1 Armed with intelligence American Institute of Marine Underwriters provides tools for globalized market he membership list of the American Institute of Marine Underwriters is something of a Who s Who in the business. Founded in 1898, the AIMU is a trade association for insurers, reinsurers and brokers. Its members are involved in insuring vessels (from the largest of the container-carrying behemoths to the small tugboats in harbors) and their cargoes. AIMU members underwrite most of the risks that are insured in the United States. Premiums from policies underwritten by AIMU members T in 2006 totaled approximately $2.5 billion. Well-known names on the members list include Starr Marine Agency (a wholly owned subsidiary of C.V. Starr & Co.) and the Ocean Marine Division of Travelers Insurance Co. Not surprisingly, the group is closely intertwined with maritime attorneys, as well as salvors, surveyors and claims settlers, a number of whom are members. Its purview also includes offshore energy, pleasure boating and yacht insurance. Like its international analog, the International Union of Marine Insurance, the AIMU provides a combination of advocacy, education-information exchange and ongoing networking for its members. In addition to its annual meeting, regional forums (including the West Coast and Canada) and ongoing committee work, the AIMU is actively involved in the workday world of insurance claims. For example, it maintains contact with surveyors around the world who are sometimes involved in settling insurance matters, and it provides standard contracts Beyond basic insurance, marine underwriters also provide the industry with the informational resources necessary for success within a quickly evolving field. 50
2 PHOTO: Panama Canal Authority and clauses that can be used by members. In a fast-changing world, members are kept abreast of legal opinions and legislation, at all levels, that affect the marine insurance business. We made a decision to emphasize education, says Jim Craig, AIMU president, who explained, Our membership got together a few years ago and crafted a strategic plan. Educating our members on what s happening in a very fast-changing world was high on the list of priorities expressed by the members. In talking about AIMU activities in this area, which include Web-based training and seminars, Craig succinctly described an important organization goal as being to enhance the professionalism of the underwriting community. Introductory courses are currently offered in the areas of cargo insurance, hull insurance, P&I coverage, yacht insurance, ocean marine insurance and ocean marine claims examination. An advanced course in cargo insurance was recently offered. At the upcoming mid-november New York meeting, AIMU members will be briefed on important trends and issues impacting marine insurance. Speakers will include U.S. Maritime Administrator Sean Connaughton, who will discuss the Maritime Administration s efforts to stimulate trade, including new initiatives that may open up the long-talked-about short-sea shipping lanes. AIMU Chairman Richard Decker, president of AIG Global Marine, will provide an insurance market overview, and Craig will discuss the organization s committees and the educational programs. The AIMU s legal counsel, Joseph Grasso of Thatcher Proffitt, will review current regulatory and legal issues, and will provide insights into the legislative landscape. The mood at the meeting is likely to be upbeat. David French, president of Starr Marine, and a past chairman of the AIMU, told The Journal of Commerce, Given the record level of world trade and resulting shipowner profitability, never in my experience have marine underwriters been in a better position to receive the right pricing for their product and service to the industry. Sean Dalton, vice president of Travelers Ocean Marine, described 2007 as a good year with good results by a number of the major insurance carriers. Dalton, who is in charge of Travelers Marine Field Underwriting Operations, said, Yes, it s a competitive business, but we see plenty of opportunities; no one company can drive the entire marketplace. We are fortunate in that our customers, the people that we insure, are operating in thriving markets. The economy has been good to them. Though business has been good and trade flow growth has exceeded gross domestic product growth, complexity in supply chains is the rule rather than the exception. A recent case, which ultimately went the U.S. Supreme Court, shows the multiple faces of the AIMU in action. In the Kirby case, the court found in favor of Norfolk Southern Railroad, the land carrier in a complicated multimodal supply chain starting in Australia. The case involved a non-vesseloperating common carrier that dealt with the shipper, an ocean carrier, which issued a bill of lading, and then NS. After a derailment and damage to the cargo, the railroad sought to limit its liability, but the legal ground was muddy, and the case then worked its way up through the courts. In its role as an advocate, the AIMU filed an amicus curiae (friend of the court) brief with the Supreme Court, taking a position supporting the shipper and its underwriter an AIMU member. Following the Supreme Court s ruling, the AIMU s education and informational aspects kicked in, as members needed to be informed about the Supreme Court s decision and its important implications. Recently, the AIMU filed another brief with the Supreme Court, this one on behalf of Exxon Shipping in the widely publicized Exxon Valdez case. According to remarks to be delivered by Craig, The key issue was whether the punitive damages award imposed on Exxon was permissible and proper under federal maritime law. In its paper, the AIMU clearly explains its rationale for filing: The current conflict between (different circuit courts) that have addressed the issue of punitive damages under federal maritime law has resulted in a significant erosion of the clarity and predictability on which the members of AIMU depend to provide insurance that is vital to maritime commerce. Additional fresh legal and regulatory issues are highlighted in the recent AIMU s Issues Book, which is available to members online. The most recent volume highlights issues such as the removal of shipwrecks the subject of an International Maritime Organization May 2007 diplomatic convention and places of refuge for vessels, a matter studied by the non-governmental association Comité Maritime International. Hot-button issues closer to home, such as environmental protection and maritime security, are also covered, as are the detailed legal intricacies of the United Nations Committee on International Trade Law. Looking back on what s been accomplished, Travelers Dalton talked with great pride about the Marine Claims Department s recent conclusion of a final settlement with a large customer a shipyard whose facilities and entire operation took a severe battering in Hurricane Katrina. Dalton, a Kings Point graduate who was honored by the AIMU last year, described the importance of always taking care of customers, including in matters involving complex claims and large amounts of money. He said, The yard has now been able to completely resume operations. The insured was recently asked by its U.S. senator s office about its experience with the insurance company post-katrina, Page 52 > and they responded that 51
