The Group P&I Clubs operate under a traditional and fascinating system, but the 13 members would benefit from innovation in the collation of data, according to Richard Adler, senior vice-president and Head of P&I, global marine practice at broker Marsh.
At the broker’s briefing on P&I market trends, Adler and Marcus Baker, chairman of the global marine practice at Marsh, Adler said that when he joined the company recently Marsh was already quite advanced in developing a tool for P&I analysis. “Our technology gives us a good way of analyzing P&I data – it explains the black box of P&I, which is a complex set of rules and the widest cover in terms of limits and in terms of what it covers.
Baker observed that P&I was a very “personal buy”, but that marine was run, from an underwriting perspective, on relatively static data. “When we look at shipping information and how we trade business, it tends to be ‘how old is the ship? Where was it made? What is it trading? What’s the loss record?’ That is what I would call ‘static data'”.
Because it was a ‘personal buy’ people became very attached to their P&I clubs, and it is important to understand that mentality when talking to shipowners.
Adler said that one of the reasons that shipowners became attached to their P&I clubs was because their biggest fear was liability exposure.
He said that Marsh had been investing in their data tool to extend it from being a financial analysis and underwriting tool to also take into account claims and other data so that Marsh can have a clear view of “what is out there” and also to make smarter decisions. As such, what one would describe as static data is no longer enough. One thing we are doing is analyzing a shipowners’ claims record far deeper than we have in the past, but we are also matching that shipowner’s profile with the right P&I Club. Sometimes in the past a club was recommended by a broker because the broker had a favourite club. Today, sad Adler, you needed to make an accurate match to make sure it was a long-lasting success.
Adler said that loss prevention was key. Human error was hard to tackle and was the major cause of losses. His belief was that one could create “technology-enabled loss prevention”. He noted that “in the end the market is something that neither a shipowner or broker can control. But we can influence the loss control.”
Adler said that what we need to look at is how the Clubs can help us with that, and that is why marsh has been so vocal about the Group Clubs being in a unique position, having 95% of the world’s tonnage, carrying an incredible amount of data, and they don’t really share it.
Marsh feels that the Group Clubs need to take the data they have to “a different level” and to share that data. He noted that in the past had said that they could not do it because it was privileged information, but Adler said that it was quite easy to anonymize the source. And in the end it would benefit the shipowner, as there was no shipowner that did not want to improve loss prevention.