BOW WAVE 258

Bow Wave Issue 258--Trees Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2004 WavyLine.com	Issue No 258 01 Nov 04
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Reflections on Spitzer v Marsh
3. Cargo Security and the President
4. APL Web Picks
5. 25 Metre Waves and the Mariner--How Bad Could it Get!
6. And Finally...

1. Welcome

Bow Wave Reader Vacancies

Underwriting Assistant in London EC3

Michael Else and Company, Underwriting Agents for Transmarine and The Charterers P&I Club are seeking an energetic, enthusiastic and motivated individual to join its underwriting team in the role of underwriting assistant to the Transmarine class underwriter. The role will involve technical support work, progressing to a position of underwriting authority. The candidate would have the capacity to develop relationships with brokers and clients as well as travelling on the company's behalf. The ideal candidate would have several years work experience and have a sound working knowledge of the principles of marine insurance.

This is an ideal opportunity to join a reputable, expanding and stable organisation offering long term career prospects and pleasant/friendly working environment. Salary £30-40,000 p.a. depending on age and experience, plus profit share and benefits.

Contact Christopher Else at

celse@else.co.uk

Poem of the Week

The Trees

The trees are coming into leaf
Like something almost being said;
The recent buds relax and spread,
Their greenness is a kind of grief.

Is it that they are born again
And we grow old? No they die too.
Their yearly trick of looking new
Is written down in rings of grain.

Yet still the unresting castles thresh
in fullgrown thickness every May.
Last year is dead they seem to say,
Begin afresh, afresh, afresh.

Philip Larkin, Collected Poems

New Readers this week include:

Claims man Georg-Christian Schaefer of Maersk Deutschland Donald Yearwood in Davidsonville, MD
Jeanette Smith of Demurrage Specialists International Nigel Roberts of brokers London Special Risks
Captain Doctor Ivica Tijardovic in Croatia
Risk Manager Gabe Lugo of TRC in Texas
Alex Letts and Roddy Langley of ri3k.com

News of Readers

On the 8th of November Didier Jouin is joining Gras Savoye (the leading broker in France and still independent--although Willis has a 30 per cent share the capital)to head their transport business. He is thus after nearly 13 years with various insurers returning to his broking roots.

Contact him at:-

chatjouin@noos.fr

Readers Write

From Judy Crick

I think some of your Readers know that I am running in the New York Marathon (again) on Sunday 7th November. On 11th November I'll be celebrating two things:

Running 26.2 miles (I do hope there will be something to celebrate!);

Redundancy and six months gardening leave: which allows me to do the trip of a life time - a two and half month round the world trip taking in Antarctica, Chile, Galapagos Islands and Kilimanjaro. To name but a few stop offs!!!!

I've booked the Auberge winebar at 56 Mark Lane, London, EC3R 7NE for 5.30pm on Thursday 11th Nov. I will be passing a hat (probably actually an ice bucket) round and asking guests to dig in their pockets, cheque books,handbags, purses, wallets or whatever and contributing to my chosen (marathon) charity - which is Mencap.

Anyone who would like to come please send an RSVP and look forward to seeing you on 11th Nov.

Contact Judy at:

Email:l.co.uk
Mob: 07958 552540
Tel: 020 7232 0632

More on Marsh this week.

Enjoy.

2. Reflections on Spitzer v Marsh

During the past week Loyyd's List carried this column by your editor. Since it appeared Mr Greenberg has gone and the UK's FSA has admitted it is taking a pretty close interest in the issue of PSAs. We have always believed that a knowledgable broker invariably earns his or her keep over the distance, but there is a line which neither brokers nor underswriters should ever cross no matter how attractive the financials:-

Spitzer v Marsh Disturbs on Many Levels

I was talking with some financial journalists the other day on the likely ramifications of the case being brought against Marsh & McLennan Cos by New York Attorney General Eliot Spitzer. Many thought that Marsh was going the way of Arthur Andersen. The discovery of a financial scandal, a run on the share price, a perception that the firm has lost its way in the thickets of corporate morality and has failed its clients by reason of its conflicts of interest, and a sudden loss of income, customers and commercial standing with a rise in claims for damages and breaches of fiduciary duty.

Indeed, for people who believe in the general grubbiness of the insurance world, the past 10 days have done little to shake convictions.

