AIMU Reports On Hull Insurance Market At Annual Conference
The effects of a continued worldwide s h i p p i n g depression, rising ship repair costs, and the instability in international currency relationships have all played a part in stalling the long-awaited recovery of the world hull insurance markets.
This was the view of William J. Bradford Jr., chairman of the Ocean Hull C o m m i t t e e of the American Institute of Marine Underwriters (AIMU), expressed in his report to the Ocean Hull Committee of the International Union of Marine I n s u r a n c e (IUMI), which held its annual conference in Vienna last month.
Mr. Bradford reported that one of the root causes for the difficulty facing all marine underwriters is the breadth and depth of the shipping depression, now in its fifth year.
"The financial plight of the worldwide s h i p p i n g community has been well publicized, and the past year has seen several instances of reorganization, consolidation or disposition of fleets.
This state of affairs has resulted in ever-increasing pressure for reduced insurance costs. Unquestionably, the restructuring of the world merchant fleets will continue." Cost of Repairs At the same time, Mr. Bradford noted that hull repair costs have risen to a point where routine maritime accidents are now regarded as major casualties.
Commenting generally in this area, Mr. Bradford reported that the United States Salvage Association (USSA) sees the world ship repair market as disorderly and unpredictable. USSA points out that shipbuilding programs have dropped precipitately during 1977. Further, ship repair volume is off considerably, as well. On the other side, new ship repair facilities have come on line, and some building yards have sought to convert t h e i r f a c i l i t i e s for repair work. The interaction of these conditions produces the confused market.
Mr. Bradford reported, however, that further observations from the USSA give cause for some hope, in select cases. He noted that income from ship repairs is becoming increasingly important to every country with sizable facilities. Bidding and prenegotiation can often result in drastically reduced prices, particularly for owners of large fleets.
The occasional large bottom damage which has been bid has been seen to result in very significant savings to underwriters.
Still focusing on the cost of repairs as c o n c e r n s American marine insurers, Mr. Bradford offered data supplied by United States Salvage. Using 1968 United States Atlantic Coast (excluding New York and Boston) levels as base 100, the following increases were developed (1977 increases followed in parentheses by accumulated e i g h t - y e a r increases): Atlantic Coast — 8 percent (244 percent) ; New York/Boston—8.5 percent (296 percent) ; Pacific Coast—8 percent (294 percent); Gulf Coast—8.5 percent (250 percent), and Great Lakes—6 percent (305 percent).
Currency Problems Another concern for U.S. Marine Underwriters, according to Mr. Bradford's report, is the instability in international currency relationships, especially with respect to vessels which repair abroad and claim under dollar policies.
"The matter is being watched," he reported, "though our underwriters are not as yet convinced that the dislocations are sufficiently fixed as to warrant action, if indeed any real c o r r e c t i o n s could be accomplished in the face of present world insurance market conditions." Although worldwide ocean hull insurance experience continued to be less that satisfactory in 1978, Mr. Bradford noted that the run off of domestic underwriting results continues generally satisfactory, due largely to the claims reserving procedures advocated in this market.
If properly employed, he maintained, these procedures virtually assure adequacy of reserves from the outset. The foreign-flag fleets, however, continue to run off very poorly with substantially heavier payments as claims are settled.
Claims Experience Regarding U.S. hull claims experience during the past 12 months, the largest casualty involved the collision of the sister vessels Venoil and Venpet, off the coast of South Africa near Capetown.
Other major casualties included two LASH vessels — the Robert E. Lee and the Delta Norte, both hit with equipment failure. Another involved the dry cargo vessel Pioneer Commander stranded during a thick fog in the eastern end of Pentland Firth, North Scotland.
In summing up the U.S. marine hull insurance market's experience during the past 12 months, Mr. Bradford saw American underwriters as continuing their efforts to rebuild and maintain an orderly market. In this effort, he concluded, these u n d e r w r i t e rs recognize that pressures would be exerted against their hull books, and that the loss of some accounts would follow their decisions not to accept business offered at levels below the margin of their underwriting judgment. This loss of business has indeed been felt, but underwriters are satisfied that it will be recovered in time.
