Ship failure presents a much more optimistic picture, with a two-thirds reduction during the 1990s - the credit for which must be shared by the classification societies and shipowners.’ This is one of the leading conclusions from the recently published ten-year analysis of trends in maritime risk by the UK P&I Club. Karl Lumbers, the Club’s Manager of Ship Inspection and Loss Prevention, warns that human error still continues to be a serious challenge, accounting for 58% of major claims, and emphasises the need for education and training in loss prevention.
The major protection and indemnity insurer the UK P&I Club has been analysing its major claims for many years to determine and assess the nature of the risks its members are experiencing. The Clubs recently published Analysis of Major Claims is the most comprehensive report to date and examines those claims in excess of US $ 100,000 filed by its members between 1987 and 1997. With the Clubs membership representing approximately 20% of the worlds deepwater fleet and a cross section of ship types, the report gives a representative global picture of maritime risk.
Loss prevention service
The UK P&I Clubs more detailed interest in claims analysis dates from the late 1980s, when insurance renewal premiums jumped alarmingly. The Club was handling 20,000 claims a year. Claims in excess of US $100,000 were being received at some 300 to 400 per year. We discovered that 2% of our claims accounted for 72% of our outgoings and this prompted the setting up of a formal loss-prevention service for our members, comments Lumbers. As a result of examining the claims trends, now we can work with facts. The results are impressive. Of all the ship failure claims received by the Club since 1987 only one third have been presented since 1990. Over the same period, moreover, there has been a growing acceptance that loss-prevention efforts must go beyond technical matters and address human factors, which are the cause of the great majority of claims.
The Clubs broad definition of ship failure includes structural, mechanical and equipment failure. The analysis includes an examination of the impact of ship failure by age of vessel, ship type, size and Flag of registration. Ship failure, it must be remembered, is also a significant factor in cargo claims, with hatchcover failures alone being implicated in US $34 million worth of claims in the ten-year study.
The report identifies vessels of between 14 and 19 years old as being at greatest risk of failure. The most vulnerable ship type remains the bulk carrier, though for this group the data shows an improving trend. A notable concern is that structural failure in container ships is on the increase.
Major sources of claims
The analysis highlights the Bahamas, Cyprus, Panama and US-registered fleets as being particularly prone to structural failure claims. However, the statistics need to be put in context. It is significant that a substantial proportion of the Panamanian-registered fleet consists of bulk carriers and dry cargo ships. Also, the fact that the rig and supply boat figures contribute greatly to the US Flag quota of ship failure-related claims influences these registers positions in the tables. Although the number of Bahamian-flagged vessels entered in the Club is small, the report indicates that this Register exhibits a frequency trend which is consistently in excess of the Club ship failure trend.
In terms of claims distribution, the report identifies some significant developments. The claims performance for container ships has shown a deteriorating trend since 1993, with a sharp increase in the number of serious cargo explosions and fires. Of particular concern to insurers is the safe carriage of calcium hypochlorite, a cargo which is perplexing the scientific community.
Shore error is a greater problem with container-ship operations than with any other ship type, responsible for 21% of all major claims compared with an all-ship Club average of 9%. Lumbers blames poor stowage of cargoes inside containers, and points to loss-prevention training as a means to improve the situation. Too many containers are being lost overboard. We will be sending copies of our latest video Container Matters for our shipowners to pass to shippers, in an effort to spread best practice in the industry.
In recent years, the UK P&I Club has led the field in the design of training materials to support loss-prevention initiatives. Lumbers says that demand for these materials has been particularly strong since the advent of the International Safety Management Code.
The publication of the UK P&I Clubs report is a significant milestone in the assessment of maritime risk and in the development of loss prevention. Improving claims records is the obvious goal but as Lumbers concludes, Our shipowners must feel confident that they are sharing risk with other quality operators. Mutuality is trust, trust that the system is fair.
Date: 2000-02-15