To attorney general Spitzer's scathing remark that the whole industry should go back to re-examine its business model came a rather paradoxical response: first came a wave of assertions that the practice of paying Placement Service Agreements was well nigh standard in the industry. This was almost immediately followed by announcements by Marsh and other brokers that they would cease forthwith.

Loud too were the complaints that Mr Spitzer was conflating two things: the activities of a number of identified price ringers, who were operating nothing more sophisticated than a version of the East Anglian antiques auction where dealers take it in turn to place winning bids on items, ensuring that everybody wins except the poor old customer of the auction house.

The conflating bit is making equivalent this reprehensible activity (between, it must be said, the largest broking house and the largest insurers in the business) and the rather innocuous industry practice of paying brokers a bit more on top of their commissions, after the fact--once it is clear certain growth or performance targets have been reached.

Well, we shall see how innocuous these practices are, since, in many individual cases, they are destined to fall under the spot light from regulators, non execs and customers.

In each case the scrutiny will be this.

To what extent will any given commission deviate from the basic legal doctrine that the broker is the agent of the assured, although the broker is paid by the insurer? A sense of ambiguity is never too far away. If the broker's duty is to the assured, why is so much time and effort made to cosy up to underwriters? For insurers, enjoying the ease which only an absence of red ink can supply, it is essential they hold their business. And, indeed, if they are newish Bermudians or fresh to the scene, they do not mind at all paying that bit more to the brokers to see the right accounts.

But Spitzer v Marsh is disturbing on all sorts of levels.

What, in the ever increasing world of insurance regulation, is a public prosecutor doing forcing root and branch reform on the global insurance industry?

Where does this leave the work product of all those legions of insurance regulators which have grown up in the major insurance centres all over the world?

How can the world's largest insurance broker, with employees numbering over 60,000 souls, be frozen in the headlights of financial scrutiny and lose nearly half its financial value in a week?

In a industry where role ambiguity is a daily professional danger, how sound an idea is it for the world's largest insurer and world's largest broker to be led by an old man and his son?

And is it merely the malign forces of chance which have settled upon the house of Marsh?

Apart from being the largest, were there any propensities visible which might have made the present nadir more likely? Is the firm any more likely to play the bully, push its weight around, take the main chance, trouser the loot, neglect its customers’ interests and generally by reason of size, arrogance, corporate culture or tradition prevail where it is not such a good idea to prevail?

It is hard for me to judge.

I know a number of exceptionally professional and all in all highly personable people in Marsh. And I have met in the halls of Marsh or its constituent parts one or two of the least admirable people I have seen in the industry, people of the sharp cut suit, elaborate manners, an appetite for intrigue and a tendency to abuse power. It is always a safe bet that the responsibility for the firm losing its way rests with the leadership. It seems very likely that the house of Marsh in particular and the insurance industry in general will have to go in for a period of back-to-basics introspection.

In the seminars and in the planning rooms the questions will be asked, as they should be, about why we are in business, what causes do we serve, in whose interests must we act, and what is proper and improper. I can well imagine a future of fewer black-tie dinners between insurers and brokers, a greater sense of punctiliousness, a more pedantic sense of what is proper in the distribution of insurance in the marketplace. Maybe the era of the very large broker battalion will be drawing to a close.

But sure as anything we are not here merely to trouser cash, and the worst moments always come when power or want of scruple overrides what we know is right.

3. Cargo Security and the President

Will John Kerry take a different position to President Bush on homeland security as it relates to cargo and in particular C-TPAT (The Customs-Trade Partnership Against Terrorism)?

Created by President Bush, the Department of Homeland Security is responsible for C-TPAT and President Bush has proposed an additional spend of $20 million for C-TPAT in the 2005 budget.

What has John Kerry proposed?? What is C-TPAT and how will effect me? Where can I get more information / assistance?

For more information and details of a unique Bow Wave offer click on the link below:-

http://www.cargo-solutions.com/bowwave1

4. APL Web Picks

Courtesy of Peter Owen we have learned that APL's web offering has been attracting plaudits.

APL Ltd., the global container transportation unit of Singapore-based NOL Group, jointly with its sister company, APL Logistics, has made the top 100 of InformationWeek magazine's list of the 500 most innovative users of information technology, for the fourth consecutive year.

