Thank you very much for inviting me to speak at the Naütischer Verein

Nautischer Verein zu Bremen
5. Seminar
28. Februar 1998
SCHIFFSSICHERHEIT
Positionsbestimmung: Wo stehen wir?
INFLUENCING AND IMPROVING
MARITIME SAFETY
A P & I - CLUB VIEWPOINT
Captain Jan P. Larsen
Director
Assuranceforeningen GARD gjensidig
Arendal / Norway

Thank you very much for inviting me to speak at the Nautischer Verein. The mere words
are important to me: “Nautisch” because it refers to my original profession and vocation.
“Verein” because I am linked to a “Verein” which probably is one of the most successful
real “Vereins” or co-operatives in the world - the mutual P&I clubs. Mutuality is in many
ways a surviving dinosaur in the roaring nineties where market forces and extreme
liberalism rule the waves. In spite of this, we are alive and kicking and feel that we are
very much up front and in a position to exert some influence on our industry.
Let me initially apologize for my poor command of your language: Although our nations
are so closely linked to each other in terms of history, culture and language family, it is
unfortunately a fact that the “lingua franca” of our profession -English- has permanently
damaged my ability to respond sensibly to questions in German. As a Norwegian, I am
quite good at improvising, but I need plenty of time to prepare for it!
You have asked me, firstly, if the P&I-clubs have an influence in improving maritime
safety, - secondly, can we set effective initiatives in this connection, and thirdly, is the
premium a useful tool for handling the issue. I believe the answers are yes - yes and
partly no. I will deal with the latter point first.
The setting of a premium in a P&I Club is a complex operation and really goes to the heart
of the concept of mutuality. As club employees, it is our obligation to make sure that the
premium we put down as a starting point - the advance call - is, on the one hand, a
professional and reasoned assessment of the long term exposure we expect to encounter
as a consequence of the trading pattern of the vessel involved. On the other hand, it is our
duty always to have our eyes on the other members of the club: will this new ship be a
charge on the rest of the club community? A number of factors must be taken into
consideration - none of them scientific, some partly statistical and perhaps the most
important considerations are based on experience and sheer old fashioned gut-feeling.
Ship type, trading pattern, contracts of carriage, crewing details are all elements which
can be isolated in a computer and made to form an opinion on how similar risks have
affected us in the past. But the final judgement must come from the heart and mind of an
experienced human being: does this make sense? Do we know these operators? Do we
trust them? Is this really enough? Is it too much and really over the top?
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When all these questions have been answered and the hardware and software of the
situation have been duly considered, the end product is supposed to be a fair and
reasonable premium for a member and a ship we are sure that all the fellow club
members would regard as acceptable.
In such a climate, the use of premium as a tool to improve maritime safety appear as a
contradiction in terms. Maritime safety is actually supposed to have been considered
already. The mere approval of the member and the ship indicate that this element has
been considered - the member has a quality of operation, including the safety aspect,
which has been evaluated and found to conform with the standards of a high quality
membership. For a club underwriter to say that “this member has such a lousy safety
reputation that I must slap on another 30% on his premium” is unthinkable. In such a
situation it is far better to say good-bye to each other: doubts in respect of the maritime
safety attitudes of a member are incompatible with membership of a mutual community of
safety - conscious, like-minded shipowners. Or as the American comedian Groucho Marx
said: “I don’t want to be member of a club which will accept me as a member!”.
Summing up, therefore: The premium “tool” as an adjuster of loss ratio variations: yes,
certainly. But as a penalty for laissez-faire maritime safety attitude: There are certain
values that you just can not blend.
So what initiatives can the P&I Clubs take to improve maritime safety? A number of such
initiatives have already been taken and are in good and efficient operation. I am thinking
of the numerous initiatives and projects in the field of loss prevention, which is in itself
very much linked to maritime safety. A ship well prepared for the avoidance of losses of
various kinds - vis-à-vis personnel as well as cargo - is per definition a safe ship.
Many clubs have shown great initiatives here: may I single out the UK Club and the North
of England Club as being particularly forward-looking here with various videos, training
schemes and now, the latest fashion, the CD ROM. As far as my own club is concerned,
the GARD, I venture to suggest that our concentration on serious and substantial volumes
of textbooks deserves positive mention: Our major works on P&I in general, Tanker Safety
and Operation, and now our latest volume on Oil Pollution Avoidance and Legislation are
all examples of attempts to improve maritime safety. Our books may not be the “sexiest”
examples of club influencing, but it is of course our hope that their presence in owners
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offices, onboard ships and in training and teaching institutions will provide at least “a drop
in the ocean” of improved awareness and alertness. Taken as a whole, I believe it must
be said that the P&I Clubs are very much aware of their duties to spread information and
disseminate their collective experiences from their various encounters with mishaps and
accidents caused by infringements of maritime safety.
