Members of the International Group of Protection & Indemnity Clubs are bracing themselves for a massive hike in claims after at least four major casualties in the first two weeks of the year.
The prospect of more than $100m-worth of new claims is piling pressure on the clubs, which are seeking to keep their finances sound, to play hardball on rates as they finalise ongoing individual negotiations with owners ahead of the traditional February renewal.
The casualties are set to see the number of International Group pool claims soar to more than 20 for the current year, with some expensive claims in the pipeline which will eat into the group’s pooled reinsurance arrangements for claims in excess of $10m.
Sincerity Ace
The most expensive claim is likely from the 6,400-ceu car carrier Sincerity Ace (built 2009), which caught fire off the Hawaiian Island of Oahu in the Pacific last week with 3,500 new Nissan cars onboard destined for the US.
The ship’s protection and indemnity club the Standard Club is likely to face a claim for the five lives lost in the casualty and part of the salvage costs.
Nippon Salvage was contracted on a Japan Open Form terms to rescue the abandoned ship, which was drifting in the Pacific, and tow it back to Japan.
Although cargo insurers will pay for the cargo loss in the first instance, it could eventually become a P&I claim if the shipowner is found liable for the loss.
The total value of the cargo is estimated at about $100m.
Another costly claim that is expected to be a pool claim and burn the clubs is from the Hapag-Lloyd 7,510-teu containership Yantian Express (built 2002), which caught fire off the coast of Canada this week.
The ship was on its way from Sri Lanka to Canada via the Suez Canal when the fire broke out. Salvage company Smit has been employed on Lloyd’s Open Form terms. The vessel is listed with Britannia P&I.
A chemical tanker explosion on the 17,542-dwt Aulac Fortune (built 2010) off Hong Kong’s Lamma Island on Tuesday this week that left two seafarers missing is set to leave its P&I club the West of England with a hefty claim.
Althos explosion
There was also an earlier explosion on the 7,100-dwt Athlos (built 2010), also with the West of England, off the coast of Cyprus as the ship sailed from the port of Larnaca.
Late last year, 12 out of the 13 International Group members said they would not go ahead with a general increase in premiums at the renewal, but instead would penalise owners with poor claims records in individual renewal talks.
The claims picture is now adding to the pressure on clubs to stay firm on rates during the current round of talks.
“These casualties look like adding considerably to the claims bill and because there is no general increase lined up for next year the clubs are worried about seeing underwriting losses worsen as premiums fall.
“They are already being tough with a lot of owners in the current round of talks and these new casualties are not helping,” one broker said.
“As a result, we could see a lot of movement this year,” he added.
The International Group is already facing major claims from earlier casualties such as the tanker Sanchi and containerships Maersk Honam and SSL Kolkata.
