Benefits of mutuality
A THE FOURTH meeting of the Branch, Mr Martin Lee, barrister and general manager of Pacindat (P and I) Management Ltd, spoke on the 'Benefits of Mutuality.' There was no doubt that the talk and the ensuing discussion were mutually beneficial.
Pacindat was the managing company of the Far East Club which specialised in this region. Using excellently produced overhead transparencies, Mr Lee showed how P&I and hull/machinery insurance complemented each other. He emphasised that from a management point of view, mutuality implied that it could not be assumed that members received better treatment depending on the tonnage they entered. He outlined the tripartite system in a mutual association: the board of directors, the managers, and the membership.
The very colourful slides, many in cartoon-form, clearly showed the procedures for entry, the system of 'calls,' the protection of a fund by deductibles and reinsurance, the menu of claims cover available to members, and the claims procedure. The Club felt it was of supreme importance to advise masters and ships' personnel, especially in remote ports where everyone from ashore seemed adversarial:
The talk was rounded off by a description of claims handling and a series of checklists for the master for various claims. The discussion was probing and many of those present participated actively.
On the question of how members regarded the usefulness of Clubs based on the calls. Mr Lee answered that this partly depended on the call recordof different Clubs and partly on the Club giving value for money. Brokers and the shipping community also played a large part in shipowners' decisions to join particular clubs.
A. C. Pyrke: Can you give us any examples of what masters can do or not do to assist with the making of claims and meeting claims.?
Mr Lee: Basically they should not drop any clangers ... .
N. J. Lane: . . . perhaps I can partly answer that question. If an accident occurs, it is most important for Clubs and owners to obtain a detailed report on what happened, based on that information a claim can be rejected or reduced. The most common failure on board ship was that the master did not report in a logical sequence. My questions concern surveyors. Firstly, does a Club check the credentials of surveyors; secondly, does a Club choose a surveyor with expertise in particular types of claims? In my experience a surveyor with the wrong expertise has been sent down to a ship on many occasions.
Mr Lee: The answer to the first question is 'No'. We rely on word of mouth. For the second, the answer is 'Yes'.
E. H. Farrow: Do you check the credentials of officers?
Mr Lee: Yes, during the condition survey. During the membership period of any particular owner, we look carefully at his management record; if there are any claims which result obviously from personnel we make a check. G. A. Marchant: What is a Club looking for prior to entry?
Mr Lee: Fundamentally, compatibility with the other membership. A problem may arise when owners want to enter without any previous record such as new entrants to shipowning. One solution is to load the deductibles for the first few years.
J. Lambourn: Do members self-regulate?
Mr Lee: One of the functions of managers is to point out obvious deficiencies, We often use surveyors to carry out checks before casualties occur. We feel that members should not be left out on their own and that the only contact with members should not occur only when a claim arose.
R. Zaheer: What are the criteria of the directors?
Mr Lee: On the tonnage entered. The directors who meet quarterly often make a valuable contribution, especially when complicated claims are made.
R. Zaheer: On the point of cargo claims . . . What is your view of 'letters of indemnity' offered to masters to induce them to sign clean bills of lading?
Mr Lee: These are illegal and unenforceable and Clubs cannot cover claims based on bills of lading. They would be open to accusation of fraud. The ultimate question for the shipowner is:"Does he really want this sort of cover?" It is really a matter of a commercial decision for individual shipowners whether to accept clean bills of lading when these should have been claused.
Contributed by Captain N.J. Lopez, FNI
Seaways July 1985