BOW WAVE 191

Tug and Barge Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2003 WavyLine.com	Issue No 191 23 Jul 03
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Quarterpoints Column
3. Who pays for Oil Pollution?
4. Truckers Notes
5. New Capital Rules Coming
6. And Finally...

1. Welcome

In order to stay sharp over the summer months, we have recently invited a number of fellow writers and editors to guest-edit Bow Wave for an edition or two. If any of our dear Readers would like to be considered for the job, now is the moment to mention it.

New Readers this week include:

Ian Carter of Messrs A Bilbrough
Lawyers John Winn and Lisa Wortley of Birketts in Ipswich Larry C. Boyd,Executive Director, Surplus Line Assn of Oregon Tim Akeroyd of London lawyers Elbornes
Savid Bull of the London Insurance Insider

News of Readers

Our friends over at the IMB are looking for
a tug and barge combination which went missing recently.

Details

Hijacked tug "Bintan 1200" and barge "Bintan Golden 2301" Bintan 1200 was towing the barge from Jambi to Kijang, Tanjung Pinang, Indonesia. On 10 July 2003 near Dabo Sinkep, Sinkep island, Indonesia, a fast speed boat came alongside and a group of armed men boarded the tug. Crew were blindfolded and tied up and subsequently landed at a nearby island. On 12 July 2003 they were rescued by fishermen. The tug and barge are still missing.

Description
Tug : Bintan 1200
Registry - Singapore
Official No: 388088, Built: 1997
Call Sign 9v5568
Grt: 125, Nrt: 38, Loa: 21.69m, Beam: 7.3m, Draft: 4m Superstructure: White, Funnel: White, Hull: Blue, Below Loadline : Red

Barge: Bintan Golden 2301
Registry: Singapore
Official No: 389271, Built: 2001
Grt: 1421, Nrt: 427m, Loa: 67.3m, Breadth: 19.51, Depth: 4.27m Colour: Side: Black; Below Loadline: Black

If you can help contact them at:-

imb@icc-ccs.org.uk

Some Bow Wave Statistics

In a search of our database, we discovered how many Readers we have in Western Europe with these country codes in their addresses:

Readers Write:

We have been contacted by Heinrich Braun who is studying at the University of Applied Sciences in Bremen, Germany for the Master Mariner Certificate. He is writing his final thesis on "The Legal Impacts on Masters and Crews in Pollution Cases; a country by country comparison".

He is collecting information from every country in the world on marine pollution legislation and enforcement with particular reference to the treatment of masters and crews after a pollution incident has occured.

He writes:

"The purpose of my final thesis is to point out differences in treatment to masters and crews when pollution of the marine environment has occurred. Sentences vary from death penalty to simple fines. This depends largely on the country where the incident has occurred. Some countries establish deterrent fines and imprisonments in order to prevent marine pollution.

My personal aim is to create a world map where every captain can see what can happen to him when damage to the marine environment has occurred. This world map will be colored in different colours which defines certain levels of danger to crews in pollution cases.

The final thesis will be written in the English language because many literature sources are in English and I want to create a very useful tool for any master or crewmember all over the world."

If any Reader thinks he or she can supply useful information on any particular country they can e-mail Mr Braun for a short questionaire at:

heinrichbraun@hotmail.com

Hope this Issue finds you well dear Readers.

Enjoy.

2. Quarterpoints Column

Your editor's last Quarterpoints column in Lloyd's List is a reflection on what our times will look like in the future:

Monuments to this Time

When the economic historians of the future rake a comb through our times, what will mark the key turning points in the world insurance market? Minds readily turn to the effects of September 11th and the way the international markets were emptied of their slender reserves of capital by having to cover the largest terrorist induced losses in the history of the industry. They will recall how organisations famed for their depth of wealth like Munich Re and Swiss Re suddenly lost unimaginable amounts as the effect of long soft rating cycles, the largest insured loss in history and the fall in the price of equities all came together to crash over the hapless insurance industry around the earth. This is what is now being called "The Perfect Storm".

And you would be hard pressed to deny how very difficult times have been since the WTC outrage for many companies. It is nearly two years on from the fateful loss and at least those accounts which may be termed short and short medium tailed are now falling to be paid. Many companies already are wobbling under the pressure of having to produce cash. The rumour mills turn quite readily and one hears surprisingly large companies "mentioned" as suffering from liquidity and/or solvency worries.

