THERE is an upheaval taking place in the global marine insurance market, says broker AlphaXO. Marine hull premiums are on the rise and P&I clubs looking at general increases for the first time in many years.
Large-scale claims such as the $1bn Lurssen Shipyard fire, the container fires onboard Maersk Honam and Grande America, the catastrophic results of Hurricane Michael on USA’s east coast (approx. $25bn in total), and even the Costa Concordia have all eroded market capital and as a result, insurers’ ability to provide capacity.
With the marine insurance market being a global marketplace, Australia and New Zealand based companies are also feeling the effects of these events. Many Australian insurers are reducing their available capacity or withdrawing from the market completely.
Insurance and risk management for boat builders and ship repairers is highly complicated and requires experienced, specialist brokers and insurers to arrange for the necessary protection of the business. Standard ISR or property insurance policies are often used to provide insurance cover.
However, typically, these do not incorporate all the specific risks and issues that face vessel builders and are simply not adequate for the risks being assumed by a vessel building business.
It is not only the risk of losing a vessel under construction. The risks of loss or damage to a vessel being repaired are arguably even greater and can severely impact a business. In the event of damage to a vessel under maintenance or repair, the potential consequential losses (such of loss of income from the vessel) could far exceed the value of the vessel itself.
While each business is different, there are some things that all businesses can do that will assist in ensuring that you receive the broadest form of cover, at the most competitive premiums:
• Be open and transparent with your broker and insurer. Your broker should be on your side, and the more information they have, the better armed they can be to go to insurers and fight your case.
• Provide details of accreditations, particularly if you operate to Class standards (such as Lloyd’s Class) ISO standards or even AS/NZ standards. They all help!
• Work with your staff to ensure a safe working environment. A safe working environment affects all aspects of the operation, including the quality of the final vessel.