential but within the International Group’s own retention and without the need to call on its reinsurance cover.
Ahead of its policy renewal discussions, Jennings also stressed it is important for the International Group to maintain its positive relationship with its reinsurers to continue the pool claims system.
“We understand that we have to allow reinsurers to invest and make a return on capital, they understand that, on occasion, claims will be heavy. We have to put them back in a position where they can continue that relationship,” he said.
