James Gosling (HFW), Tom Brown (Seacurus) and William Beveridge (Arch Insurance)

Attendees at yesterday's Maritime London piracy seminar agreed that armed guards aboard merchant vessels would exacerbate an already dangerous situation.

Hosted by the Lloyd's Market Association on the day when news broke that a Vela VLCC had been hijacked off the coast of Somalia, the event focused on the types of insurance available to shipowners seeking cover against acts of piracy as well as an overview of the current situation.

Tom Brown of independent insurance broker Seacurus advised shipowners to work with specialist brokers and to keep their identities confidential when seeking quotes for cover. James Gosling, a partner at Holman Fenwick Willan gave the audience of Maritime London members and guests an overview of the situation from the point of view of someone who has dealt with the release of numerous ships and advised that under UK law it was perfectly legal to pay a ransom. William Beveridge, an underwriter with Arch Insurance said that owners should look at the correlation between tides, weather and attacks and plan their voyages using an intelligence led approach.

Attendees at yesterday's Maritime London lunch

Meanwhile eight Somali nationals detained after a fire-fight with Royal Marines from the frigate HMS Cumberland last week were transferred to a naval auxiliary while the Foreign Office decides what to do with them. As of Friday, according to a UK Ministry of Defence (MOD) spokesman, the suspects were on board the Royal Fleet Auxiliary vessel Wave Knight, having initially been taken aboard the frigate HMS Cumberland. The Foreign Office appears to be attempting to land the Somalis in a country within the region.

The MOD says the Royal Navy took the action it did under the provisions of UNCLOS.

The MOD adds that there were 17 men on board the stolen dhow which had been identified as being involved in an abortive attack on a Danish merchant vessel. Two Somali nationals were shot dead when the pirates opened fire on two small attack craft carrying the marines who returned fire. There were eight other Somalis, believed to be pirates, on board as well as eight Yemeni fishermen who turned out to be the rightful crew of the dhow. One of the Yemenis was severely injured as a result of an earlier incident and subsequently died despite attempts by Cumberland's doctor to save him. The surviving Yemenis sailed their dhow back to their home port.

Meanwhile Norwegian parcel tanker operator Odfjell has become the latest owner to refuse to send ships through the Gulf of Aden, routeing them around the Cape of Good Hope.

The UK P&I club says it will have to make supplementary calls to cover premium shortfalls for two claims years. The club has also announced a general increase of 12.5%. A statement says: “Against a background of unparalleled uncertainty in financial markets and substantial claims deficits on the 2006 and 2007 policy years, the UK P&I Club Board has levied supplementary premiums on both years, issued an estimate of a supplementary premium on the 2008 policy year, and announced a general increase for the 2009 policy year.”

It adds: “With investment income for the current year likely to be negative and unable to help reduce the deficits for 2006 and later policy years, the deficits have increased following the latest actuarial review at 20th August. The 2006 and 2007 deficits are currently estimated at USD61 million and USD83 million respectively. However, the Board believes that in the current climate of uncertainty, it would be 'inequitable and unsound to carry them forward into future years'.”

UK Club chairman Dino Caroussis said: "This was a very serious issue for the Board to address at my first meeting as chairman but after careful consideration of the options, I believe we took the correct decision. I am very conscious this may cause pain to all of us as mutual Members but the Board was fully convinced that action had to be taken. Making this tough decision now will put the Club in a really strong position for what could be very turbulent times ahead.”

For the 2006 policy year, therefore, there will be a supplementary premium of 20% of mutual premium. For 2007, the supplementary premium will be 25% of mutual premium. As it is only eight months old, it is too early to form a clear view of the ultimate claims outcome for the 2008 year. Nevertheless, members are warned to expect a 20% supplementary premium, to be decided in October 2009.”

However, the club notes, the 2006 and 2007 claims have been associated with high shipping activity. If the recession deepens, claims costs may fall but it is not clear how soon the situation could improve. If it does, it might be possible to reduce the supplementary premium. The general increase to be applied to mutual premiums before adjustments for individual risk and record will be 12.5%, plus any increase in the cost of the International Group reinsurance premium for 2009. For the time charterer and other fixed premium rates, the general increase will be 7.5%.

