Issue 17 - May 1996

International House,
26 Creechurch Lane
London EC3A 5BA,
Telephone: 0171 283-4646
Fax: 0171 283-5614

UK CLUB UNDERGOES A REFIT FOR NEXT MILLENNIUM

by Herry Lawford

Since the publication of the first ever survey of Members in 1993, the UK Club has greatly improved the level of service it offers Shipowners. The UK Club carried out the first ever survey of Members in the Autumn of 1992 and published the results in July 1993. The lessons learnt from the survey have guided the Club in improving the service to Members in the three years since, and have resulted in the largest number of changes and improvements being made in the Club's 125 year history.

In 1992, 77% of the Membership expressed themselves as 'satisfied' with the service they received from the Club, and 15% as 'very satisfied'. Areas in which the responses indicated lower levels of satisfaction have since then been addressed in a number of ways.

CLAIMS HANDLING:	Claims handling, and advisory services have been made more efficient with more personnel to improve the staff to tonnage ratio and speeds of response; a reorganisation of the claims handling syndicates, and the creation of the P&I Claims Team (PICT) to provide advice to syndicates on the most difficult and expensive claims.
TRAINING:	Training too has been in the spotlight: there is a new emphasis on practical experience through visits to ports and ships and extended stays in owners' offices. A secretarial training programme has also been introduced to improve secretarial support and the Club now uses a late shift of typists to clear any backlog of work overnight.
CONTACTING THE CLUB:	Contact with the Club is now much easier. Claims handling staff are now available from 08.00 to 18.30 daily and the Club uses direct dial telephones, individual fax machines for each syndicate and mobile telephones for out of hours contact. The Club has also created a more efficient 'open-plan' office layout to allow greater team working, and has established a business information centre giving claims handlers and underwriters access to all internal and many external databases for their research.
INCREASED REPORTS:	The Club has focused more closely on loss prevention and published a number of loss prevention videos such as 'Cargo Matters', Ship Inspection reports and the Manning Report (The Human Factor).
AIDE FOR CORRES- PONDENTS:	Following an audit of correspondents, the Club has placed greater emphasis on their training and produced the Correspondents' Guide (the first ever comprehensive guide to claims handling for Club correspondents).
NEW OFFICES:	There is now greater local support for Members. There are new managers' offices in Hong Kong, Greece and Sydney and regular seminars and workshops are held for Members in their own areas. Important changes in America are reported on page 5.
NEW TECHNOLOGY	Some service improvements supported by the Board have not yet been brought into effect. A far reaching project computerising the Club's claims handling system will go on trial at the end of this year. This imaging and work-flow system will improve efficiency and will allow swifter and more accurate handling of routine claims. Also not yet fully visible to the Members are the Club's advances in information technology. Some 25 key correspondents in the major ports of the world are now linked to the Club through e-mail and Lotus Notes, and increasing numbers of them are providing monthly reports on their regions, covering trade, commodities, law, loss prevention and port and geographic information. These reports, together with the valuable store of information drawn from the Club's own files, is being fed into a database called the Miller Encyclopaedia, access to which will be offered to all Members who can support an electronic connection and Lotus Notes software. In addition, a simple faxback system has been developed to provide Members with standard Club information, circulars and publications by dial-up. The same IT advances and the use of Lotus Notes now allows an increasing number of Members to have immediate access to their claims records. Increasingly, the information available from the Club will be accessible electronically 24 hours a day and will be provided by different means to suit the Members, including here on the Internet. The 1996 Member Survey will be carried out, as before, by Research International. Questionnaires will be sent out in the second week of June and the survey findings presented to the Board at their meeting in October. They will be published to the Members shortly thereafter.

UK CLUB's FUNDS and RESERVES

The Board recently approved the accounts for the year ended 20th February 1996, which will be presented at the Annual General Meeting in October.

Investment income of $116 million last year has provided a further boost to the Club's funds. Net of any allowance for future supplementary calls, the Club's funds now stand at just over $1.1 billion.

This compares with estimated and forecast claims of $921 million (without any discount for future investment income) and adds further strength to the Club's free reserves. The free reserves are now at the top of the Board's target range.

The Club is well placed, not only to deal with any increase in claims levels, but also to comfortably satisfy the increasingly stringent solvency requirements imposed on mutual insurers by insurance regulators

1992 PROTOCOLS TO CLC AND FUND CONVENTIONS

Starting from 30th May 1996, the 1992 Protocols to the 1969 Civil Liability Convention and 1971 Fund Convention enter into force in a number of countries.

