- P&I Clubs are the necessity to tackle maritime liability risks.
- They protects the crew from growing risks of cyber crime and cargo Misdeclaration
- Fires, groundings and all other situations are dealt with by P&I insurance.
- P&I Clubs are working towards evolving themselves for modern day risks.
With growing shipping challenges P&I clubs have gained momentum but shippers remain unaware about their importance. To remedy that, John Dolan, the Deputy Director of the Standard Club has penned an article on P&I Insurance.
Saving Shippers from Maritime Liability Risks
According to that article published in Safety4Sea, P&I insurance is specifically designed to address the unique needs of the marine industry, covering practically all maritime liability risks.
In this article, Mr. John Dolan, Deputy Director, Loss Prevention, The Standard Club, confirms that P&I insurance is more relevant and necessary today than ever before.
“The storm raged outside. Restricted visibility, the Master stared anxiously into the darkness and listened intently for clues of imminent danger from close traffic. The vessel was on reduced speed as it butted into heavy seas and the weather forecast did not indicate any imminent relief. He hoped that the lashings on the deck cargo were secured correctly and that the seals on the hatch covers were weathertight”.
Why is it needed?
Experienced mariners have encountered many such situations during their careers at sea. Adverse weather, rough seas, risk of cargo damage and dense traffic are just a small sample of the challenges faced. The vast majority of voyages today, however, are performed safely and efficiently, thanks principally to competent crews, well-found ships and prudent owners / managers.
P&I Insurers Saving the Crew
Despite best efforts, collisions, groundings, pollution and environmental damage, fires and personnel injuries do occur, and these are the risks and liabilities to which P&I insurers respond. These insurers formed ‘clubs’ in which like-minded shipowners pool their resources to insure their third-party risks. These organisations operate as non-profit cooperatives resulting in lower costs for their members. This business model has been commonplace for more than a century; Standard Club has been supporting its members since 1884.
Modern Cyber Risks
Like every commercial enterprise, P&I clubs evolve to service their clients’ needs and cover their liabilities exposures. Today, while the fundamental and familiar marine risks remain, new areas of concern continue to emerge in international shipping. These include rapid technological developments, cyber security concerns, IMO 2020 and the new regulatory regime for permissible fuels, and potentially large consequential penalties.
The Fire Risk
Fire on board ships presents a particularly dangerous situation for mariners and poses a great risk for cargoes, ships and the environment. The marine industry is aware of this risk, which is why crews are trained in firefighting techniques to respond rapidly and decisively if a fire does occur, and ships are built and equipped to strict technical standards to mitigate fire risks. Ship sizes grow but ship designs, particularly in relation to safety systems, often evolve at a slower rate than the cargo types they carry.
This may be one of the reasons why there has been a surge in the number of fires – out of 57 in the past five years, 32 occurred in the past two years alone including 8 total losses – on car carriers. More electric cars are being carried and there is a strong belief that the cause of many of the fires relates to electrical problems with the car batteries. Representatives from the major P&I clubs and H&M insurers, including Standard Club, have formed a working group to study this critical issue.
Cargo Misdeclaration Risks
Special mention should be made of the well-publicised challenges with container shipping and the dangers posed by shippers’ misdeclared cargoes. Ship names like Hyundai Fortune, CMA Djakarta and, more recently, the Yantian Express and the KMTC Hong Kong strike fear throughout the container shipping sector, a major concern to marine insurers and, more importantly, to the crews employed on those container vessels.
In response, many multi-disciplinary working groups involving representatives from the shipowners, operators, classification societies, marine insurers and the regulators have been established to tackle this specific issue.
Perhaps the most visible of these groups is the Cargo Incident Notification System [CINS] that was established in 2011 by five of the biggest container ship owners, including Maersk, CMA CGM and MSC. Today, CINS comprises 17 shipping line members representing more than 85% of the container ship industry capacity globally. This forum, supported by the International Group of P&I insurers, continues to share information on all cargo-related incidents in order to improve the margins of safety in the industry. It is clear, however, that the carriers and shippers must make greater efforts to ensure that all cargoes are declared correctly.
Ensuring Skilful Sailing
‘It is not the ship so much as the skillful sailing that assures the prosperous voyage’. George W. Curtis, writing in the 19th Century, could easily be describing the important role of crews in shipping today. All reputable shipowners, operators and managers recognise this imperative and will ensure that all of their crews have extensive professional training and education.
Today, we know so much more about people, their interests, emotions and what motivates them. Human factors, therefore, have a critical influence on personnel safety performance and behaviours on board. Standard Club recognised this issue more than a decade ago and collaborated with BP Shipping, Teekay Shipping and the UK’s Maritime & Coastguard Agency to release the ground-breaking ‘The Human Element’ publication. This book explains the general principles of how people think, communicate, their decision-making processes, and how stress and fatigue can impair these processes.
P&I Clubs Raising Safety Standards
Despite such knowledge, claims relating to crew injuries, negligence and errors continue to feature in the annual statistics. P&I clubs are aware of the issues and strive to raise safety awareness by sharing their claims experience amongst their respective memberships. For example, a key topic today is the wellbeing and mental health of the crews on board ships. Tiredness and fatigue are commonplace in the industry, and unfortunately, separation and social isolation from home is a fact of life for many seafarers. In these circumstances, it is unsurprising that mental health related illnesses occur, so it is important that resources and support are available to both the seafarers and the Masters to assist them in dealing with such personnel. In a bid to do its part, Standard Club has published a poster campaign to alert the members’ crews to the potential challenges they face, and ways to encourage positive wellbeing. The campaign and practical advice have been well received by the club’s membership and by the mariners on board.
P&I insurance is more relevant and necessary today than ever before. Ships and shipping pose major safety, technical and operational challenges. P&I clubs respond by providing shipowners, operators, managers, masters and their crews with a 24/7 support network that is available to them at any time, day or night, particularly when their ships are sailing into the raging storms.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Safety4Sea
