WEBVTT - How Shipping Insurance Really Works During a War 0:00:02.720 --> 0:00:15.840 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.280 --> 0:00:20.959 Hello and welcome to another episode of the Odd Lots podcast. 0:00:21.040 --> 0:00:22.720 I'm Tracey Alloway and I'm Jill. 0:00:22.760 --> 0:00:24.000 Why isn't thal Joe. 0:00:24.040 --> 0:00:27.600 You know, I'm slightly obsessed with insurance. Maybe obsessed isn't 0:00:27.600 --> 0:00:32.199 the right word, but fascinated. Appreciative of insurers because I 0:00:32.240 --> 0:00:35.080 think there's a tendency to think of them as sort 0:00:35.120 --> 0:00:38.199 of limiting factors in the world. So, you know, if 0:00:38.240 --> 0:00:40.720 you can't get insurance in California, you can't build a house. 0:00:41.200 --> 0:00:44.760 But I also think of them as enablers of certain behaviors, right. 0:00:44.600 --> 0:00:46.559 I think that's a really good way to put it. 0:00:46.560 --> 0:00:49.520 People do a lot of things that they wouldn't otherwise 0:00:49.800 --> 0:00:53.880 do were they not able to get insurance on it. So, yes, 0:00:54.200 --> 0:00:56.880 it does cut in both directions, so we should appreciate 0:00:57.320 --> 0:01:00.160 the existence of the existence of insurance. All right, Well, now, 0:01:00.200 --> 0:01:02.200 surely you know what my daughter actually. 0:01:02.600 --> 0:01:03.720 Your daughter has insurance. 0:01:03.760 --> 0:01:06.640 She well, she asked me to explain insurance the other 0:01:07.040 --> 0:01:09.000 which I was like, you know, and then suddenly I 0:01:09.000 --> 0:01:09.880 was like, I have to explain it. 0:01:09.920 --> 0:01:10.080 Wait. 0:01:10.120 --> 0:01:12.320 First of all, tell the listeners how old your daughter 0:01:12.360 --> 0:01:12.800 is ten. 0:01:12.920 --> 0:01:13.360 I was trying. 0:01:13.360 --> 0:01:15.800 I can't remember the context exactly what it was, maybe 0:01:15.920 --> 0:01:18.760 something about fire insurance, et cetera. But I think I 0:01:19.280 --> 0:01:21.960 was actually pretty proud of myself. I was basically like, 0:01:22.240 --> 0:01:25.680 there are these risks that happen where like, save your 0:01:25.720 --> 0:01:28.800 house burns down, you could like ruin you financially, but 0:01:28.840 --> 0:01:31.560 it doesn't make sense to like save all that money 0:01:31.600 --> 0:01:35.040 in cash and always have that much savings available to 0:01:35.080 --> 0:01:37.200 be able to rebuild your house. And therefore the way 0:01:37.200 --> 0:01:39.679 you solve it by paying a small amount. I wasn't 0:01:39.680 --> 0:01:41.080 pretty like happy. I think she got it. 0:01:41.160 --> 0:01:45.000 I'm glad she's planning for home ownership at your early age. Okay, well, 0:01:45.000 --> 0:01:47.680 now is a really good time to think and appreciate 0:01:47.840 --> 0:01:51.240 insurance because, as you know, we are recording this on 0:01:51.600 --> 0:01:54.680 April eighth. I feel like, do I need to say 0:01:54.680 --> 0:01:57.200 the hour? Maybe I do twelve oh six pm on 0:01:57.320 --> 0:02:00.800 April eighth. It is not entirely clear at the moment 0:02:01.000 --> 0:02:03.840 what is going on in the strait offore moves. We 0:02:03.960 --> 0:02:06.360 don't know if ships are being allowed to pass or not. 0:02:06.560 --> 0:02:09.480 But we do know since the earliest days of this 0:02:09.639 --> 0:02:12.359 entire conflict happening, that one of the issues that's come 0:02:12.440 --> 0:02:16.320 up is war insurance and maritime insurance in general. 0:02:16.520 --> 0:02:18.280 Yeah, and we sort of like touched on it in 0:02:18.320 --> 0:02:21.800 our very first episode that related to the war. But 0:02:21.880 --> 0:02:24.720 of course one major reason why ships haven't been moving 0:02:24.720 --> 0:02:29.200 through is the direct threat being attacked and sinking. But 0:02:29.240 --> 0:02:32.840 then another element is the entire insurance element, and then 0:02:32.840 --> 0:02:36.160 beyond that, like that adds costs to everything and it's 0:02:36.240 --> 0:02:39.800 not you how do you price war insurance? Have no idea, 0:02:39.960 --> 0:02:43.320 So I have many more questions on this topic. 