And if such safety-related activities and initiatives have developed into something of an
inter-club “brownie points” competition - so much the better! The harvester of the benefit is
maritime safety.
Where do the clubs go to further the cause of maritime safety? It is my personal opinion
that two major lines of activity will be 1) to give positive support to the enforcement of
recent international legislation, such as the ISM code and STCW-convention, and 2) in the
longer term prospect to make possible a co-operation - probably including a certain
financial commitment - towards maritime education in the widest sense.
The ISM code will be our first hurdle. I wish I could stand here and give you a precise,
black-and-white description of how we as clubs will enforce our rules vis-à-vis ISM code
infringements. Experience has taught me, however, that however good our planning may
be, we will run into extraordinary situations, all of which have to be dealt with singularly
and on their own merits. But I do know that the clubs have all given a strong commitment
to the code in the knowledge that this is a major step forward and, ideally, a step which all
operators must take, simultaneously and with profound effects on economy and
operations if non-compliance cause breaks in planned schedules. The clubs will certainly
stand behind such moves. However, preferably before such dramatic occurrences take
place, club intervention may be on the cards: Club surveying activities or information
derived from on-going claims matters may result in pro-active and perhaps confrontational
situations such as “Dear Member - your less- than perfect packings on your hatches will
sooner or later turn into an ISM code non-compliance crisis: please fix them soonest - until
you have done so, we must unfortunately take away your cover for seawater damage to
the cargo caused by these faulty packings”. Such actions are taken today as well, and
have a wonderful mind-concentrating effect. Un-pleasant as such episodes may be, they
are nevertheless contributions to improved maritime safety.
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But are we as insurers being perceived as safety-conscious and quality conscious?
Apparently not. In a seminar on marine risk assessment in London recently, reported in
the Fairplay magazine, a representative of one of the major brokers said that “quality does
not pay”.
He could see no point in more legislation unless there was an end reward for quality.
“Insurance has not been a factor in driving out substandard shipping, which it should be” it
was said, and continued: “Some underwriters and re-insurers are happy to be writing any
risk in a soft market, just when insurers and re-insurers should be busy examining the
fundamentals of the risks they are underwriting.”
Perhaps mainly aimed at the Hull and Machinery and Cargo sectors of insurance, I am
afraid that these serious allegations are also, to some extent, relevant for P&I.
Substandard ships are still getting insured, and ship operators know that it is still cheaper
to insure against the cost of a catastrophe than to pay for measures to prevent it.
If this is how the system works, and if this is how we are perceived by the general public,
our industry has a serious struggle ahead of us. The old cynical insurance mantra “There
is a premium level available to match any risk” just isn’t true - or at least, should not be
true in the realm of mutual P&I.
Certain operators should simply be forced to mend their ways by being un-insurable as
fringe-quality operators - as I have mentioned earlier, a P&I club should not offer terms if
there is the least doubt about the safety consciousness of the management company. As
Madam Nancy Reagan said in another context: “Just say no!”.
Does such an attitude work? In GARD, we think it does. Over the past years, we have
seen a steady decline in the number of smaller claims. On the whole, our first half year of
1997 produced a 28 percent reduction in claims value. We believe it has to do with a
growing number of our members being ISM code certified and the fact that any new
member needs the scrutiny and approval of at least three directors of the Association prior
to acceptance. It is also probably due to the fact that our underwriting department has
achieved a pretty good ability to spot a rotten apple when they see one and is getting
increasingly clever to say “thanks, but no thanks”.
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Based on statistics as well as on logic and reason, I believe this attitude is one of the most
important factors a P&I-club can provide for the purpose of furthering the cause of
maritime safety - namely to force out the sub-standard and un-serious operators.
Last, but not least, let me mention education in the widest sense. Standards and quality in
this field are varied, to put it in a diplomatic manner. Should P&I clubs be involved in the
providing of a better and more unified and standardised maritime education? For the time
being there is no such involvement - at least not on a major scale. Gard for instance is
providing teaching capacity for the International Maritime University in Malmö and are
taking part in various similar functions on an ad hoc basis. Other clubs do the same. But
for the time being, there is no co-ordinated or collective stand.
It is my personal opinion that this may change. As shipowner-owned, and run,
organisations, there is an obvious vested interest in safe shipping, and safe shipping can
only be achieved and maintained through the intervention of well educated and safety
conscious human beings. The P&I Clubs within the International Group control 90% of the
world fleet and is probably the only “common denominator” of such a magnitude within
shipping. Surely such show of force could be positively utilised to the benefit of all. But
that is a look into the future.
Thank you.
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