The document discusses how owners and charterers can protect themselves in the future shipping industry from 2025-2025. It notes that risks may increase or change and opportunities may also change. The origins and evolution of marine insurance and P&I clubs are reviewed, showing how they have adapted to cover emerging risks over time. Good, appropriate insurance through a P&I club is recommended to help owners and charterers save money, avoid liability, and have peace of mind. P&I clubs provide loss prevention services and global claims handling to assist members. Looking ahead, new technologies may increase safety but also bring new risks like cyber attacks or extreme weather due to climate change. Marine insurance will likely continue to evolve to address changing risks and

1. THE AMERICAN CLUB
HOW DO OWNERS AND CHARTERERS PROTECT
THEMSELVES IN THE LONG RUN?
Chris Hall
Managing Director, Hong Kong
The American Club
THE FUTURE OF SHIPPING 2018-2025, MUMBAI, 7 MARCH 2018

2. Happy Holi!

3. The Future in 2025?
• What does the future hold?
• Are things moving faster?
• Will the risks be greater or different?
• Will the opportunities be greater or different?
• Will Marine Insurance be the same?

4. The Future in 2025?
• How should owners and charterers protect
themselves in the long run?
• How should they prepare for new risks?
• How should they position themselves for new
opportunities?
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5. What should we do?
• Learn from the Past.
– What has worked in the past that will work in the future?
– What happened in the past, which might happen again?
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7. What else should we do?
• Prepare for the Future.
– Be aware, open and creative.
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9. • But, what does that mean in a Marine
Insurance context (esp. P&I)?
• Let’s start with the Past…
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10. Origins of Marine Insurance
• Italy, 1347
• England, 1601: first marine insurance statute
• BTW, what’s the most important drink in the
history of marine insurance?
– (Also important listening to this presentation)

11. Lloyd’s Coffee House, 1688
-Informal insurance market

12. • Hull Clubs -- Rise and Fall
• Introduction of various Acts
• Including the Merchant Shipping Act of 1854
• All created new and growing liabilities…

13. First Protection Club
• 1855. Ship Owners Mutual Protection Society
(later Britannia)
• Covered passenger, cargo, death and cargo
claims from other ships caused by improper
navigation

14. First Protection and Indemnity Club
• 1874, what became the North of England
• Arose due to non-covered cargo claim. Much
uproar led to formation of new P&I club.

15. Crucial to the Past and the Future:
The Evolution of P&I Clubs
• Increasing regulation 
• More liabilities faced by shipowners
• Need for cover
• Opportunity and effort to cover.
• This is still happening today…
– Marine Labour Convention

16. The Evolution will continue…
• As risks and opportunities evolve,
• So, too, will the P&I Insurers and their
approach to Cover and Service.
• Why? Because Owners ARE the P&I Clubs.
• Common Interest – to cover all the risks and provide
good service
• Mutuality (IG Clubs - 90%+ of world fleet)
• Governments like it too.
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17. So, to survive in the present and
flourish in the future…
Owners and Charterers should have:
GOOD & APPROPRIATE INSURANCE!
• But, what’s good?
• And what’s appropriate?
• Why do we care about good insurance at all?
• What’s the REAL PURPOSE of it?
• Is it just paper - “a ticket to trade”??
Here are some hints… 17

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22. Money!
• Save money – avoid, mitigate & recover costs
• Transfer risks
• Free-up capital
• Be more appealing to 3rd parties
• Be perceived as responsible, prudent and professional (ERM)
• Avoid being seen as a bad partner/“counterparty risk”
What else….?

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26. Sleep!
• “Sleep easy”
• Peace of mind
• Comfort
• In good hands
• Handle & solve problems

27. P&I – A vast range of covers
• Loss of life, injury and illness of crew, passengers and other persons (PEOPLE)
• Cargo loss, shortage or damage
• Collision
• Damage to docks, buoys and other fixed and floating objects
• Wreck removal
• Pollution
• Fines and penalties
• Mutiny and misconduct by crew
• Crew repatriation and substitution
• Damage to property on board the insured vessel
• Quarantine

28. P&I insurers are not normal insurers…
The importance of Good Service
• Good Service is fundamental to P&I and FD&D insurance
• Not just review and pay claim (like auto/health insurance)
• Involved from the beginning of a claim
• Avoid/mitigate members’ liability
• More lawyers/claims people than underwriters
• Take the lead in handling cases
• Commercial attitude
• Loss prevention. Best to avoid claims completely.
• Solve problems!
• Pay claims promptly and properly (IG attitude and good reputation)
Handling of Claims – The Core P&I Product…

29.  Offices around the World
 Correspondents in
Every major port
• 24/7, Global Service
• International Staff
• Experienced Lawyers, Mariners & Commercial Professionals
• Multi-lingual (10+ Languages Spoken)
• Help wherever and whenever it is required
New York
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Hong Kong
London
Piraeus
Shanghai

