Navigational failure tops pooled P&I club claims

Navigational error has again proved a predominant feature of the largest claims notified to the leading protection-and-indemnity clubs.

The current policy year still has a month to run but the number of claims large enough to be pooled has reached 16, slightly up on the previous two years.

The most striking feature of the pooled claims is that 13, or over 80%, have navigation as a cause or at least a key feature of the incident. This can range from a grounding, collision with another vessel or damage to a berth, cranes or other fixed objects.

The loss of the National Iranian Tanker Co 164,000-dwt suezmax Sanchi (built 2008) involved fire, explosions, pollution and loss of life but began with a collision with the 76,000-dwt bulker CF Crystal (built 2011).

TradeWinds has included the Sanchi among the claims facing the pool operated by the 13 International Group clubs, as it seems certain to reach the $10m threshold for being shared, although it has not been formally notified so far.

The incidents on the list range from four precautionary notifications, that are close to the pool entry point, to the 2,194-teu Kea Trader (built 2017), the most costly of the current casualties.

The Kea Trader, reserved at $170m, is the only incident of the year to have passed the $100m mark, where the P&I clubs commercial excess of loss reinsurance programme begins to share in the loss.

However, club reinsurers have been hit by recent deterioration on two older claims.

The claims reserve on the 46,100-dwt product tanker Alpine Eternity (built 2009), which collided with an oil platform in Iran’s South Pars gas field in the Persian Gulf in 2015, has been increased by $65m, while the bill for the 9,737-gt ro-ro ferry Amadeo 1 (built 1976), which became a total loss following a 2014 grounding in Chile, requiring a wreck removal, has also been climbing.

While claims have been falling in terms of both numbers and cost for years, larger casualties are more unpredictable and responsible for much of the volatility that is a feature of the P&I market.

Despite year-to-year variation in the number of pool claims, there is a long-term downward trend, as the graph shows.

The number of pool claims peaked at 50 in 2006, falling to an average of 30 five years ago to less than 20 in the past few years.

The huge spike in 2011 pool claims reflects it was the policy year hit by the loss and subsequent wreck removal of both the 114,000-gt cruiseship Costa Concordia (built 2006) and 3,032-teu containership Rena (built 1990), producing a combined P&I claim of almost $2bn.

There is a perception that tankers produce few claims, but they account for five or one-third of pool claims of the current year, so are ahead of the four containerships and three bulker incidents.

There are four tragedies involving large scale loss of life. The Sanchi and the sinking of the 266,100-dwt Stellar Daisy (built 1993), as a result of suspected structural failure while fully laden with an iron ore, resulted in a combined death toll of 54. A further 17 US Navy servicemen died in collisions between warships and merchant vessels.

The UK, Steamship Mutual and Skuld clubs each have three pool claims, West of England and Japan a couple each, while Gard, the North of England and Swedish all have a single claim.

Five clubs have escaped without a single pool claim but as larger claims fall almost randomly, this is mostly a matter of good luck.

Those whose luck has so far held through the current policy year are the Britannia, Standard, London, Shipowners’ and American clubs.

Claims facing the International Group pool