0:02:43.520 --> 0:02:46.440 Yeah, the whole ecosystem of maritime insurance in general. You 0:02:46.480 --> 0:02:50.360 hear these things thrown around, like whole loss protection and 0:02:50.400 --> 0:02:53.640 liability protection, and there's the reinsurers, and then there's the 0:02:53.720 --> 0:02:56.160 normal insurance, and then there are insurance clubs. 0:02:56.200 --> 0:02:56.880 Right there are all these. 0:02:56.840 --> 0:03:00.440 An insurance you belong to the SOHO club. Me I 0:03:00.560 --> 0:03:02.200 blocked to an insurance club, like. 0:03:03.800 --> 0:03:06.600 You kind of have the club jacket thing jacket today 0:03:06.600 --> 0:03:08.520 at the moment, Okay, well, we do, in fact have 0:03:08.600 --> 0:03:10.440 the perfect guests to talk about all of this. 0:03:10.560 --> 0:03:13.000 We're going to be speaking with Dorothea Yanu. 0:03:13.160 --> 0:03:15.800 She is the chief executive officer of the Managers of 0:03:15.840 --> 0:03:18.600 the American P and I Club. So amazing you can 0:03:18.639 --> 0:03:21.880 ask her if you can join as well as well. 0:03:22.120 --> 0:03:24.400 I need like one, I need one member to endorse 0:03:24.440 --> 0:03:26.640 me and another one. That's how it works, all right. 0:03:26.680 --> 0:03:29.200 Well, the second member who could potentially endorse you is 0:03:29.280 --> 0:03:33.000 Steve Oglukian. He is the reinsurance director at the American 0:03:33.080 --> 0:03:35.119 P and I Club. So truly the perfect guest. Thank 0:03:35.120 --> 0:03:36.880 you so much for coming on all thoughts. 0:03:37.400 --> 0:03:39.200 Thank you for having us. Thank you. 0:03:39.240 --> 0:03:41.320 Why don't you go ahead and tell Joe what is 0:03:41.560 --> 0:03:44.119 an insurance club and can he can he be part? 0:03:44.600 --> 0:03:45.320 Okay? Great? 0:03:45.360 --> 0:03:48.480 First of all, I love that you talked about insurance. 0:03:48.760 --> 0:03:54.280 Especially from our perspective. Clubs we're enablers. So what are clubs? Clubs? 0:03:54.880 --> 0:03:55.960 In our context? 0:03:56.000 --> 0:03:58.760 The P and I Club, which means Protection and Indemnity, 0:03:59.600 --> 0:04:05.760 is a collective. It's a not for profit, accessible mutual association. 0:04:06.400 --> 0:04:10.320 It's not a commercial insurer, and it basically, historically is 0:04:10.360 --> 0:04:13.520 a club that brought together ship owners in the industry 0:04:13.760 --> 0:04:16.800 that we're trying to fill a gap. So they came 0:04:16.839 --> 0:04:19.640 from a need for society. And really what clubs do 0:04:19.800 --> 0:04:23.159 is while they ensure the owner, they are protecting society 0:04:23.240 --> 0:04:25.560 because they are ensuring the owner. For what you refer 0:04:25.640 --> 0:04:29.120 to before as liabilities, so that would be like losses 0:04:29.240 --> 0:04:33.040 or damages that they cause to other people, not to themselves. 0:04:33.040 --> 0:04:35.880 So the clubs never pay own damages. We will not 0:04:36.040 --> 0:04:38.520 pay damage that occurs to the vessel in an accident 0:04:38.960 --> 0:04:42.120 or if they have economic loss, their own economic loss. 0:04:42.320 --> 0:04:45.120 So what P and I clubs do is they step 0:04:45.160 --> 0:04:48.080 in and they protect the owner and defend the claims, 0:04:48.240 --> 0:04:50.800 but they ultimately pay whatever is the fair compensation or 0:04:50.800 --> 0:04:54.960 whatever is adjudicated for passengers that perhaps get hurt on 0:04:55.000 --> 0:04:58.040 the ship due to negligence of the ship, claims from 0:04:58.320 --> 0:05:01.800 a crew that might get hurt in an accident. Liability 