To complicate these things further similar restrictions soon coming to the refined products space.
Some thoughts on these questions were included in an all-encompassing high-level view of the P&I landscape offered by the luncheon speaker, Joe Hughes, Chairman of the American Club, at the SMA’s first monthly lunch in the new year.
Originally trained as a UK Barrister, Hughes joined the maritime insurance world in the late 1970’s; he came over to the Shipowners Claims Bureau (Managers of the American Club) in the mid 1990s. His remarks, to attendees at the luncheon which followed the social hour, combined a historical view encompassing more than four decades in the business, including a lengthy list of mergers and other combinations, with an insightful look ahead.
“The relentless imposition of regulatory burdens” – by both national and supranational agencies, had led to new forces shaping the P&I world. On the domestic side he pointed to financial reporting, domicile requirements, and the supranational side, “to a relentless degree, economic sanctions.”
Hughes, in his unique style (without missing a beat, he invoked a Roman pundit), asked some questions about the current state of regulatory oversight on the P&I sector. First, he wondered aloud “Who benefits” (actually he quoted the orator Cicero- who asked “Cui bono?”) from the “increasingly large battery of reporting requirements in Europe, the US and elsewhere”. He pointed to the “extension of the ambit of sanctions enforcement in provision of P&I insurance.” as a recognition by governments of the “indispensability of P&I” in the context of conducting seaborne commerce.
On the very topical question of sanctions, he added: “To constrain insurance revision as a means of implementing sanctions…is of course an entirely legitimate avenue for the exercise of foreign policy. But it obviously creates burdens on both shipowners and their clubs to ensure that relevant embargoes are not being breached, even innocently.”
Hughes moved into prognostications, towards the end of the speech, talking about the International Group of P&I Clubs, which he thought would continue to be a feature of the market structure, said that “Geopolitical tensions will continue to affect global trade, and the implementation of foreign policy through sanctions and other embargoes will continue to impact the operations of marine insurers- especially the P&I clubs.”
Geopolitics was again mentioned, as Hughes went through a list of factors that would likely buffet the insurance markets in the coming year- including “…the rising costs of regulation”, “geopolitical tensions affecting risk”, the situation in the reinsurance realm, capital markets vicissitudes, and- of course, “weather-related catastrophic losses.”
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