Claims commentary

The number of indemnity claims reported during the 2017 policy year (1st June 2017 to 31st May 2018) is lower than in the previous year. This is the third consecutive reduction in the number of matters reported.

The amounts paid and estimated after 12 months’ development in the 2017 policy year were however slightly higher than the average of the previous five policy years but remained consistent with those years. Historical claims have developed less adversely than anticipated leading to an overall improved claims position.

Although human error will always be the main cause of claims reported to ITIC the cover often responds to situations where the member is held liable irrespective of their fault. Recent years have seen a number of claims relating to liabilities imposed on ship agents by port authorities. A notable example in the last twelve months was an agency that faced a substantial liability for the costs of removing a grounded ship in the Middle East. Another claim involved an agent’s potential liability for a ship abandoned in the same region.

The abandonment of crew members due to the financial default of the ship owner can leave ship managers being liable to reimburse P&I clubs for costs paid under their Maritime Labour Convention certificates. ITIC has provided cover for ship and crew managers (offered at no additional premium) giving some protection to this potential liability.

The need to interpret and comply with a range of constantly evolving regulations is a growing feature of transportation businesses. One of the notable claims of the last 12 months involved a ship manager who overlooked that new regulation had come into force in one US state requiring ships entering from international waters to deballast more than 200 nautical miles from the coast. The previous regulations contained a 50 mile restriction.

ITIC insures many naval architects and an example of a typical claim arose from excessive vibration in a newly built workboat. In another case it was found that the construction drawings for a compressor contained an error. In both these cases litigation was avoided and ITIC worked with the member to resolve the issues on a practical level settling the additional costs incurred.

The number of debt collection files handled by ITIC also fell during the 2017 policy year. This was the first such fall for three years. The claim numbers reported in the 2017 policy year do not however contain multiple debts arising from a major bankruptcy and therefore may not reflect a general improvement in principals paying their shipbrokers and ship agents.