0:05:01.880 --> 0:05:04.159 is related to collisions, So if the ship hits another 0:05:04.200 --> 0:05:07.440 ship and they cause damage or personal injury to people 0:05:07.640 --> 0:05:10.440 or crew on the other ship, they'll pay that oil pollution, 0:05:10.880 --> 0:05:15.800 environmental damage, so clean up related to that. So basically, 0:05:15.960 --> 0:05:17.840 the way we like to think about P and I 0:05:18.080 --> 0:05:19.680 and you really should think about it like this. 0:05:19.920 --> 0:05:23.120 It's the safety net and it is the only. 0:05:22.920 --> 0:05:26.160 Way that a ship can trade. So for example, let's 0:05:26.160 --> 0:05:28.000 look at what you do with your car. Right, you're 0:05:28.040 --> 0:05:30.640 not allowed on the road if you don't have liability insurance. Right, 0:05:30.960 --> 0:05:33.400 you don't have to have own damages insurance, right, Yeah, 0:05:33.440 --> 0:05:35.880 but you do need to have liability because we need 0:05:35.920 --> 0:05:38.160 to know that all the cars on the road have 0:05:38.279 --> 0:05:41.320 financial security behind them that if something happens and somebody 0:05:41.360 --> 0:05:44.480 else gets hurt, there's a compensation that's going to come 0:05:44.520 --> 0:05:45.839 from somebody that's responsible. 0:05:45.839 --> 0:05:48.120 So that's the concept. Let's say of a P and 0:05:48.160 --> 0:05:48.920 I club. 0:05:49.160 --> 0:05:53.520 And you mentioned that it's structured as a nonprofit. So 0:05:53.560 --> 0:05:56.080 I take it that you're doing this just out of 0:05:56.120 --> 0:05:58.440 the goodness of your heart. No, that's a joke. 0:05:58.640 --> 0:06:01.320 But talk to us about, like, then what's the concept 0:06:01.320 --> 0:06:01.800 behind it? 0:06:01.839 --> 0:06:03.880 Well, so like why is it that? And then who 0:06:03.920 --> 0:06:06.960 is bearing your risk for which they're taking the profit? 0:06:07.040 --> 0:06:08.800 Okay, so let's go a little bit to the history 0:06:08.839 --> 0:06:10.800 of it so you can understand it. So basically, if 0:06:10.800 --> 0:06:12.599 you go back in time, let's say, up until the 0:06:12.600 --> 0:06:15.400 eighteen hundreds, up to a certain point, there was no 0:06:15.640 --> 0:06:18.920 liability for most of your marine liability insurans. As things 0:06:18.920 --> 0:06:21.960 started to change and they started to impose strict liabilities, 0:06:22.120 --> 0:06:25.440 regulatory changes started to happen in various countries, Passenger liabilities 0:06:25.440 --> 0:06:28.360 started to increase, and also the liability started to get 0:06:28.360 --> 0:06:31.200 a lot more volatile. Your regular commercial insurance did not 0:06:31.320 --> 0:06:33.760 want to touch it, they couldn't price it, they didn't 0:06:33.800 --> 0:06:36.360 want to deal with it. And also your classic policy 0:06:36.400 --> 0:06:38.919 would have a limit of the value of the ship, 0:06:39.120 --> 0:06:41.840 and a lot of times liabilities would exceed that. So 0:06:42.080 --> 0:06:44.440 what happened was the shipowners came together to say, well, 0:06:44.680 --> 0:06:47.520 we can't allow like you said before, you know, number one, 0:06:47.560 --> 0:06:50.039 you can't put all of this money aside until the 0:06:50.080 --> 0:06:53.400 time is needed. And you also can't risk becoming financially 0:06:53.400 --> 0:06:56.120 destitute right in the instance that you have a catastrophe. 0:06:56.360 --> 0:06:59.040 So the shipowners came together and said, let's pool our risks. 