Joe Hughes was speaking as the American Club sought to spell out that it is in good shape heading towards the February 20 renewals, but added the key to the future success of the clubs is to get the message across about what they bring to the relationship with the shipowner. “The challenge we all face is to ensure the proper valuation of the P&I system,” he said. “What the clubs offer goes way beyond the simple pricing of risk. Shipowners derive a great deal of value from the clubs and we need to explain what the clubs do above and beyond providing extremely high levels of insurance cover at low cost.”
He added: “There are the additional issues of claims service, legal advice and expertise, regulatory advice and the work towards using the system to exchange ideas and information of risk management for instance.”
Mr Hughes said 2007 has been one of “incredible change” for the American Club with the appointment of Arnold Whitty as chairman in June and the work that had been carried out by the club to deliver a strong performance at a time when claims levels were at a record high across the sector.
“The abiding challenge remains one of capitalisation,” he said. “We have no liquidity issue, but we are still playing catch-up in terms of our capitalisation with our peers. What it does is shape our need to maintain our underwriting performance and drive our efforts on loss prevention. Clubs live or die on their service levels to their membership.”
He added that the future remains one where the club and, to some extent, the rest of the market has to ensure the proper pricing of the risks that they are asked to cover.
“We are slightly closer to the curve than, say, some of our counterparts who have had surpluses on which to rely,” he commented.
He said one task for 2008 would be to protect the membership against a range of threats such as opportunist regulatory changes and the rise in spurious cargo claims.