Ship Management Claims trends

1

• Ship Management Claims trends
• ever upwards?
• Stuart Munro - Director
• - ITIM Co Ltd.

2

• ITIC FACTS
• ITIC is the largest liability insurer of ship
  yacht and crew managers worldwide with over 180
  members
• Ship managers are 10 of the membership by number
• Ship managers pay 18 of the premium of ITIC
• Ship managers now account for 21 of claims by
  value
• Highest ship management claim paid is US 4.5
  million.

3

• Types of Management
• Technical
• Operational
• Commercial
• Accounting
• Insurance
• Crewing
• Pool

4

• Technical Management
• Equipment problems
• Dry docking budget
• Allegation of secret commissions from suppliers
• Oil major and/or Rightship approval
• Hard worked ships
• Lack of Investment credit crunch
• Quality of new tonnage?

5

• Operational Management
• Bunker stems quality, quantity, grade
• Funding of agents

6

• Commercial Management
• Incorrect description of loading/discharging
  equipment US1 million
• Fixed ship for LOOP contrary to bareboat charter
  US 350,000
• Tanker demurrage statement late notification
  -numerous examples!!!

7

• Accounting
• Fraud by staff
• Late payment of insurance premiums

8

• Insurance
• Placing hull cover for incorrect limit
• Placing separate crew liability insurance for too
  low limits
• Not arranging for manager to be co-assured on
  hull and PI covers of owner
• Failure to place charters liability insurance by
  pool manager US 600,000

9

• Crewing
• Incompetent as opposed to negligence of crew
• Vicarious liability of crew on the manager
• Crew contract values (increase in wages)
• Crew supply as agent only

10

• Pool Management
• Pool manager as agent or a charterer
• Unsafe port claims
• Insurance

11

• Current issues facing ship managers that have
  increased the size of claims
• Customers
• Market conditions
• Cost and complexity of litigation

12

• CUSTOMERS
• Choose them carefully many are inexperienced
  owners
• Detailed inspection of the ship
• Agree detailed budget and payment plans
• Ship management contract negotiations
• Fee level
• Payment problems

13

• MARKET CONDITIONS
• Buoyant shipping market
• Quality of tonnage
• Inexperienced owners
• Rising costs
• Quality of officers and crew
• Qualify and turnover of ship management staff
• 7. Over enthusiastic marketing

14

• COST AND COMPLEXITY OF LITIGATION
• Effect of ISM Code and Quality Management Systems
• Weakness of US dollar (costs incurred in Sterling
  Euro)
• Volume of documents to be analysed
• Claims are inflated to ensure amount is in excess
  of any limitation under contract

15

• TOP TIPS
• Dont put up with any customer who is short
  funding a vessel or is late making payments.
• Dont offer a service you cannot provide.
• Dont accept any change to your limitation of
  liabilities under your contract.
• If in doubt, terminate the contract.
• If you follow tips 1-4 the other ship manager
  will have all your problems.