Owners hold the upper hand in pricing clashes with P&I clubs

Rate reductions of up to 5% are starting point for many negotiations, with fewer fleets on the move

Battles over premium reductions and a turf war between insurance brokers have been as notable a feature of the 2017 protection-and-indemnity (P&I) renewals as fleets sailing between the clubs.

The annual renewal of P&I cover takes place at noon GMT on Monday, with the final push to get improved terms from clubs under way this week.

But as the clubs were not seeking any general increases this year, skirmishing focused on the extent of reductions, with rate cuts of up to 5% the starting point for many negotiations.

Gard, which usually gains tonnage at renewal, is reported to be taking the toughest line in resisting significant reductions and may pay a price in tonnage terms as a result.

With many owners successful in winning reductions, there appear to be fewer than usual fleets moving between the clubs.

There has been considerable competition to win a share of Maersk’s big charterers account, said to be on the move from the Britannia Club.

Two notable bulk shipping operations changing course are ArcelorMittal, which is moving vessels from Steamship Mutual to Skuld, and Fortescue Metals, which has been a Gard member, committing large ore carrier newbuildings under construction in China to Britannia.

Team Tankers is moving its Gard entry to Skuld in the wake of an earlier broking change that saw Arthur J Gallagher replace Willis Towers Watson.

There has been a modest rebalancing of NYK entries in the UK, Japan, Britannia and North of England clubs following the appointment of Aon as the Japanese shipping giant’s first P&I broker. But market sources say this does not amount to a major restructuring of cover.

The big Cosco fleet is leaving both the London and Britannia clubs as a result of last year’s merger of Cosco and China Shipping and a strategic decision to route P&I cover through the China Shipowners Mutual Assurance Association rather than the People’s Insurance Co of China.

The London Club is losing two million gross tons of Cosco tonnage and the Britannia a lesser amount. The business has been redirected to clubs with which the China P&I Club has co-insurance arrangements — the UK, North of England, Steamship, Skuld and Swedish clubs.

Cosco, through Ocean Tramping, one of the Chinese shipowning companies it has absorbed, has been a member of the London Club for 60 years and the managing director of its Hong Kong operation, Chen Xin Chuan, is a club director.

Strong connections

There is widespread market gossip that Ofer family-linked Zodiac Maritime, Eastern Pacific and XT Shipping are paring down their strong connections with the London Club but TradeWinds understands this to be untrue.

The Islamic Republic of Iran Shipping Lines resumed membership of the West of England Club some time before the renewal, in the wake of a West-bound voyage by National Iranian Tanker Co.

Oslo’s Hydor underwriting agency and Carina, a fixed-premium scheme run by the managers of the Britannia Club, have lost ‘blue card’ approval from the Turkish authorities but this may have little impact on their business.

There was a spate of broking moves in the run-up to the 2017 renewal, with the Angelicoussis fleets appointing Gallagher as broker in place of independent consultant Mike Amiss; Diana Shipping moving to Gallagher from PL Ferrari; while part of the Eastern Mediterranean account moved in the opposite direction. Milaha Maritime switched to Marsh from JLT.

There was talk at the recent Piraeus Marine Club P&I conference that Goldenport had appointed Arthur J Gallagher as broker for its London Club entry but the West of England Club placing stays with Karaindros, an Athens-based partner of the Willis Towers Watson broking group.

John Dragnis, who heads the bulker, containership and tanker operation, is a shipowner director of the London Club.

Gallagher declined to comment but changes to Goldenport’s club relationships seem unlikely.

There have been other notable developments in Greece, with George Caramanos launching a management buy-out of National Insurance Brokers from the National Bank of Greece. It is a return to private ownership, as Caramanos sold the business to Alpha Bank group before it became part of National Bank.

The business places cover for more than 70 Greek owners, with Caramanos planning to continue offering cover to brown-water owners through National Insurance Brokers but launching Fortius Risks Solutions to focus on oceangoing business.

Kevin (Kiriakos) Zaharakis, former head of Marsh’s marine business in Greece, also launched a new broking venture, Triple ‘A’ Marine Risks, at the end of last year.