3 their case should be a model of how big insurance claims should be handled. From Travelers standpoint, we are just glad that we were able to get them up and running as quickly as possible. Similarly, Starr Marine is committed to its customer base. David French said, Starr Marine has invested heavily in added-value services such as marine loss control and enabling our producers and clients to produce their cargo certificates via the Internet. Though such investments come with a cost, there is also a payoff. French added, By differentiating ourselves from the competition in these ways, we have achieved our profitable growth objectives in an albeit competitive marine insurance market. On the technological front, the AIMU itself has used the Internet and video conferencing to overcome time zones and geographical distance in a worldwide business. Craig said, At a seminar we held in May, the keynote speech, by Joe Plumeri, who is the chairman of Willis, was made available live to the membership that could not attend the seminar. Likewise, two sessions from the IUMI s early September meetings in Copenhagen were replayed for North American members. Craig said, The keynote, by C.V. Starr s chairman, Maurice Hank Greenberg, was replayed to Court case decisions in situations such as the Exxon Valdez oil spill have far-reaching effects the membership later in that same day since Page 54 > on the business approaches of marine insurers. there was a six-hour difference Seas are uncertain; your ocean cargo coverage shouldn t be hipping cargo is a risky business. You worry about stormy seas. You worry about cut-throat competition. You worry about the impact of the rising price of fuel. One thing you shouldn t have to worry about is your insurance coverage. Unfortunately, if you re in a fast-paced mode and your plans change unexpectedly, you may find out too late that your policy doesn t have you covered. That s because many cargo insurance policies typically limit the types of goods that qualify for the broadest coverage. For example, if your core business is importing ballpoint pens but you suddenly have the opportunity to load up on space heaters or lawn mowers, notifying your insurer is probably low on your list of things to do to get the deal done. But when something goes wrong and you try S 52 to file a claim, you may discover that your standard insurance is great for ballpoint pens but is extremely limited for anything beyond your usual cargo. Or take the agreement that you, as the buyer, thought you had with the seller about who was insuring the cargo you are waiting to receive. After a disaster has happened is not the best time to discover that there was a misunderstanding and there is no insurance, or that the seller has arranged for inadequate coverage with an unreliable or slow-paying carrier. With Travelers, these types of circumstances are not a problem. Under our Cargo EliteSM coverage, any new product that you import or export is automatically insured on an all risks basis. And the contingency insurance that is automatically included with Cargo Elite takes care of any unexpected issues that may arise with respect to who was supposed provide insurance, and on what terms. In fact, Cargo Elite will even advance funds to cover what other insurers owe you but may simply be slow to pay. Why is Cargo Elite structured to provide flexibility for on-the-go importers? Because Travelers knows that the key to success for these businesses is to jump on a deal when the time is right, without worrying about insurance details. When you buy Cargo Elite, your coverage is on automatic pilot and you can go back to worrying about the weather and your competitors, not your insurance. PHOTO: Exxon Valdez Oil Spill Trustee Council < Page 51
5 in time. Also on the same day, the IUMI Cargo Committee s workshop topic on accumulation was conferenced live to the AIMU boardroom in New York. The future is promising for Travelers and its continuing leadership in the market. We offer a breadth of products and depth of experience unparalleled in the business, said Dalton, who holds a master s in transportation management as well as the coveted CPCU designation. We can do a superior job of meeting the needs of both small and large customers. With the big guys, we are able to offer multiple insurance product lines that cut right across all aspects of the customer s business. We have long-term relationships we have been able to earn the business of demanding customers, and keep it. French, overseeing the activities of another market leader, summed up his firm s value proposition, Starr Marine has specialized in ocean marine insurance for over 60 years and has grown to be one of the largest writers of ocean marine insurance in the U.S. Few managing general agencies are able to offer the breadth of tailored marine products and services available through Starr Marine, including multinational cargo programs, marine liability coverages and hull insurance, often incorporating risk management/captive approaches to best meet a given client s needs. PHOTO: PSA Corp. < Page 52 By integrating environmental protection and maritime security policies into current marine insurance discussions, industry leaders ensure successful client partnerships. Starr Marine a premier marine insurance provider tarr Marine, an ocean marine specialist with more than 60 years of experience, is one of the leading writers of ocean marine insurance in the United States. Starr Marine is a managing general agency for various member companies of the Berkshire Hathaway group of insurance companies. Berkshire Hathaway s financial strength ratings are the highest in the insurance industry, providing independent confirmation that the Berkshire Hathaway group issuing company has a superior ability to meet its ongoing obligations to policyholders. Few insurers offer the breadth of tailored products and services available through Starr Marine. Customized multinational cargo programs, a full range of marine liability coverages, hull insurance and risk management solutions tailored to meet our clients needs are only a few examples of the products and services we offer worldwide. A highly experienced team of marine professionals with local authority allows for S 54 quick decisions at the point of sale. Customer-service standards that are constantly benchmarked and enhanced guarantee a consistently high level of service. Starr Marine s claims network is staffed with in-house marine claims specialists who understand local law and business practice. In partnership with VeriClaim, we have the knowledge and expertise to handle even the most difficult claims wherever and whenever they occur. We recognize that every dollar recouped from salvage and subrogation reduces our clients total cost of insurance. Operating through our network of claims specialists, Starr Marine has a team dedicated to achieving consistent, superior recovery rates for our clients. Years of experience in international trade allow our loss control services team to help develop cost-effective recommendations to minimize exposure and prevent transport losses. Our loss control services team can assist in designing and coordinating a comprehensive plan tailored to the client s individual needs. Starr Marine has the global network, local expertise and professional capabilities to provide outstanding service to clients worldwide.
6 Starr Marine