2018, an eventful year to date
Well the first half of 2018 seems to have positively flown by – a busy and eventful period. The world is certainly in an unusually volatile and unpredictable state; Trump meets Kim, US withdraws from JCPOA and reinstates sanctions against Iran, US and China rattle their trade war sabres, the UK indulgences in a post Brexit identity crisis, but with the English at least in temporary euphoria following the football team’s run to the World Cup semi-finals.
The mini-recovery in the dry bulk market over the last 12 months has brought welcome respite to many clients. This is one of our key sectors, so it has also had a positive impact on us; however, market conditions do remain challenging in other sectors such as tankers and containers. Overall our volumes are up over the first half of 2018 and we are seeing a positive inflow of new clients every month, particularly through the hubs in Dubai and Shanghai, which are flourishing.
Service is our top priority and to that end we have strengthened our claims team in Dubai, which will be expanded further in the coming months. Our sister brand, True North, which is an in-house claims/legal consultancy service, is also proving to be very popular with the clients serviced by both Dubai and Shanghai. The team in London goes from strength to strength and the working relationship between the three hubs is excellent. We have 16 lawyers on staff across the three hubs, so we are well resourced to provide quick and efficient service, and we are now handling more work in-house so that we can continue to be pro-active in managing the delivery of successful outcomes to clients. Feedback from clients on service is generally very positive, which is encouraging.
The insurance market is in a state of flux, Lloyd’s and other markets are showing poor results and underperforming syndicates are being threatened with closure. The insurance market is well overdue a price correction but with the availability of so much cheap capital and fierce competition from overseas it’s difficult to see how London can regain the initiative. It’s interesting to note that in the last two weeks, three Lloyds’s syndicates have essentially pulled out of the major classes of marine insurance.
In contrast, some of the IG P&I Clubs continue to ‘diversify’ but interestingly, over recent months, we have seen a move away from the Charterers market; Clubs that previously courted Charterers so hard through cheap prices and the promise of ‘IG’ style service are now not as keen. Reasons quoted are typically based on premium levels being too low, or the account being too service intensive. It all seems a bit crazy, but who are we to complain, it’s underpinning our growth. It’s worth remembering that in most cases an ‘IG’ Charterers policy is not written within the protection of the IG framework and most buyers should read the small print regarding the actual limit available absent reinsurance.
The IG System benefits shipowners, but Charterers do not have the financial safety net of the IG structure so buying an IG policy simply “because it’s IG” is not a logical choice for most Charterers.