Last year the UK P&I Club announced it was setting sail in the direction of the Netherlands in response to the Britain-European Union divorce. Now another club managed by Thomas Miller has revealed where it’s headed in time for the loss of Single Market benefits.
Freight, demurrage, and defence (FD&D) insurer UK Defence Club, which reported gross written premium of £22.9 million for the “exciting and successful” year ended February 20, is entering Cyprus waters.
“Brexit looms large,” said UK Defence Club chair Petros Pappas. “This Club will be establishing a European presence in Cyprus through which we will be able to continue writing European business.”
The insurer, described as the world’s largest defence club, posted a 7% increase in the number of entered ships for its latest financial year. With the total now at 4,200, the UK Defence Club provides cover for legal and other costs incurred in relation to disputes that are uninsured.
“The club has supported in excess of 90% of cases to the full extent and has no mandatory deductibles,” noted Thomas Miller Defence club manager Daniel Evans. “It covers legal costs insurance of up to US$15 million, for all disputes, and has never sought to impose release calls.
“Combined, we believe this makes the club an attractive proposition.”
Imminent regulatory changes
Earlier this year global brokerage giant Marsh warned shipowners amid pending rule changes related to sulphur emissions. The International Maritime Organisation, through its International Convention for the Prevention of Pollution from Ships (MARPOL), is reducing the global cap on sulphur emissions to 0.5% from the current 3.5%.
At the time Marsh said it must not be assumed that insurance cover will continue to be in place following a breach of the MARPOL Convention Annex VI after January 01, 2020. It explained that failing to comply with international conventions, and in turn losing flag state convention certification, could affect policies’ validity.
In light of this, UK Defence Club’s Pappas has issued his own warning.
“It has been an exciting and successful year for the club,” he commented. “However, I do foresee significant issues ahead for owners and operators which could result in a significantly volatile claims environment. Future changes in regulations, particularly as regards low sulphur fuel oils, have the potential to give rise to many issues.”
Pappas cited “serious and troubling questions” – including ‘What additional risks will this pose to ships and their crew and where will contractual responsibility lie?’ – and said he believes “we are unlikely to get clarity until well past the date of implementation,” which is one and a half years from now.
“This is where a strong and stable FD&D club will play its part – advising, collaborating, funding,” added the chair.