Meanwhile over in the United States--where 50 cents in every insurance dollar in the world is spent Consultant Charles Cox lists the following ten worry factors:

1. Renewal Costs: There are still double digit increases. 2. Coverage Restrictions: Each renewal involves removal of some element of coverage.
3. Financial Crisis Among Insurers: More and more insurers are being placed on a "death watch" by increasingly active rating agencies.
4. Baseless claim denials: Denials based on policy language having no bearing on the claim at issue - clear evidence that insurers are hoping to discourage policyholders from pursuing any recoveries.
5. Ineffective Middlemen: An alarming number of brokers quickly acquiesce to unreasonable positions taken by insurers. Coverage reductions and premium increases are too often accepted without question, or are explained away by the "continuing insurance crisis".
6. Return to Underwriting: In reality, old risk by risk underwriting is gone. Most underwriting today is by class. The very best risk in an unfavourable class finds coverage hard to come by.
7. Loss Control Again: Insurers are reinstituting inspections and tightening parameters for all inspections. 8. Terrorism Risk Insurance Act: However well intentioned, it has had some unforeseen consequences.
9. Workers’s Comp is still Broken: Eight states recently received a failing grade in a study by the Work Loss Data Institute. The California State Fund is on the brink of financial collapse. 10.Mold Dilemma Continues: Initially not thought to be the next asbestos crisis, more policy holders are being left to deal with mold exclusions and loss exposures that are beyond their means to retain.

Cox says the insurance market is in chaos. Worse, however, is the fact that the insurance industry is on the verge of obsolescence. His drift is clear enough.

And yet, possibly the most worrying side of all is not mentioned in any of this. Gather together a group with a penchant for future planning and it will not be long before perhaps the most oustanding feature of our times is mentioned. This is the hole in savings and pensions which is opening in most developed economies. The demography of post war prosperity has produced not a triangle of people with many young below and a few oldies above but instead a pair of vertical parallel lines with a slight bulge in the middle as the post war baby boom works its way up the ageing tree. Expectations of comfortable and long retirement are being revised downwards with each passing month. What will our societies do with so many older people unable to retire on their savings and pensions in the coming decades? Demography is a slow but inexorable force which works its way through history. Once it gets going there is no real stopping. In the developed economies we are in for quite a pickle. The fact is that many people have deserted the great savings standbys of mutual funds, pensions, ISAs and so forth. The Irish Times this week carries reports of an industry survey which is circulating the companies there: This year, the takings for personal lines products (often considered an attractive market to serve) are down 46 per cent.

No doubt the hope springs that an upwave of economic prosperity will carry away these problems in the decades ahead. Yet as we all know, hope is desire in conditions of reduced probability and the choice is not so nice as it once seemed: work through/eschew more leisure versus save more/and eschew more spending seems to sort of describe it.

3. Who pays for Oil Pollution?

We went last thursday to the Old Library in the Lloyd's Building to hear a well put together and far from bland presentation by David McKie and Roger Miles of the the legal firm of Elbourne's on the laws and conventions governing oil pollution.

The audience were each given a small business card sized item containing address details on the front and a small cd-rom at the back which will take the readers straight into the firm's web site where the speaker notes are lodged. A well organised way to get the business done. Fast, efficient and cheap, the ideal modern mixture.

See the notes at:-

http://www.elbornes.com/lecture/17Jul03_notes.doc

4. Truckers Notes

It used to be that mostly hitchhikers heard about the day to day incidents in the lives of long distance truck drivers. Nowadays anyone with a web browser can listen in. The latest instalment of American on-line trucker Russ Ringsak's writings on the road can be read at the link below:-

http://www.prairiehome.org/russ/index.shtm

5. New Capital Rules Coming

There is change in the regulatory winds here in the UK. for non-life insurers in relation to how their capital will be measured by the Financial Services Agency (FSA).

The consultation paper, "Enhanced Capital Requirements and Individual Capital Assessments for Non-life Insurers," is available at:-

http://www.fsa.gov.uk.

6. And Finally...

Thanks to Lawyer Jeremy Bolger of Borden Ladner Gervais LLP in Montreal for this fable:-

THE MISSIONARY

A missionary suddenly realized that the one thing he hadn't yet taught the natives he served was how to speak English, so he takes the chief for a walk in the jungle. He points to a tree and says to the chief, "This is a tree." The chief looks at the tree and grunts, "Tree."

The missionary is pleased with the response. They walk a little farther and the missionary points to a rock and says, "This is a rock."
Hearing this, the chief looks and grunts, "Rock."

The missionary is really getting enthusiastic about the results when he hears a rustling in the bushes. As he peeks over the top, he sees a couple of the natives in the midst of somewhat private activities. Flustered, the missionary quickly says to the chief, "Riding a bike."

The chief looks at the preoccupied couple briefly, pulls out his blowgun and kills them. The missionary is outraged at this behaviour and yells at the chief stating that he has spent years teaching the tribe how to be civilized and kind. "How could you kill these people in cold blood that way?" he demands.

"My bike," the chief replied.

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