0:06:59.320 --> 0:07:01.839 So then not for profit element is this. So the 0:07:01.920 --> 0:07:05.360 concept goes to, in principle, we each put a certain 0:07:05.360 --> 0:07:07.760 amount of money into a pool. It's based let's say 0:07:07.760 --> 0:07:09.680 on factors that they agree club members they have to 0:07:09.680 --> 0:07:11.920 be shipowners, by the way, so if you do have 0:07:11.960 --> 0:07:14.080 an ocean going vessel, we could consider making you a 0:07:14.160 --> 0:07:19.800 member to say, so there's a formula or an underwriting 0:07:19.840 --> 0:07:23.840 formula where everybody pays a certain rate per ton, okay, 0:07:24.080 --> 0:07:26.400 And then dating back from the beginning of time when 0:07:26.400 --> 0:07:29.920 they started this, if all of the losses were less 0:07:30.360 --> 0:07:33.760 than the amount that they had put aside into the pool. 0:07:34.040 --> 0:07:36.560 Then they could either have it returned or they could 0:07:36.600 --> 0:07:38.640 save it for the next year and pay less the 0:07:38.720 --> 0:07:41.720 next year, and each year there would be a reconciliation. 0:07:42.200 --> 0:07:45.080 But if the losses were more, they each had to 0:07:45.120 --> 0:07:48.320 put in you know, pro rata based on their tonnage 0:07:48.320 --> 0:07:51.240 and based on the formula. So that's the concept of 0:07:51.400 --> 0:07:54.520 not profit now. Of course, back then regulation wasn't the 0:07:54.520 --> 0:07:56.720 way it is today. So now you're not allowed to 0:07:56.760 --> 0:07:58.920 just keep enough to pay your losses. So now there's 0:07:59.000 --> 0:08:01.400 regulatory requirements. So now the not for profit is kind 0:08:01.400 --> 0:08:04.440 of increased to you need to be healthy not for profit, 0:08:04.680 --> 0:08:07.960 so you have to meet certain solvency ratios under regulation. 0:08:08.440 --> 0:08:10.760 So that's the concept. So I don't know if you 0:08:10.760 --> 0:08:11.480 wanted to add anything. 0:08:12.080 --> 0:08:15.920 Ultimately, it's providing at cost insurance for the members of 0:08:15.960 --> 0:08:17.600 the club. So like you said, you want to join 0:08:17.640 --> 0:08:20.280 the club. If the four of us have vessels and 0:08:20.320 --> 0:08:22.080 we want to form our own P and I club, 0:08:23.040 --> 0:08:25.400 you could theoretically do that, pull our money together, as 0:08:25.440 --> 0:08:27.880 Dorothea said, and say hopefully it's enough. 0:08:27.760 --> 0:08:28.920 To meet the claims for the year. 0:08:29.240 --> 0:08:31.960 If not, we're fine putting in more but it's better 0:08:32.000 --> 0:08:34.560 than going through commercial underwriter who's going to charge double 0:08:34.600 --> 0:08:37.040 that because they need to make a profit and they 0:08:37.040 --> 0:08:38.000 don't want to take a loss. 0:08:38.160 --> 0:08:39.520 So it's kind of like self insurance. 0:08:40.160 --> 0:08:43.080 Right, So it's kind of like self insurance. 0:08:43.080 --> 0:08:45.400 You might think of something that exists at the firm level, 0:08:45.600 --> 0:08:48.119 and this is self insurance kind of at the industry level. 0:08:47.960 --> 0:08:49.720 Right, exactly, right, exactly. 0:08:49.880 --> 0:08:51.920 So one of the things that comes up immediately if 0:08:51.960 --> 0:08:54.480 you type in American P and I Club into Google 0:08:54.640 --> 0:08:58.960 is it says it's the only americanan club. There are 0:08:58.960 --> 0:09:02.040 a bunch apparently in London. And actually I would like 0:09:02.080 --> 0:09:05.040 to talk about how London became like a big insurance 0:09:05.080 --> 0:09:07.640 capital in general, but why is there only one American 0:09:07.800 --> 0:09:08.480 insurance club. 0:09:08.559 --> 0:09:10.160 Okay, well then we'd have to go back and talk 0:09:10.200 --> 0:09:12.800 about how the American club was born, right, So yeah, 0:09:12.800 --> 0:09:17.440 So historically the origins of organized insurance really are into 0:09:17.480 --> 0:09:20.720 the financial center of the London market actually started I 0:09:20.720 --> 0:09:23.920 think with REMIAMEI st with some brokers in a coffee 0:09:23.920 --> 0:09:27.679 shop in London that you know, started to decide well, 0:09:27.920 --> 0:09:30.520 you know, we actually it's the same concept of how 0:09:30.600 --> 0:09:33.280 the clubs developed, but at the more fundamental level of 0:09:33.440 --> 0:09:35.800 the basic well, we don't want to risk losing the 0:09:35.840 --> 0:09:39.880 cargo or the ship en route. So you know, underwriters 0:09:39.880 --> 0:09:42.600 were kind of born through that process, but the American 0:09:42.640 --> 0:09:45.479 club actually was born much later. So the American operators 0:09:45.600 --> 0:09:51.560 historically were insuring with the London clubs. And then nineteen sixteen, 0:09:52.240 --> 0:09:54.800 the Americans were not in World War One yet, right, 0:09:54.920 --> 0:09:58.040 the UK was, So the UK at that time passed 0:09:58.040 --> 0:10:01.200 what was called the UK Trading with the Enem Act, 0:10:01.240 --> 0:10:04.040 which basically says, you know, if you are, you know, 0:10:04.960 --> 0:10:07.679 trading with my enemy, then you're my enemy. And at 0:10:07.679 --> 0:10:10.079 that time the United States was not in certain American 0:10:10.120 --> 0:10:12.880 operators were still involved in certain types of trades, and 0:10:13.000 --> 0:10:17.280 the UK then this act prohibited a lot of American 0:10:17.280 --> 0:10:20.360 operators from continuing to have their insurance with the UK 0:10:20.720 --> 0:10:21.680 clubs at that time. 0:10:21.920 --> 0:10:23.559 So back then, I. 0:10:23.480 --> 0:10:26.240 Think was the largest US broker, Johnson and Higgins, I 0:10:26.240 --> 0:10:30.280 think at that time came together with shipowners, industry, lawyers, 0:10:30.360 --> 0:10:33.720 and lobbyists and legislators and realized that they were going 0:10:33.760 --> 0:10:36.319 to have to create something in the United States. And 0:10:36.360 --> 0:10:39.600 I think that this it's very interesting how it's kind 0:10:39.600 --> 0:10:41.160 of very timely of what's going on in the United 0:10:41.160 --> 0:10:43.680 States right now, because we're seeing that, you know, in 0:10:43.760 --> 0:10:45.839 terms of our peers, in terms of other countries, even 0:10:45.880 --> 0:10:48.640 our allies or even non allies, we've kind of fallen 0:10:48.640 --> 0:10:51.520 behind on the maritime side, right so in the industry, 0:10:51.679 --> 0:10:54.160 like we used to be the number one maritime nation 0:10:54.320 --> 0:10:57.120 in the world, and now we're definitely not. And so 0:10:57.440 --> 0:11:00.439 they came together and they surveyed the American opers to 0:11:00.480 --> 0:11:02.920 see would you be interested and would you join an 0:11:02.960 --> 0:11:05.240 American P and I club that would fundamentally work the 0:11:05.280 --> 0:11:08.160 way the London clubs would already work. And they got 0:11:08.200 --> 0:11:10.320 a lot of favorable response, and then within the year 0:11:10.360 --> 0:11:14.320 they had enabling legislation in New York State which created 0:11:14.360 --> 0:11:16.800 the structure because it didn't exist before that and needed 0:11:16.840 --> 0:11:21.960 to have a regulatory structure. And on February twentieth, February fourteen, 0:11:22.120 --> 0:11:26.199 sorry Valentine's Day, nineteen seventeen, the American Club was born. 0:11:26.480 --> 0:11:28.440 And since then it's not an easy thing to put 0:11:28.480 --> 0:11:30.720 together a club, you know, because you have you start 0:11:30.800 --> 0:11:34.920 from scratch, really, and so since then we have been 0:11:35.120 --> 0:11:38.320 the only club, and we've brought we've taken the United 0:11:38.360 --> 0:11:41.959 States through two World wars since then, but also been 0:11:41.960 --> 0:11:43.880 a part of this whole ebb and flow of the 0:11:43.920 --> 0:11:45.720 American maritime industry. 0:11:46.280 --> 0:11:47.320 Yeah, and I was gonna. 0:11:47.080 --> 0:11:49.960 Say, that doesn't mean that our members are only American now, 0:11:50.080 --> 0:11:51.320 so historically. 