The Insurer

Many ports renew their insurance in January, and this season saw a fierce battle to grab what are seen as “the best risks.”So it turned out to be largely a buyer’s market, despite predictions a short time ago that insurers would be able to lever rates higher, certainly not to the extent of the 17% or so on average in the protection and indemnity market, but perhaps something approaching the figure of close to 9% that Lloyd’s insurer Amlin reported recently has been achieved for marine hull. London market and international insurers – reinvigorated rather than new players – ploughed into the ports sector, making a particular play for the most envied accounts that have long nestled in the portfolio of the major mutual, the TT Club. They sought to establish a top-line programme of blue chip operators that would provide a basis for expansion, and reportedly offered some attractive cuts in premium. According to the club, the ploy largely failed, and it retained some 90% to 95% of its business, albeit at rating levels that on average barely moved.

There had been market talk in the second half of 2008, and particularly towards the end of the third quarter, that there would be some small but material hardening of the market. Instead, the outcome was what was described by Charles Fenton, chief executive-designate of the club, as price stabilising. The club was able to extract increases from members with a claims record deemed too expensive, while treating others more leniently. When all the sums are done, its overall premium volume may turn out to be unchanged or to have lost a percentage point or two.

This calculation excludes a factor that must not be forgotten, which is that two of the biggest shifts away from the mutual had taken place in the previous six months.

As was widely reported, Hutchison Port Holdings transferred its property and its liability cover to two separate syndications of Lloyd’s and London operators, while the market believes that TT Club by mutual agreement parted company with the huge property book of DP World, in line with distancing itself from global property programmes and high value risks, in order to focus more on liability cover and the transport operator category. The Thomas Miller-managed club says it is now happy with the shape of its ports segment, which is expected to remain at around the benchmark of one third of its total portfolio for the short term at least.

This renewal saw the club under a lot of pressure, and equally rival insurers are unlikely to give up their quest for quality clients. It means that most ports operators are enjoying value for money from their insurers, especially those which work closely with them on loss prevention issues giving rise to costly claims, notably for bodily injury and handling equipment failures and accidents. The insurance market has amassed a huge amount of expertise on the type of problems typically encountered at the quayside, and maritime executives will do well to ensure that they build on the high levels of co-operation already in place.