The number of indemnity claims reported during the 2015 policy year (1st June 2015 to 31st May 2016) was at the same level as in the previous year. After 12 months’ development the amounts paid and estimated for the 2015 policy year were slightly higher than the average of the previous five policy years but remained consistent with those years. Historical claims had developed less adversely than anticipated leading to an overall improved claims position.
The number of debt collection files handled by ITIC rose by 5% during the 2015 policy year. This was the first such rise for a couple of years and the increase took place in the second half of the year. The difficult trading conditions that our members are continuing to face are one factor in the increased number of debt collections. The claims reported in the 2015 policy year do not contain multiple debts caused by one major bankruptcy and therefore reflect a wider deterioration in principals paying their shipbrokers and ship agents.
Human error is the main factor in matters reported by ITIC Members. Recent years have seen a number of claims relating to penalties imposed by customs authorities arising out of relatively technical infringements by ship agents. Fraud continues to be an issue for this sector of the membership with issues arising both from cybercrime and the forgery of traditional paper bills of lading.
The potential for liabilities arising from cyber-attacks is much wider than fraud and, as reported elsewhere in this yearbook, ITIC has developed a simple new third party cyber liability endorsement.
Notable claims in the last year included a US$ 5m settlement arising from the abandoned construction of a barge. ITIC’s member had been engaged to undertake the design, approval and tender process for the construction. The project fell behind schedule and the customer alleged these were due to design defects. This was hotly contested by the member who alleged that the customer had caused the delays by constant interference.
The depressed markets have an impact on the claims results. Low freight rates can mean that the quantum of claims (especially against shipbrokers) is at correspondingly lower levels. The poor trading conditions are however a factor in the increased number of debt collections.