0:11:51.120 --> 0:11:53.800 Explain this, Yeah, so explain why that it's just. 0:11:53.760 --> 0:11:55.200 The name now is the American Club. 0:11:55.400 --> 0:11:57.440 Then you have the Swedish Club, you have the London Club, 0:11:57.480 --> 0:11:58.439 you have the japan Club. 0:11:58.520 --> 0:11:59.880 But there were members who are. 0:12:00.080 --> 0:12:02.880 Global, global, all over the world, right, So I would 0:12:02.920 --> 0:12:07.000 say maybe thirty years ago we were probably eighty percent, 0:12:07.080 --> 0:12:07.800 maybe even more. 0:12:08.080 --> 0:12:11.240 Yeah, in the base member the nineties we went more 0:12:11.280 --> 0:12:12.640 of a global station effort. 0:12:12.679 --> 0:12:13.320 In the nineties. 0:12:13.679 --> 0:12:16.720 How do ship owners decide which club to be a 0:12:16.760 --> 0:12:17.160 member of? 0:12:18.480 --> 0:12:21.240 A lot of it's service oriented again, who you know, right? 0:12:21.240 --> 0:12:22.840 Do you have a friend who owns a ship and 0:12:22.840 --> 0:12:24.880 he's I'm with the American Club, I'm with this club, 0:12:25.240 --> 0:12:29.360 have a great experience with them, close with the tam handlers, underwriters. 0:12:29.640 --> 0:12:31.640 If I need something, they pick up the phone, I 0:12:31.679 --> 0:12:34.240 can talk to them. I'll make the introduction. So it 0:12:34.280 --> 0:12:36.480 could be as simple as that, or some people just 0:12:36.480 --> 0:12:38.120 go on Google and say I need to join I 0:12:38.160 --> 0:12:40.480 need P and I insurance. Where could I go and 0:12:40.480 --> 0:12:42.040 maybe if they're American, they see American. 0:12:42.200 --> 0:12:45.400 And is there like a maritime insurance comparison site where 0:12:45.400 --> 0:12:47.400 you get all the different rates or something like that. 0:12:48.720 --> 0:12:51.959 Yeah. No, But there is an international group of B 0:12:52.040 --> 0:12:52.640 and I clubs. 0:12:52.760 --> 0:12:55.520 I don't know, Steve, if you want to talk about that, 0:12:55.640 --> 0:12:56.320 how that works. 0:12:56.360 --> 0:13:01.720 So there's collectively now there's twelve international group clubs known 0:13:01.720 --> 0:13:04.720 as the International Group of P and I Clubs. Collectively 0:13:04.760 --> 0:13:08.200 we ensure ninety percent of ocean going tonnage. So being 0:13:08.240 --> 0:13:13.160 a member of one of those clubs it effectively the 0:13:13.200 --> 0:13:14.600 same way the clubs work together. 0:13:14.679 --> 0:13:17.359 They pool risks. The group works. 0:13:17.080 --> 0:13:19.000 Together in the same way. So being a member of 0:13:19.080 --> 0:13:22.080 the International group it allows you. And there's a few 0:13:22.120 --> 0:13:25.840 core functions of the IG. As the reinsurance director selfishly, 0:13:25.880 --> 0:13:29.440 I'll say the most important is the reinsurance purchasing power 0:13:29.520 --> 0:13:33.200 that the group clubs have. So collectively, the twelve clubs 0:13:33.240 --> 0:13:37.480 come together every year and they purchase policies. I think 0:13:37.480 --> 0:13:41.760 it's the largest reinsurance policy in the world. There's roughly 0:13:41.840 --> 0:13:45.720 eighty five separate reinsurers on this various points of the world, 0:13:45.960 --> 0:13:48.680 and we ensure risks up to what we provide cover 0:13:49.559 --> 0:13:53.040 about for about eight billion dollars per incident, but we 0:13:53.080 --> 0:13:56.920 buy reinsurance collectively with the other clubs up to three billion, 0:13:57.559 --> 0:14:00.439 so it's fairly unique because they are competitors of ours. 0:14:00.480 --> 0:14:03.040 But together we realize the best thing for an individual 0:14:03.080 --> 0:14:07.000 shipowner is to have this group purchasing power and allows 0:14:07.040 --> 0:14:10.520 us to buy high levels of reinsurance. It's pretty pretty 0:14:10.559 --> 0:14:11.360 an expensive cost. 0:14:11.559 --> 0:14:14.679 It's so interesting because I guess, like insurance per se, 0:14:15.360 --> 0:14:17.080 it's all about pooling right. 