The more than 150-year-old shipping and logistics company finds itself ranked on the same list with such technology leaders as Cisco Systems, Xerox, Dell, Dow Chemical, FedEx, AT&T, and Hilton Hotels.

It is the fifth consecutive year that APL has appeared on the InformationWeek 500 list, and the company remains the only ocean carrier included.

http://www.apllogistics.com

http://www.apl.com

5. 25 Metre Waves and the Mariner--How Bad Could it Get!

Howard Evans writes:-

25 metres (more than 80 foot) waves are regularly detected around the world by satellite imaging. The mariner has always had to cope with extreme weather but these are more than twice the maximum anticipated wave heights. Just how bad will it get and how should the mariner respond?

A conference organised by the Honourable Company of Master Mariners on 29th November 2004 in London will come up with some answers. Entitled, The Mariner and Climate Change, the conference will feature experts on the weather and wave heights as well as mariners from deep sea cargo vessels to short sea trades, fishing boats, yachts and supply vessels. Offshore structures such as wind farms will also be represented.

Professor Wolfgang Rosenthal who headed up the three-year study, Max Waves, will speak on his findings, which used European Space Agency satellites to sweep the world's oceans. Over a period of just three weeks Max Waves produced 30,000 images of the sea surface and located 10 waves of at least 25 metres in height.

In the past 10 years around 10% of the 22,000 merchant ship casualties are attributed to weather.

Experts from the Met Office and the University of Plymouth's School of Earth, Ocean and Environmental Studies will look at climate change and how it could be linked to increasingly extreme weather for the mariner.

The responses to this extreme weather range from better ship handling techniques and improved ship design, increasing the specifications set by SOLAS.

For further information, contact the HCMM Conference Secretariat at:
:
enquiries@conferencebusiness.co.uk

http://www.hcmm.org.uk

6. And Finally...

Many thanks to Capt Sweetman and wife Yupaporn for these reminders of the golden age of aviation

CATS & DUCKS?

Today's flight age is an era highlighted with increasing emphasis on safety. Instrumentation in the cockpit and in the traffic control tower has reached new peaks of electronic perfection to assist the pilot during takeoffs, flight and landings. For whimsical contrast to these and other marvels of scientific flight engineering, it is perhaps opportune to remind pilots of the basic rules concerning the so-called Cat and Duck Method of Flight, just in case something goes wrong with any of these new fangled flying instruments you find in today's aircraft.

Place a live cat on the cockpit floor. Because a cat always remains up right, he or she can be used in lieu of a needle and ball. Merely watch to see which way the cat leans to determine if a wing is low and, if so, which one. The duck is used for the instrument approach & landing. Because any sensible duck will refuse to fly under instrument conditions, it is only necessary to hurl your duck out of the plane & follow her to the ground.

There are some limitations to the Cat & Duck method, but by rigidly adhering to the following check list a degree of sucess will be achieved.

-- Get a wide awake cat. Most cats do not want to stand up at all, at any time. It may be neccessary to get a large fierce dog in the cockpit to keep the cat at attention.

-- Make sure your cat is clean. Dirty cats will spend all their time washing. Trying to follow a cat licking itself usually results in a tight snap roll, followed by an inverted (or flat) spin. You can see this is very insanitary.

-- Old cats are best. Young cats have nine lives, but an old used up cat with only one life has just as much to lose as you do and will therefore be much more dependable.

-- Beware of cowardly ducks. If the duck discovers that you are using the cat to stay upright - or straight & level - she will refuse to leave without the cat. Ducks are no better on instruements than you are.

-- Be sure the duck has good eyesight. Nearsighted ducks sometimes will go flogging off into the nearest hill. Very short sighted ducks will not realise they have been thrown out & will descend to the ground in sitting positions. This manoevre is quit difficult to follow in an aeroplane.

-- Use land loving ducks. It is very discouraging to break out & find yourself on final approach for some farm pond. Also, the farmers there suffer from temporary insanity when chasing crows off their fields & will shoot anything that flies.

-- Choose your duck carefully. It is easy to confuse ducks with geese because many water birds look alike. While they are very competent instrument fliers, geese seldom want to go in the same direction you do. If your duck heads off to a swamp, you may be sure you have been given the goose.

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