Tough market conditions — including insolvencies and sales of ships to foreign owners — have hit the fleet that is insured by German freight, demurrage and defence (FD&D) mutual Schutzverein Deutscher Rheder (SDR).

Tonnage insured by Hamburg-based SDR has fallen to 29 million gt — a 19% decline on the 36 million gt of a year ago. The number of vessels also fell to 1,335 as of October, which is a 13% reduction on the 1,540 from 12 months previously.

The recent annual general meeting was told that the club rang up a modest surplus of nearly €54,800 ($63,700) during 2016, down from €418,000 in the previous year.

SDR says it recovered or resisted claims of €15m on behalf of members, which is a slight increase on the €14.9m of the previous year. About one-third of the cases raised with SDR in 2016 were finalised.

FD&D cover is one of the bargains of the marine-insurance market, with SDR leaving premium levels unchanged for 2018 at €440 to €1,800 depending on vessel size. Premium levels have been steady for 13 years.

Members have to pay 10% of the cost of a claim, subject to a minimum deductible of €450 and a maximum of €4,000.

Members whose vessels have been laid up for six months — so without freight earnings for that period — get a 50% premium rebate.

A break-even result is expected for the current year as premium income will be reduced but costs are also being cut.

SDR is seeing a drop in disputes referred to the club, which fell to 269 in October this year, compared to 332 in the same month of 2016.

The number of charterparties referred for evaluation also fell to 221 last month, down from 310 in the same month last year.

The reduction should cut SDR’s costs, although the club notes that external lawyers have to be involved more often, due to the increasing complexity of the cases.

The majority of cases continue to arise from time charterparty disputes, but the club is seeing a reduction in ship arrests, which it suggests may be an indication of recovering markets.

But there has been an increase in bunker-quality incidents and consequential issues, such as main engine damage and vessels going off-hire.

Bills of lading and delivery of cargo against disputed documentation also remain an issue.

“Potential liabilities in these cases can be very substantial and existence threatening for one-ship companies,” SDR warned.

Dr Kurt Klemme of Reederei Nord is due to become the new chairman of SDR when Carsten Sommerhage of Columbia Shipmanagement (Deutschland) — in the role for the past nine years — steps down in the new year.

There is also change in the SDR office, with Wolf-Dietrich Gerlach vacating the managing director position. He is being replaced by his deputy, Michael Wester.

SDR's members include Peter Dohle Schiffahrts, Reederei F Laeisz, Harren & Partner, Hartmann, Jungerhans, Bereederungsgesellschaft Alstership, Schiffahrtsgesellschaft Oltmann, Hans Peterson & Sohne, Transeste Schiffahrt and Borealis Maritime.