0:14:20.160 --> 0:14:20.360 Risk. 0:14:21.360 --> 0:14:24.320 So I certainly want to get more soon to like 0:14:24.440 --> 0:14:26.400 the sort of the role of this P and I 0:14:26.560 --> 0:14:29.960 insurance within the context of the war right now and 0:14:30.000 --> 0:14:33.800 so forth. But one quick question. I have you mentioned 0:14:33.840 --> 0:14:39.080 that entities contribute based on their tonnage? And you know 0:14:39.200 --> 0:14:41.920 when I when you use the driving insurance analogy to 0:14:42.000 --> 0:14:45.000 talk about liability, you know there are various factors that 0:14:45.080 --> 0:14:47.320 go into how much, how old are you if you 0:14:47.400 --> 0:14:51.480 take a defensive driving, how many tickets you've gotten, et cetera. 0:14:52.680 --> 0:14:56.960 Why is tonnage, which is not a metric that would 0:14:57.240 --> 0:15:01.000 suggest risk to others in my mind, an important proxy. 0:15:01.240 --> 0:15:03.440 No, it's not that it's not a risk factor. 0:15:03.680 --> 0:15:07.760 It is how we multiply the rate is per ton, 0:15:07.880 --> 0:15:10.280 but the rate per ton comes from all of those 0:15:10.360 --> 0:15:10.920 risk factors. 0:15:10.920 --> 0:15:12.400 I don't know if Steve you get it. 0:15:12.480 --> 0:15:14.880 Yeah, so what might be one dollar a ton, somebody 0:15:14.920 --> 0:15:16.440 else to pay two dollars a ton, so we may 0:15:16.480 --> 0:15:17.360 five dollars a ton. 0:15:17.560 --> 0:15:20.360 Oh so it's not that there's like a fixed prote 0:15:20.560 --> 0:15:25.040 no talk about I mean of got it? 0:15:25.400 --> 0:15:28.320 Not all tonnage is yes, exactly right. 0:15:28.400 --> 0:15:32.160 So if you have a small barge, since that doesn't 0:15:32.200 --> 0:15:34.960 have any crew, it's just carrying coal up and down 0:15:34.960 --> 0:15:38.920 a river, versus a large cruise ship. We have multiple 0:15:38.920 --> 0:15:42.240 crew members and passengers on there. You know that one ton, 0:15:42.480 --> 0:15:44.760 if you will, on each vessel is not the same. 0:15:44.880 --> 0:15:47.560 So they're gonna get you it priced differently different. Okay, 0:15:47.560 --> 0:15:49.280 it's just really about it's not. 0:15:49.280 --> 0:15:52.880 About it's just a measuring tool. Yeah, it's just a 0:15:52.920 --> 0:15:56.040 measuring tool. But like let's say you have the same sect, 0:15:56.160 --> 0:15:58.800 you have the same type of ship, a lot of 0:15:58.840 --> 0:16:01.680 the same factors. The smaller ship's going to pay less 0:16:01.720 --> 0:16:04.200 than the larger ship simply because of the tonnage. Let's say, 0:16:04.200 --> 0:16:06.720 so they might both be charged at five dollars a ton, 0:16:06.760 --> 0:16:10.520 for example, but because also that is also a factor 0:16:10.960 --> 0:16:13.720 in assessing limitation of liability. 0:16:13.880 --> 0:16:19.360 Do the clubs play a role in like ensuring training 0:16:19.400 --> 0:16:21.680 of the crew and things like that that would be 0:16:21.800 --> 0:16:23.480 proxies for safety. 0:16:23.680 --> 0:16:26.800 Well, this is going to be my question because one 0:16:26.800 --> 0:16:29.760 of the other reasons we appreciate insurance here is because 0:16:29.840 --> 0:16:34.040 like they're arbiters of behavior, right, and especially at a 0:16:34.080 --> 0:16:36.720 time when a lot of governments seem to be, you know, 0:16:36.720 --> 0:16:39.280 stepping back from certain markets. It's often like the private 0:16:39.280 --> 0:16:41.280 insurers who are saying, like, this is what you need 0:16:41.320 --> 0:16:43.840 to do in order to get insurance. What are the 0:16:43.920 --> 0:16:47.760 requirements for ship owners in order to be eligible for 0:16:47.880 --> 0:16:48.600 club membership? 0:16:48.640 --> 0:16:50.080 Great? Great, that's a great question. 