30. Of course, Prevention is Better the Cure!
Loss Prevention:
 Advice
 Circulars
 Condition Surveys
 Management Reviews
 In-house seminars
 E-Learning Tools
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31. Loss Prevention Toolbox
• L/P related Circulars & Alerts
• PEME program
• Posters & comics
• L/P presentations
• Management evaluations/audits
• Best practices
 Economic sanctions - Compliance guidance
 Steel cargoes guidance and animations
 Bagged rice cargoes guidance and animations
 Welcome to the USA!
 Welcome to Greater China!
 Liquefying bulk cargoes
 Infectious diseases
 Slips, trips, and falls
 Machinery damages
 Piracy guidance
 Man Overboard!
 The collapse of O/W Bunker Group

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33. Loss Prevention from American Club
 Club Circular No. 21/17 dated July 18, 2017
 Due diligence investigations made easy
 FREE asset investigation reports
 Unique to the American Club
 A less common LP offering!
Due Diligence Initiative: Member Resource

34.  Special pricing arrangements with
two prominent asset investigation
companies
• LSR Services Limited (Hong Kong)
• Roxburgh Forensics (Newcastle, UK)
 Geographic assignment to LSR /
Roxburgh
 “No fuss” investigations at
Member’s fingertips
Due Diligence Initiative: How Does It Work?

35. EXPECTED BENEFITS FROM DDI
 Yields fewer and lower value claims
 Savings in management time (for Member and
Club)
 Reduces exposure to counterparty financial failure
 Minimizes being exposed to sanctions penalties
 Averts the incidence of cyber fraud
Due Diligence Initiative: Benefits

36. EXPECTED BENEFITS FROM DDI (Cont.’)
 Members will make more insightful commercial decisions
 Improves Member’s operational profile & reputation
 Meets compliance requirements of large trading groups
 Enhanced risk procedures and methods attract better
clients for Members
Due Diligence Initiative: Benefits

37. Charterers’ Cover
• Charterers can face nearly ALL the same risks that
Owners do (e.g., unsafe berth case)
• Potentially Big Claims Exposure
• And Reputational Risk
• So, they should have good P&I too
• And possibly DTH, Bunkers Insurance
• But, what do many Charterers REALLY love?!
• And, what do Clubs REALLY need for that?
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38. Freight Demurrage & Defense (FD&D) Cover
“Legal Defense Insurance” – for Charterers and Owners
The costs of pursuing or defending disputes arising out of:
• Charterparties
• Contracts of Carriage
• Bills of Lading
• Contracts of Affreightment
• Vessel building contracts
• Vessel sale and purchase contracts
• Vessel repair contracts
• Vessel agency, stevedoring, towage and salvage contracts
• Insurance broking, ship broking and management service contracts
• Bunker and necessaries contracts
• Crew contracts
• Marine insurance contracts
Like having a lawyer in your back pocket!
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39. Building a Relationship Together
• A key feature of P&I
• And a key element of what is “good and
appropriate” insurance
• Long relationships – good cooperation –
better results
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40. So, that’s the past and present..
• What will the future bring?
• A harder question, of course, but we can
speculate and make some predictions…
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41. The Good…?
• Helpful Technology
• Better Comms
• Better Training (due tech)
• Smart Ships (IOT, Big Data)
• Smarter Shipping Management
• “Sea Transport Factories?” M. Stopford, 2018
• Blockchain
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Highly
sophisticated -
like an F1 Team?
“The future is not about ships,
it’s about improving global
transport.” M. Stopford, 2018

42. Helpful Tech and Comms
• For example…
• Ship Design
• ECDIS
• GPS
• AIS
• Comms – from Nil to Sat/Cloud/IOT/Apps
• VDR, as evidence
• And VDR Analysis
– “Telematics of the Sea”?
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43. Remote Crew Doctors
provide urgent guidance
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Real-time,
interactive,
onboard
weather routing
Increase safety & reduce claims!

44. Blockchain
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Project includes Maersk,
Accord, EY, Guardtime,
Microsoft, MS Amlin,
Willis Towers Watson and
XL Catlin
Not just:
Over USD4BN in goods shipped, 20% of
which is documentation accounting costs?

45. The Bad…?
• Over-reliance on tech (eg, only rely on ECDIS?)
• Cyber Attacks
• Mega-Ships
• Mega-Disasters
• Mega-Pollution
• Climate Change
• Extreme Weather
• Political upheaval
• War
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Where to start?
The cyber risks Landscape

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50. Mega-ships -> Mega-Disasters
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But…

51. And the Mixed…?
Mixed outcome for shipping, likely sector dependent.
• Autonomous ships
• New Competition
• Consolidation
• 3D Printing
• Over-land pipes (as in OBOR/BRI)
• Renewable Energy
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52. Autonomous Ships
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Source: Allianz
Safety Shipping
Review 2017
Autonomous
Ships

53. The Future in 2025 and beyond?
• It will be good, bad and a mix of both.
• New risks and opportunities.
• But, on balance, tech should increase safety
and efficiency, reduce claims and maybe even
reduce premiums (!).
• But watch out for low probability, high impact
incidents.
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54. As for Marine Insurance…
Like in the past centuries, we will be here to
help owners & charterers navigate the changes
by providing new covers and new service
approaches to address new risks and harness
opportunities.
Why?
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55. So that Owners and charterers can make and
save MONEY and SLEEP WELL.
Let’s build strong relationships now and take on
the future together.
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Thank You! Questions?
Chris Hall
Managing Director, Hong Kong
chris.hall@scbmcs.com
www.american-club.com