Schedule for entry into force of the 1992 CLC & FC Protocols
30 May 1996	Denmark Egypt (CLC only) France Germany Japan Mexico Norway Oman Sweden United Kingdom
6 Jul 1996	Spain (CLC only*)
5 Oct 1996	Liberia
9 Oct 1996	Australia Greece
16 Oct 1996	Marshall Islands
24 Nov 1996	Finland

* In Spain, the Fund Protocol will not enter into force until 18 months after the total quantity of contributing oil has reached 750 million tonnes.

Members whose ships require CLC certificates have already received details of when to apply for new CLC certificates covering the 1992 CLC levels of liability using the new 'hybrid' blue card from the Association.

1992 CLC certificates will be issued by those flag States which are parties to the 1992 Protocol and will be required in 1992 Protocol countries for ships carrying more than 2,000 tons of persistent oil in bulk as cargo. However, with the exception of Japan where all tankers must have 1992 CLC certificates, ships registered in 1969 CLC States need only have on board their usual 1969 CLC certificates when trading to 1992 CLC States, at least until the 1969 Convention is denounced.

The major impact of the new Protocols is the increase in the level of the limit of the shipowner's liability under the 1992 CLC and the increase in the amount of compensation available from the 1992 Fund. These increases are illustrated in graphs 1 to 3 opposite. (not available in this form- sorry for the inconvienence)

The application of these new limits to incidents occurring in 1992 Protocol States is complicated by the transitional arrangements laid down in the Protocols. The relevant factor in determining which limit should apply is the status of the country where the incident occurs.

However, if in addition to being a party to 1992 CLC, that country also continues to be a party to the original 1969 CLC (and this will be the case until the 1969 Convention is denounced) then the liability in that country of ships flying the flag of a 1969 CLC State which has not brought the 1992 Protocol into force, will continue to be determined by the 1969 CLC.

Thus, for instance, a Panamanian flag tanker having a pollution incident in the United Kingdom will still be able to limit liability to the 1969 CLC level. The 1971 Fund is then available to pay compensation up to the 1971 Fund maximum of SDR 60 million, and only if that is insufficient to compensate all the damage will the 1992 Fund become involved and pay further compensation, so as to make the maximum available for the incident up to a total of SDR 135 million.

Even where both the flag State and the State where the incident occurs are parties to the 1992 Protocols, the application of the new limits has to take into account the prior Conventions while they remain in force. Compensation is paid in such a case on a layered basis, starting with the shipowner's 1969 CLC liability, with the amount available from the 1971 Fund being interposed between the 1969 CLC limit and the shipownerOs further liability under the 1992 CLC (as shown in graph 2).

The shipowner is only liable under the 1992 CLC if the pollution damage exceeds the 1971 Fund maximum. In that event, the shipowner will have to pay additional compensation up to a limit of the difference between his 1992 CLC limit and his limit under the 1969 CLC which has already been paid. The 1992 Fund only becomes liable to pay if claims are still unsatisfied, the maximum payable by the 1992 Fund being the difference between the 1992 Fund maximum of SDR 135 million and the total compensation paid by the shipowner under the 1969 and 1992 CLC plus that paid by the 1971 Fund.

These are the two most likely ways in which the transitional arrangements will apply but other situations are theoretically also possible. The 1992 Protocols can also apply in situations outside the scope of the 1969 CLC. The most common of these is likely to be a bunker spill from a tanker in ballast, which will be covered by the 1992 CLC. Similarly, the costs of threat removal measures, even when no oil is actually spilled, can also be recovered under the 1992 CLC. The entry into force of the 1992 Protocols is now expected to take place in many more States, particularly those already party to the 1971 Fund Convention, and it may be that these complicated transitional arrangements will not last for very long.

In any event, a State which is a party to the 1971 and 1992 Funds will have ensured that there is at least SDR 135 million available to compensate pollution damage in its waters, even though the way in which that compensation is shared between shipowner and Fund may differ from case to case. The availability of this extra compensation should relieve some of the pressure imposed on the 1969 and 1971 Conventions system in recent incidents where the fear that claims might exceed the limit has resulted in the need to make, initially, only partial payments of settlements.

"The major impact of the new Protocols is the increase in the level of the limit of the shipownerOs liability under the 1992 CLC and the increase in the amount of compensation available from the fund." - Luke Readman

POSIDONIA '96

With visitors that included royalty, a Prime Minister, Greek and foreign ministers, ambassadors, municipal mayors and leaders of the world shipping industry, the place to be in the first week of June was Posidonia '96. As well as the shipping world's 'glitterati', the event was attended by many thousands of other delegates, mingling amongst the 1,400 stands, catching up on the latest developments and sharing views on the issues that are affecting the industry in the mid-1990s.

Mr Cosmas Sfiriou, the Greek Minister of Mercantile Marine, greeted by Terence Coghlin at the Miller stand.