0:16:50.160 --> 0:16:53.640 So one, there are a lot of requirements, and yes, 0:16:53.720 --> 0:16:56.400 loss prevention is a big thing, and that also differentiates 0:16:56.480 --> 0:16:58.760 us from commercial andre As you go to the website, 0:16:58.800 --> 0:17:00.760 you'll see whole section and loss prevention. 0:17:01.360 --> 0:17:04.160 So we do look at the quality of the operation. 0:17:04.240 --> 0:17:06.399 We do look at the experience of the people that 0:17:06.480 --> 0:17:10.760 are running the management. There are warranties as well, so 0:17:11.119 --> 0:17:13.879 number one, you have to be of a technical level 0:17:13.960 --> 0:17:16.760 in terms of quality. So that we're going to get 0:17:16.800 --> 0:17:19.080 a little bit complicated here, but okay, so ships are 0:17:19.119 --> 0:17:22.280 also subjects to other requirements independent of the club, and 0:17:22.359 --> 0:17:26.000 that's subject to the requirements of their classification society. So 0:17:26.040 --> 0:17:29.880 the classification society are like the surveyors, the technical arbiters. 0:17:29.920 --> 0:17:32.080 Let's say that comments and make sure that the ship 0:17:32.320 --> 0:17:36.080 is of certain quality technically, so you have to be 0:17:36.200 --> 0:17:38.560 in we call it in class is what we call it. 0:17:38.640 --> 0:17:41.160 That's definitely a requirement. And then of course we also 0:17:41.240 --> 0:17:45.600 require that you are conducting only legal trade, so that 0:17:45.760 --> 0:17:48.040 is another aspect of that. I will hand it over 0:17:48.040 --> 0:17:49.880 to Steve to add other aspects. 0:17:49.920 --> 0:17:51.879 On the underwriting side, the main I. 0:17:51.880 --> 0:17:54.720 Mean, we do management audits as well, obviously, so we 0:17:54.840 --> 0:17:58.080 bring because sometimes it's a startup, right, which is tough 0:17:58.080 --> 0:18:01.800 because there's no history there to see where they've been. Ideally, 0:18:01.840 --> 0:18:04.960 as an underwriter, you're looking at a client who's been 0:18:05.000 --> 0:18:07.439 with another club and is looking to switch. So they 0:18:07.480 --> 0:18:10.200 come over, you see a loss record, you have a pattern, 0:18:10.359 --> 0:18:12.840 you know where they're operating, what they're doing. When it's 0:18:12.840 --> 0:18:15.800 a startup, it's a bit more difficult than that. Where 0:18:16.280 --> 0:18:19.400 will go out And again sometimes it could just be proactively, 0:18:19.800 --> 0:18:22.080 we haven't met this member, Let's see them in person, 0:18:22.119 --> 0:18:22.679 what they're up to. 0:18:22.840 --> 0:18:25.880 Get on their ships with other condition surveys. 0:18:25.920 --> 0:18:27.920 Yeah, from that perspective, quite often we would do a 0:18:27.960 --> 0:18:28.719 conditioned survey. 0:18:29.040 --> 0:18:30.760 So we would do in that case like a pre 0:18:30.920 --> 0:18:34.119 entry condition survey where if the vessel is older than 0:18:34.160 --> 0:18:36.240 ten years of age, we'll say we need to see 0:18:36.240 --> 0:18:37.840 it even though it's in class. 0:18:37.920 --> 0:18:39.440 We just want to make sure that from a P and. 0:18:39.359 --> 0:18:41.679 I perspective requirements that there's certain. 0:18:41.440 --> 0:18:44.240 Things that check all the boxes to come into the club. 0:18:44.480 --> 0:18:48.080 Wait, what actually constitutes risky behavior on the part of 0:18:48.080 --> 0:18:51.160 a ship, because again, if we go to the driving analogy, 0:18:51.240 --> 0:18:54.320 like okay, speeding is bad, that would be risky. Driving 0:18:54.359 --> 0:18:55.680 drunk would be very bad. 0:18:56.440 --> 0:18:57.680 What's equivalent. 0:18:58.960 --> 0:19:01.320 Well, no, other thing that we look at is the 0:19:01.400 --> 0:19:03.960 history and the claims record, right, so we would see 0:19:04.000 --> 0:19:05.959 the incidents and the types of incidents. So if we 0:19:06.000 --> 0:19:09.159