Other stories from October 1978 issue
- Shipyards Support Marinfec Asia 79 page: 4
- New Firm To Buy Five Vessels For Service Great Lakes To Europe page: 4
- C.Y. Tung Group Enlarges Fleet To 118 Vessels page: 6
- Bath Iron Works Names Allan G. Anderson page: 6
- MarAd Approves Title XI Guarantee For Eagle Dredge page: 7
- Two New Parcel Tankers Added To Stolt-Nielsen Fleet page: 7
- Gibbs & Cox, Inc. Opens Newport News, Va. Office —R. Delia Rocca Named page: 7
- Abex Corporation Names Paul J. Powers President Of Denison Division page: 7
- Built By Main Iron Works, The 6,000-HP McAllister Tugboat Jabbar Will Work In Arabia page: 8
- El Paso Announces Proposed Offerings page: 8
- ITT Decca Marine Names Richard Muller page: 8
- Title XI Requested To Reconstruct Flat-Deck Oceangoing Barges page: 10
- Triangle Fleeting Corp. Names Jeffrey Kindl VP And General Manager page: 10
- Foster Wheeler To Supply Inert Gas Systems For LNG Tankers At Quincy page: 10
- C.F. Bean Corporation Names John Lescroart Executive Vice President page: 10
- National Marine Service Names Glennon Bequette Shipyard Division VP page: 11
- Royal Netherlands Orders Three New Freighters From Dutch Shipyards page: 11
- Gotaverken Plans To Build 37,000-DWT Icebreaking Bulker page: 12
- John J. Bajor Joins Midland Marine Corp page: 12
- Diamond Shamrock To Charter Chemical Tanker Building At Avondale page: 12
- Crowley Maritime Corp. Appoints Jay Brickman page: 15
- General Electric Credit Buys Its Eleventh Tanker page: 16
- Rear Adm. Westfall Addresses ASNE Charleston Section page: 16
- Continental Oil Announces Six Executive Promotions page: 16
- Hillman Barge & Construction Elects R.E. Kenny And B.T. Kelley page: 16
- Chairperson, Member Appointed To Kings Point Advisory Board page: 18
- Los Angeles-Long Beach Propeller Club Names Officers For 1978-79 Term page: 18
- U.S.-Flag Fleet To Double In The Last Quarter This Century page: 20
- U.S. Navy Awards Ingalls $287 Million Contract To Design And Build First Of A New Class Destroyer page: 20
- Exxon International Awards Maintenance Contract To Stanwick page: 21
- Crowley Maritime Names Jim Grissom Manager San Juan Operations page: 21
- ITC Completes 6,237-Mile Dry Tow To Argentina With Six Oil Barges And Two River Towboats page: 22
- NICOR, Inc. To Acquire National Marine Service page: 22
- Port Weller Dry Docks Plans Shipyard On Lake Erie To Build And Repair Large Ships page: 22
- Mobilization Ship Design To Be Unveiled November 6 At Conference In Arlington page: 22
- 27 New Members Elected To American Bureau Of Shipping page: 24
- George Lowman Elected Farrell Lines Chairman page: 26
- Furuno U.S.A. Formed In South San Francisco page: 26
- Gastech 78 To Focus On World Supply And Demand For LNG And LPG page: 27
- Butterworth Systems Receives IMCO Approval page: 30
- Atlantic Diving Forms SeaTec International, Ltd. page: 30
- Ruddie E. Irizarry Named President Of PRMMI— Carr, Calderon Also Named page: 30
- Evergreen Handt Corp. Names Three Executives page: 31
- AIMU Reports On Hull Insurance Market At Annual Conference page: 32
- Crowley To Provide Maintenance Services Worldwide For Navy page: 32
- Rutland Maritime Names Peter Gallagher page: 32
- Alario And Associates Named To Represent Shipyard In Greece page: 33
- Hofstra And Webb Jointly Announce New Relationship page: 34
- Reynolds Announces $580-Million Upgrading For Sea-Land Service page: 34
- Tampa Ship Repair & Dry Dock Dedicates New $23-Million 900-Foot Graving Dock page: 35
- Singapore Marine Conference Set For February 1979 page: 40
- St. Louis Ship Delivers Second Of Four Supply Vessels To Gulf Mississippi Marine Corp. page: 40
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- Sperry Division Names Blumberg Marketing Communications Manager page: 42
- J.J. Scott Of Sea-Land Named Director Of Mideast Por page: 42
- Floyd Mechling Retires From Union Mechling page: 42
- Jacques B. Hadler To Direct Research Activities At Webb page: 43
- Admiral Benkert Elected President Of AIMS page: 44
- AWO Elects James Potter —Industry Issues Examined At Board Meeting In Tulsa page: 44
- Tidewater To Acquire Insurance Firm In Texas page: 46
- Steam Turbine Operating Guide Now Available page: 46
- Shipping Executives To Review Maritime Policy At Oakland Conference page: 46
- Kubota To Stockpile Anti-Corrosive Pipe In Texas Facility page: 48
- Kawaski Delivers Cargo Ship Equipped With Derrick Capable Of Lifting 600 Tons page: 50
- Investment In Tankers: The Case For Optimism page: 50
- International Firms Plan Large-Scale Operations In The Beaufort Sea page: 52
- USCG Removes All Personnel Restrictions Based On Sex page: 53
- Hawaii Site Selected For Testing Nodules Gathered From Ocean Floor page: 53
- Hawaii Site Selected For Testing Nodules Gathered From Ocean Floor page: 53
- New Starlite Is Second 122-Foot Combination Boat From MARCO Yard page: 53
- New Abex/Denison Bulletin Describes Pressure Valves page: 54
- Booklet Published On Bulk Liquids And Solids In Standard Freight Containers page: 54
- President Signs Murphy Energy Bill page: 54
- General Electric Credit Names Joseph Heimerl page: 54
- FMC Launches Another World's Largest Barge page: 55
- Passenger Liner's Fast Repair At Northwest Marine Iron Works page: 55
- MacGregor's Novel Solution To Quay Height Variation page: 56
- Oceanology International For Offshore Industry Set For March 3-7, 1980 page: 56
- Hawaii Firm Announces Plans To Construct A Stable Semi-Submerged Fishing Vessel (SSFV) page: 57
- SNAME New York Section Reports Meeting Program For 1978-1979 Season page: 57
- Newfoundland Makes Bid For $.75-Billion Investment In Fishery page: 57
- Modules Towed To Site For Construction Of Offshore Plants page: 58
- New York Metropolitan Section Begins New Season With Past Chairman's Night And Third Generation Ro/Ro Paper page: 58
- Shipbuilding Experts Meet To Discuss Ways To Increase Automation And Productivity page: 58
- Halter Delivers Second Supply Boat To Gonsoulin Enterprises page: 59
- Ship Structure Committee Publishes Two New Reports page: 59
- Texas Gas Transmission Inland Waterways Division Announces Personnel Changes page: 60
- A.L. Burbank & Company, Ltd. Announces Election Of Officers —Celebrates 50th Anniversary page: 61
- Maritime Data Network Announces Computerized Charter Fixtures Library page: 62
- Sperry Computerized Positioning System Permits Pipelaying In 2,000-Ft. Waters page: 62
- American Bureau Of Shipping Classes 53 Vessels In August page: 62
- Hatch & Kirk Inc. Acquires Cleveland Diesel Engine Assets page: 64