In person: Nick Shaw

Nick Shaw, CEO of the International Group of P&I Clubs (IG), discusses the impact of the COVID-19 pandemic on the International Group and the sector in general with Adrian Ladbury. Clearly the pandemic has had a big impact on the way that the market works and has led to a rise in certain claims. But Mr Shaw is confident that the sector will cope and emerge from the crisis in good shape.

Adrian Ladbury (AL): How are the Clubs and market bodies such as the International Group (IG) working together to tackle the challenges for shipowners thrown up by this crisis?

Nick Shaw (NS): Communication and partnership on key issues facing shipowners is one of the reasons why the Clubs formed the IG in the first place. Following the advent of COVID-19 in early 2020 the Clubs pulled together quickly. At an IG meeting in early March a new COVID19 working group was set up with all IG Clubs sharing information and strategies for dealing with the crisis. This helped shipowners to understand quickly which claims were covered and which were not. All the Clubs posted answers to FAQs to deal with common queries and this proved successful.

AL: How are the IG and the Clubs using the latest technology to help Members through the crisis?

NS: On the recommendation of and with help from the North the Group launched a new online digital dashboard with the technical service provider Geollect to help shipowners, charterers, operators and other parties in the maritime sector to track country and port specific advice. The dashboard gives up to date details of the measures being put in place in response to the pandemic. This facilitates the dissemination of port and country specific COVID-19 restrictions to anyone interested. The tool allows the industry to identify commercial risks and physical threats to shipping around the world. It sources data from all 13 IG Clubs and their wide network of IG correspondents, the International Maritime Organization (IMO), World Health Organization (WHO) and other leading sources.

Riding the COVID wave

NS: Initially Clubs helped shipowners deal with passenger claims and the logistics of how to get sick crew off vessels and home. This was a big job as the world entered lockdown. Whilst all passengers are now home and many cruise vessels are laid up across the world there remain significant issues with carrying out crew changes and the quarantining of vessels around the world when COVID-19 cases are found on board.

AL: What impact has the crisis had upon claims? What are the main type of claims triggered?

NS: There are a number of high-profile passenger claims against cruise operators. Whilst it is still too early to judge fully their impact none presently looks likely to breach the IG Pool deductible. Otherwise so far, the level of claims has been pretty consistent with previous years. With global shipping trade levels presently predicted by Clarksons to be about 5% down over the entirety of 2020, the actual claims could even come in less than average.

AL: What impact has the crisis had on the financial position of the clubs? What is the underwriting outlook and how will pricing and availability of cover be affected?

NS: All the Clubs have recently reported robust balance sheets and this was reflected in the premiums charged to shipowners at the last renewal. That said, the general reinsurance outlook will clearly be affected by the pandemic as the major reinsurers are reporting substantial COVID-19 claims not linked to P&I. Market reports refer to a general

“Upon lockdown in March we moved quickly to working on a remote basis and things have run on time and smoothly. It is different not being able to see people in person and having to rely on video technology but in terms of getting things done the IG work has proceeded pretty normally.’’

Nick Shaw, The International Group

hardening of rates as a result. However, we would hope that, given the claims record of the IG, the Group and the P&I sector in general can defend its record. Having recently concluded a two-year deal on the main General Excess of Loss programme in February, the Group also has time to see how matters unfold and will not have to renegotiate until after the initial wave of the pandemic has run its course and the market has hopefully settled down. AL: What has been the practical impact of the pandemic at the IG and the way this part of the market operates? Has remote working worked?

NS: Upon lockdown in March we moved quickly to working on a remote basis and things have run on time and smoothly. It is different not being able to see people in person and having to rely on video technology but in terms of getting things done the IG work has proceeded pretty normally. If this had happened 10 years ago, without the present technological advancements, things would have been

a lot more challenging. On the downside, getting the IG message out of London and Western Europe to Asia for example, where 40% of the world’s shipowners are based, has proved a bigger challenge since COVID-19. Normally I would be there three to four times a year representing the Group at industry events, meeting shipowners and other government and non-government industry organisations but this has not been possible this year. Sometimes you do really need to be there physically to have an impact.

AL: What is happening with crew changes? The ITF has said “enough is enough” because of a lack of government response and told seafarers to go home. What impact will this have on global trade and what needs to be done to solve this problem? What role could and should P&I clubs play?

NS: This is a complex question with no easy solution. The IG has worked with a number of other industry organisations to try to find a way forward with the ICS leading on the issue from the shipowners’ side (as this is mainly an operational matter). The industry has sought to provide workable solutions to local governments to help effect crew changes safely and efficiently. This involves coordination with the airlines, in circumstances where many commercial routes are still grounded, and with local ports and governments that have differing rules and regulations and approaches. The situation is made more complex as local conditions can change overnight if there is a new outbreak of the disease. Governments are understandably nervous and planning is extremely difficult. Nevertheless we have seen a growing recognition amongst governments of the importance of this issue to continue to facilitate global trade. In the meantime the IG remains conscious of the developing human cost of seafarers being left on board vessels indefinitely.