Maritime London member Steamship Mutual has announced a 17.5% standard increase in P&I premiums for 2009/10. According to a company statement, the move is: “a reaction to the extreme investment market volatility which is expected to persist into next year.”

James Stockdale, Steamship Mutual’s CEO, said, “With commodity prices falling, economic conditions deteriorating and shipping activity showing signs of a rapid slow down, the claims outlook is extremely difficult to predict. Faced with uncertainty in the outlook for claims and extreme levels of financial market risk, the Club must ensure that any adverse developments are capable of being met by maintaining the strong and conservative approach to underwriting taken over recent years.”

Steamship Mutual hopes to eliminate any future reliance on investment income in achieving a breakeven underwriting result and to set a policy year combined ratio target of 100% for future years. The Club also cites the “inexorable effects of inflation on legal costs and the average size of routine claims” as the reason for its decision to raise minimum deductible levels.

However, Steamship Mutual also reports that the underwriting results of both earlier open years continue to improve.

In addition, Steamship has seen continued growth in the first eight months of this year and reports a positive increase in owned entries (net of disposals) of 3.2 million GT.

Earlier this year Steamship Mutual posted record financial results, announcing an operating surplus of USD27.6 million and a 17.5% increase in free reserves.

Tomorrow (Weds 19 Nov) sees the gathering of over 400 leading shipping market players in London for a meeting organised by the Baltic Exchange to discuss the bulk freight markets. The meeting comes in the wake of a dramatic collapse of freight rates and concerns by charterers, owners and traders over the financial crisis hitting the shipping industry.

Items on the agenda include initiatives to minimise cash-flow and credit risk, issues caused by disponent ownership and charter party chains, possible improvements to standard charter party documents and the feasability of the introduction of clearing in the physical market.

Primorsk Shipping Corporation (PRISCO) is about to take delivery of the recently the first vessel built to comprehensive new global standards for ice-class vessels, built in Korea to rules developed by Lloyd’s Register. The 51,000 dwt Prisco Alexandra is the first of seven sisterships being built for PRISCO at STX Shipbuilding Corp’s yard in Jinhae. It has been built to a new winterisation notation that dramatically extends the coverage of current standards beyond basic hull structures to include the products and equipment that are essential for safe and reliable operations in frigid temperatures.

”We are proud to witness the naming of Prisco Alexandra and the first application of our market-leading winterisation notation,” said Luis Benito, country manager -- Korea, Lloyd’s Register Asia. “There is a growing requirement for our clients to operate vessels in the harsh conditions of the Arctic, so it is essential to have clear and comprehensive minimum standards of performance to protect seafarers and the delicate marine environments in which they operate. These winterisation notations provide clear guidance for all parties."

According to Konstantin Globenko, the director of PRISCO’s technical department, having a more comprehensive set of common winterisation rules helps to streamline the process of establishing -- with groups such as chartering companies, international oil firms, insurance organisations and port authorities – whether a vessel is technically equipped to trade in -25° temperatures.

“We believe that being the first to build to this class notation is only the first step. Eventually, all oil companies, charterers, flag and port authorities and terminal operators working in Arctic waters will realise the importance of the proper winterisation of vessels,” says Globenko.

“This co-operation between class and owner – between theoretical and practical people – has promoted the development of a very practical tool that is useful to all parties and safer for those at sea.”

Ian Luder

The City of London has its 681st new Lord Mayor following the recent election of Ian Luder. A tax partner at accountancy firm Grant Thornton, he will promote the UK’s diverse range of financial services, including shipping, during his year in office.

Maritime London will be accompanying the Lord Mayor on a trip to Liverpool next week, which will include a meeting with a number of regional maritime service providers.

The Lord Mayor’s overseas agenda for the next 12 months features a number of regions of interest to Maritime London and the UK’s maritime services promotional body will be working closely with the mayoralty to ensure that where appropriate the UK’s maritime services sector is involved.

