Press article: Singapore War Risks Mutual takes off
20 April 2015
New operation adds yet another feather in the cap for Singapore as it aims to offer a full range of insurance options.
The recently launched Singapore War Risks Mutual (SWRM) is an initiative of the Singapore Shipping Association (SSA) but in insurance terms is an offshoot of the Standard Club, a leading protection-and-indemnity (P&I) underwriter.
Singapore thus now joins other major maritime nations such as Greece, Norway and Japan in having its own dedicated war-risks facility.
David Roberts, managing director of Charles Taylor Mutual Management (Asia), which acts as manager of Standard Club Asia, explained: “Setting up the SWRM was a strategic decision designed to give Singapore more control over how risk is managed. The SSA wanted to partner with a local entity to get this off the ground, which made Standard Asia the obvious choice as it is the only club incorporated in Singapore".
A decade ago, the dominant London war-risks market designated the Strait of Malacca an excluded area under annual war-risks policies, causing concern that the additional premiums payable might damage the competitive position of Singapore.
The new mutual, launched in February, will have a high degree of autonomy. While it is currently following the additional premium areas set by London’s Joint War Committee, if an intensification of pirate attacks led to the Strait of Malacca being again listed as a higher risk area, it may take a different line.
Cover is available to SSA members, regardless of the flag of their vessels, as well as owners of ships registered in Singapore. There is no need to enter an entire fleet, nor a requirement that vessels have P&I cover from The Standard Club.
The SWRM will offer hull war-risks cover up to the insured value of the ship, with excess war-risks P&I cover of up to $550m, along with add-ons such as loss of hire.
Dedicated team on hand
Premiums are said to be competitive but Roberts stresses that the main attraction for Singaporean owners is that it is a national facility with a dedicated team in the city to facilitate real-time advice, services and claims handling. “Customers don’t need to wait for London to wake up,” he said.
SWRM’s premiums will be held in Singapore, with a local insurance fund to be built up by the new venture. At present it is backed by Standard Asia but 100% reinsured out.
“As funds accumulate we will be able to offer more competitive rates, which has been our commitment”, Roberts said.
He describes war-risks insurance as currently a very soft market thanks to the near eradication of piracy off the coast of Somalia, which he says was accomplished through the use of armed guards onboard ships.
“This decline in Somali piracy is the main reason why rates have fallen off. Piracy in the Gulf of Guinea is increasing but, as it mostly involves cargo theft, it is not as heavy duty as Somalia,” he said.
While Roberts does not reveal exact figures, he claims he is pleased with the amount of interest and take-up that SWRM has attracted since it was first launched.
Standard Club Asia insures the mutual’s Asia-Pacific members and has a separate shipowner board, headed by Teo Siong Seng of Pacific International Lines (PIL), with other leading members, such as Pacific Basin, Valles Steamship and Harinsuit Transportation, also represented.
The SWRM will operate as a class of Standard Club Asia but with its own committee.
As well as a shipping hub and major port, Singapore is becoming an important insurance centre. Eighteen Lloyd’s syndicates have outposts in the city state, with most writing hull and war-risks cover and two-thirds also involved in marine liabilities and port cover.
There are also notable independent underwriters present, such as Asia Capital Re.
This article is reproduced with kind permission of Tradewinds. The article was published in the 17 April edition, available here on the Tradewinds website.