DGS Marine Advises Fixed Premium P&I Cover
DGS Marine, a leading global P&I management provider and exclusive manager for the British European and Overseas (BE&O) P&I facility, has highlighted the benefits of fixed premium P&I cover for ship owners and operators in the Middle East.
David Skinner, Managing Director of DGS Marine Group, was speaking at the Seatrade Middle East Maritime conference in Dubai, where DGS Marine was a leading sponsor.
Discussing the growing appeal of alternative models of P&I cover to ship owners in the Middle East, Mr. Skinner said: “Middle East ship owners face the same global challenges, with tough market conditions, including low freight rates, high fuel costs and the burden of new regulations, placing pressure on balance sheets. Under these conditions, it is imperative that owners have financial control and transparency in order to manage all of their costs, including marine insurance.
“Owners can no longer afford to take it on blind faith that they get the best deal from their insurance provider. However, the mutual model offered by the IG Clubs provides neither cost transparency nor cost control. An insurance model that subjects small and medium-sized owners to double-digit increases, retrospective premium calls and high release calls, irrespective of their individual claims records, is not sustainable. These owners are looking for alternatives that allow them to better control their insurance costs and many are now turning to fixed premium P&I cover.
“The need for certainty and transparency is the driving force behind the significant growth in the fixed premium P&I market, both here in the Middle East and globally. Fixed premium cover gives owners complete certainty over their insurance costs. In other words, the figure they are given when they purchase the policy is the full and final insurance cost. Then, when it comes to the renewal process, the key determining factor is an assessment of the owner’s own claims record.”
DGS Marine was a major sponsor of Seatrade Middle East Maritime, the region’s leading shipping and maritime event and the largest event of its kind in the Middle East. DGS Marine’s support for this event was testament to the importance of the Middle East Gulf for world shipping. Speaking in Dubai, Mr. Skinner expressed his confidence in the continued growth of the Gulf as a shipping hub, “There are plenty of reasons to be optimistic about the growth of shipping in the Gulf, despite tough global conditions. More shipping companies are establishing themselves in the UAE and significant investment is being made in the UAE as a shipping hub. This includes the expansion of port capacity, such as in Jebel Ali and Fujairah, and support for Dubai’s growth as commercial base for owners, operators and service providers, given its proximity to US, European and Asian markets.
“Billions of dollars are being invested to prepare for the World Expo in Dubai in 2020, resulting in a significant expansion in the quantity of imported materials and the volume of shipping traffic. A similar pattern can be expected in respect of the FIFA World Cup in Qatar in 2022. Overall, the foundations for the ongoing growth of the Gulf shipping sector in all respects are very strong.”
DGS Marine Group has also seen considerable growth in the Middle East in the past year, driven both by its cargo claims operations in Dubai and by P&I premium growth. As Mr. Skinner explained, “DGS Marine’s Middle East office is solely focused on handling cargo claims. Our main clients are cargo underwriters, as well as other parties who move cargoes, such as shippers or trading houses. We consult and assist cargo underwriters under subrogation and handle the claim on their behalf. We look after all sorts of cargoes, including perishable cargo, steel cargo, bulk cargo and container cargo. We do this on a ‘no cure, no pay’ basis. This means if we do not succeed in recovering the claim on our clients’ behalf, they do not have to pay any fees or charges. We also have a lot of in-house maritime expertise, with a considerable number of our team having served spent at sea.
“This has been accompanied by a growth in the client base of the wider DGS Marine Group in the last year. In fact, the Middle East has been one of our fastest growing regions. P&I renewals in February 2014 resulted in a 22% growth in premiums in the Middle East for DGS Marine Group, in our capacity as a P&I provider and exclusive manager for the BE&O P&I facility.”
The rapid growth of fixed premium cover is a defining feature of today’s P&I market and DGS Marine is one of the leading providers of fixed premium P&I cover. DGS Marine saw a 19% growth in premiums during the 2013/14 policy year, which included a 22% growth in the Middle East. DGS Marine Group is also the only fixed premium P&I provider to publish audited annual reports.