MSC Napoli

The Maritime and Coastguard Agency has delivered its in-depth 103 page report to the chairman of Devon Council’s local Inquiry into the circumstances leading to the beaching of the MSC Napoli off the East Devon coastline.

The report summarises the agency’s activities from the moment the incident broke on the 18th January 2007, when the MSC Napoli was on passage in the English Channel, loaded with 2,318 containers and bound for South Africa and when she suffered a catastrophic hull failure and got into severe difficulties.

A number of possible locations were assessed by both the French and British authorities for a place of refuge on both sides of the Channel; however, the south coast of England provided better options for a place of refuge.

Working with the French authorities, the Secretary of State’s Representative for Maritime Salvage and Intervention (SOSREP) decided that the ship was in danger of breaking up and polluting the English Channel and should be towed to Portland Harbour.

During towing, the weather deteriorated and the salvors and the SOSREP decided to beach the ship in Lyme Bay to minimise the pollution threat. Over the next six months the 3,500 tonnes of fuel oil and the containers were systematically removed.

Toby Stone, head of the agency’s counter pollution unit said: “The successful way in which the MSC NAPOLI was handled demonstrates the effectiveness of the UK’s arrangements for handling incidents at sea and the professionalism of all of those involved. We also hope that our submission to the Inquiry will set the record straight on several issues, including of course, the overriding practical reasons for beaching the vessel at Branscombe, and the function of a Shoreline Response Centre. In this case there was no need for such a Centre to co-ordinate the shoreline clean-up operation because the third party insurers retained the services of contractors to do the necessary clean-up work.”

James Morley, a chartered accountant with more than 25 years’ experience as a board member of both listed and private companies mainly in the insurance sector, has become a non-executive director of Clarksons PLC.

He was chief operating officer of Primary Insurance Group until 2007, having started his career with Arthur Andersen & Co and having held finance director appointments with Guardian Royal Exchange, Arjo Wiggins Appleton and Cox Insurance Holdings.

A joint meeting organised by London Branch of the Nautical Institute in conjunction with HCMM, RIN, RINA & IMarEST will focus on the two navigational watch system. The seminar takes place on 1 December and will seek ideas to improve the situation and look at the obstacles to improvement in manning and how to address them. The speakers include Michael Grey - Lloyds List, Colin Sandeman - Bahamas Maritime and Eric Murdoch - Charles Taylor / Standard P&I Club. The evening will be chaired by Cdre David Squire, Editor of Alert.

HQS WELLINGTON
1730 for 1815, Free entry, wardroom bar open before and after.
Further info www.nautinst.org/london or London Branch chairman Andrew Bell 07785 586317 andrewj-bell@talktalk.net

The Marine Society & Sea Cadets is holding a Festival of Carols on 2 December at Southwark Cathedral. A reception takes place after the service.

Tickets are available for £30. See www.ms-sc.org for further details.

Sea Vision partner, the National Maritime Museum, Greenwich is looking for maritime industry professionals to talk to school children as part of its ‘Career Days’ programme.

The Museum works with 11-16 year old students to highlight marine environment issues, climate change, sustainable development, and to raise awareness of the maritime sector.

As part of this programme the museum runs study days, special lecture days, video conferencing, career days and summer schoolteacher programmes. The next careers day is on 28 November 2008, but there are two more days scheduled for 13 February 2009 and 3 April 2009. Speakers would need to be willing to speak about their roles for about 15 minutes and to answer questions from the students.

The organisers would welcome any information that could be given to the students to take away, either relating to the speakers organisation or to the industry as a whole.

Lunch and travel expenses will be covered by the Museum, and the talks will take place in the Museum lecture theatre, which has all the expected technology for this type of venue.

Shipping professionals wishing to help this initiative should contact Stephen Moorhouse, Environmental Education Officer at National Maritime Museum, Greenwich on 0208 312 6618 or SMoorhouse@nmm.ac.uk.