Business | Shipping
Tougher rules will raise insurance rates
A report by one of the world's largest insurance brokers is predicting that insurance costs for shipping companies may rise by as much as 10 per cent as underwriters prepare for stricter maritime safety regulations.
- By Frank Kennedy, Special to Gulf News
- Published: 00:00 September 18, 2006
A report by one of the world's largest insurance brokers is predicting that insurance costs for shipping companies may rise by as much as 10 per cent as underwriters prepare for stricter maritime safety regulations.
According to AON Corp, future costs for protection and indemnity (P&I) policies are likely to increase as insurers are forced to take account of extra risks following implementation of stricter rules that will increase the liabilities of ship operators for pollution and crew compensation.
Upcoming and proposed European Union legislation, plus new compulsory UN rules on both crew welfare and pollution, will soon expose operators to pay compensation in the event of proven non-compliance and P&I cover will have to rise in cost accordingly, so as to cover such eventualities that were previously insured for on a voluntary basis.
Stephen Hawke, London-based Executive Director of AON's Marine Unit, said, "Higher premia will affect all types of vessels," and he added, "Owners will have to pay whether or not they are negligent the world is saying let's deal with the fault at a later date, let's move to an environment where there's a non-contestable level of compensation in 70 to 80 per cent of cases".
In the case of pollution, AON highlighted the fact that contracting governments are adhering to the limits set by the International Maritime Organisation (IMO) and it cites France, Germany and the USA as examples. France for instance is on record as fining errant ship operators as much as five million euros and fines in the US can be as much as $500,000, the report said.
The draft Maritime Labour Convention, drawn up by the International Labour Organisation (ILO) could also become an issue for shipowners, Hawke said. The convention proposes to give additional working rights to crews and therefore exposes insurers to increased risk.
The North of England P&I Club has expressed the view that the mental wellbeing of seafarers, in general, is worsening with worrying symptoms ranging from mild anxiety attacks and depression, to aggressive behaviour culminating in suicide as the worst and most tragic consequence.
In the latest edition of its loss-prevention newsletter 'Signals', the club says that despite the main causes of the problem being so far undefined, there is evidence that major contributing factors may be the effects of increasing vulnerability to the criminalisation of seafarers in situations of non-compliance and growing anxieties due to family pressures, exacerbated by unreliable relief situations, increased time spent away and the consequential need to send funds home.
The club's risk management manager, Tony Baker, is quoted as saying, "In the modern world of shipping, turnaround times in port are also much quicker and shore leave may be restricted by the authorities. This creates more work for both officers and crews and less opportunity to relax, resulting in greater fatigue and stress.
But whatever the cause, mental illness must be taken extremely seriously, both to protect individual crewmembers but also their colleagues on board."
He goes on to say, "Anyone who appears to deeply depressed or who talks of suicide should never be left alone. In practice, this can be difficult, but the crewmember should be confined to a cabin and remain there under supervision. The deck is a dangerous place and the ship's side may be a temptation."
Sharjah-based Gulftainer, managers and operators of the container terminals of Sharjah and Khor Fakkan, have announced the signing of a key agreement with the government of the Comoros Islands for a 15 year contract to operate, manage and upgrade the ports of Moroni and Mutsamudu.
The company will manage Moroni Port with the aim of expanding the port's capabilities by increasing the cargo storage area, constructing warehousing facilities and introducing the latest state of the art cargo handling equipment.
It will start the Moroni port project immediately while it will manage and operate Mutsamudu port in 2007.
Peter Richards, General Manager of Gulftainer commented, "This is a significant occasion for two main reasons; firstly that this contract represents a further step in our efforts to develop our international links and raise our profile as a port management company; and secondly it allows Gulftainer to use its well established expertise to help develop the transport gateways of a country which will certainly benefit from the cost savings through efficient cargo handling at its ports."
He then added, "Our main aim will be to drastically reduce the time that vessels take to discharge and load their cargo in the port.
This will allow the consignees and shippers of the Comoros Islands to negotiate better freight rates from the shipping lines, which will in turn allow the cost of importing goods into the country to be reduced.
The same principle will be applied to the Port of Mutsamudu. We look forward to a long and successful co-operation with the Comoros".
The Comoros Islands have existing maritime links with the UAE with an 'open flag' ship registry based in Ajman the first such registry to be established in the Islamic world.
The writer is a marine consultant based in Dubai.
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