Crew quality hits marine claims
- 2008-04-14
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Norwegian Hull Club figures show that human error is behind alarming rise in accidents. HARD statistical evidence has emerged from one of the leading marine insurers, the Norwegian Hull Club, directly linking the rise in the number of accidents at sea with human and navigational error.
Figures revealed at a recent Nordic insurance gathering by the Norwegian mutual, a leading marine insurer, offer a compelling argument that the surge in the number of marine hull claims is a result of declining crew quality.
In Oslo, the mutual’s chief operating officer Arne Birkeland said: “Our experience is that navigational accidents continue to rise at an alarming rate, and ships are twice as likely to be involved in an serious incident today compared to five years ago.”
Groundings and collisions accounted for 21% of claims by number, but 37% of the total cost of claims between 2002-2006, according to NHC figures.
Fire and explosions represented just 2% of claims but 16% of costs.
Only two months ago, NHC chief executive John Wiik told Lloyd’s List that further statistical research was needed to quantify the part that crews play in incidents that produce casualties.
Internal club statistics for 2002-2006 show that 45% of all claims were directly caused by navigational errors.
The club’s operations chief added that the share of claims caused by navigational errors was now “far above what we have experienced in the past”, both in numbers and in costs. “If you go behind the figures then the majority, or 90% or more, refer to human error,” said Mr Birkeland.
“It is our opinion that more than 70% of our major losses would not happen if the human relation leadership and communication on the ships and ship [to] shore was better.”
The Bergen-based club’s most recent study of its claims account reported that 18 out of 22 claims above $500,000 were due to navigational errors. In 2007, NHC insured around 4,000 vessels and received 1,100 reported claims, of which just 32 incidents represented 64% of the total cost.
A lack of qualified officers, intense commercial pressure, heavy and condensed traffic — as well as market factors such as a lack of repair capacity — are adding to insurers’ risks, with the club expecting increases both for 2008 and 2009.
“These figures confirm the excessive cost of human error on ships,” Mr Birkeland added. “We are into a trend shift and we have to change our thinking when doing risk assessments.”
The industry is in “serious trouble”, the audience heard, as the shortage of officers grows, with many serving officers promoted before acquiring the necessary experience to take on high workloads and commercial pressures.
Raising a related controversy for some in the industry, guests at the Central Union of Marine Underwriters (Cefor) event viewed video footage of at least half a dozen leading international shipowners and operators who had set up recruiting stands at unofficial crewing markets in central Manila.
“Most of you would be concerned if officer employment was done in this manner,” Mr Birkeland said.
Throwing out a challenge to the international shipping community, Mr Birkeland added: “You can only meet a shortage of crew by internal initiatives up to a certain level. At the end you need knowledge through education.”
The latest Cefor figures, as revealed earlier in Lloyd’s List, also show that the average hull claim cost has risen by 86% over the past five years to $386,000, with the largest increase occurring for groundings and collisions.
But the Nordic marine insurance association also said that the frequency of claims has been stable over the past three years — the reported frequency for the 2006 policy year was 25%.
Cefor has argued that high claims costs are broadly a result of a series of strong market conditions, as well as economic pressures such as commodity prices and a weak US dollar, although it has also expressed concern over the shortage of skilled crew to operate the world fleet.
“The problem is far more complex and we have to put a lot more emphasis into the human side of the equation,” Mr Birkeland said.
NHC figures also show that older ships do not necessarily pose more risk, and found that the highest losses were among vessels of 10 to 14 years of age, nofollowed by those built in the past four years. “You look at some of the near collisions and these are nothing to do with age”, Mr Birkeland said.
Citing a recent near-miss between a capesize bulker and a containership, he added: “We’re talking here about quality owners, acceptable ship types; IACS class, okay flag state and no detentions. From our point of view this was — and still is — a good risk.”
He urged owners to develop the requisite skills to meet the challenges posed in an adequate manner.
Keywords: Crew quality, marine claim
