How to make IG a more effective decision-making body? Cracknell

In the recent Marsh P&I Review, Mark Cracknell, Head of P&I, noted that, “with very little in the way of new convention or regulation on the horizon, [new CEO Nick Shaw] will have time to consider tasks that can transform the organization”.

Cracknell said that one of these “must surely be how to make the IG a more effective decision-making body”.

Cracknell observed that much had been said and written about the value of the IG to the shipping industry and to the vital interests of global trade of the mutual P&I system, and Marsh supported that proposition. In addition, said Cracknell, in marsh’s opinion, the areas where the IG could be more effective fell into two main categories: the tactical and the strategic.

In the tactical category Marsh placed issues such as the scope and limits of cover ordinarily afforded by the P&I clubs. “Some of the deficiencies in club cover that trouble our clients seem to be simply a failure to keep abreast of the pace of events”, Cracknell said.

An example was the potential for the imposition of fines for exceeding sulphur caps for bunker fuel. Cracknell accepted that there could be a moral hazard when it comes to cover for fines, but added that “where a fine arises as a result of differences between two recognized authorities in the measurement of the sulphur content of fuel, it seems egregious that there should be any question of cover when a ship owner has loaded fuel — accepting in good faith the representations of a first competent body in respect of that sulphur content — but faces a fine when a subsequent authority disputes the earlier findings”.

Cracknell said that club managers could and should have discretion to make a determination that the member has or has not done everything reasonably possible to avoid such a penalty. “If, in the opinion of club managers, the member has acted in good faith and could not reasonably have taken steps to avoid a fine, cover should be afforded”.

Cracknell said that this was “a practical as well as a technical and moral imperative. Such cases likely will be numerous in the future. It is not the most effective use of club directors’ time to be asked to deliberate on such matters”.

https://www.marsh.com/uk/insights/research/protection-and-indemnity-review-2019.html