Although the atmosphere at Posidonia is a very warm and relaxed one, it is an extremely important event for many shipping organisations. For the UK Club, it is an opportunity to meet clients, friends and, of course, Members - both from Greece itself and from the wider international community. Given the large number of Members present, the Club always takes a keen interest in main-taining the high design standard of the exhibition stands, which prompted praise from Cosmas Sfiriou, the Greek Minister of Mercantile Marine, who conducted the opening ceremony on 3rd June.

Classification was very much in focus. The American Bureau of Shipping, Det Norske Veritas and Lloyds Register of Shipping all held presentations on the subject, with senior delegates discussing developments in classification at each event.

Posidonia also gets bigger every time. This year, some 110 journalists attended, along with 10,000 international vistors and innumerable local delegates; 64 countries in all were represented, 21 of them mounting national stands. All these figures are records, making Posidonia '96 the biggest ever.

UK CLUB TAKES A STAND ON MARITIME EXCELLENCE

Loss prevention will be the central theme of the Club's presence at the Maritime Excellence exhibition in June.

To support the Nautical Institute in celebrating its Silver Jubilee, the UK P&I Club will be represented by a stand at the 'Maritime Excellence' exhibition. This will take place at London's Baltic Exchange on 26th and 27th June.

Baltic Exchange, London

The UK Club's theme will focus on loss prevention and the stand will include a TV monitor featuring the Club's latest loss prevention videos. In addition, there will be the opportunity for our guests to have 'hands-on' experience of an interactive display of new IT applications recently developed by the Club. Pamphlets and other literature explaining the services of the Club will be freely available and visitors to the stand will be offered appropriate refreshments!

Some 26 organisations will represent the wide spread of expertise available to the shipping industry in London, including shipbroking, classification, training, safety, insurance, banking, ship agency and port works.

The exhibition features two major seminars on 'Improving Management Performance in Shipping' and 'Formal Safety Assessments in Shipping'.

Nigel Carden, who heads the Club's loss prevention team, explains, "We are very pleased to support the Nautical Institute in its Silver Jubilee year. We have great respect for the Institute and have worked closely with them in recent years to improve technical and safety standards in shipping, sponsoring three books published by them on commercial awareness in shipping. The last of these, Commercial Management for Shipmasters is due for publication later this year.

The Baltic Exchange, London

BEIJING AND HONG KONG PLAY HOST TO UK CLUB BOARD

The UK Club covers an increasing amount of merchant shipping in the Asia Pacific region. Its choice as venue for the Directors' meeting reflects its growing importance.

This was the Club's first meeting in China and the first one attended by Mr Chen Zhong Biao, the Chairman of China Ocean Shipping Company (COSCO) and a Director of the Club. Not surprisingly, every opportunity was taken to celebrate these two events, including a reception hosted by Mr Chen and the China Ocean Shipping Company.

The directors' meeting was followed by a very well attended seminar in Beijing where members' representatives had the opportunity to talk to the Chairman and the Directors about the Club's long term strategy, both in the region and worldwide. Of particular interest were the steps being taken to strengthen the Club's presence in Hong Kong.

The Club's managers and some of the Club's senior directors then travelled to Hong Kong to host a seminar for the local shipping community. The seminar was well attended by almost 200 representatives of owners, charterers and brokers.

The UK Club already provides cover for around 20 million tonnes of merchant shipping in the Asia Pacific and South-East Asia region and recognises that growth in shipping activity - trade volumes, new buildings, fleet expansions, etc - is increasing at a greater rate in this region than in any other part of the world.

Deck: Nils-Gustaf Palmgren addresses the Beijing delegates, backed by (from left to right) Stephen James, Herry Lawford and Hugo Wynn-Williams Left: Xu Zunwu (left) and Yang Schicheng (right) of COSCO meet Nils-Gustaf Palmgren Millers in America

THOMAS MILLER (AMERICAS) INC.

• Thomas Miller (New Jersey) Inc.
• Thomas Miller (Houston) Inc.
• Thomas Miller (Miami) Inc.
• Thomas Miller (San Francisco) Inc.

Another Miller partner, Tom Bradshaw, has been appointed President and CEO. Additional P&I and Defence claims expertise to develop the service from the syndicate is being provided by Hugh Bishop, temporarily seconded from London. John Devine, who has successfully established the Houston office and has particular expertise in oil pollution matters, returns to New Jersey to lead the syndicate, while marketing responsibility for developing the Clubs' membership in the Americas is taken by Mike Jarrett, formerly a London syndicate manager, but now a permanent member of the Miller Americas team.

Announcing the new company, David Martowski stresses that this is not just a name change. The consolidation and staff reinforcement will further strengthen the service provided by Millers to the UK P&I and Defence Clubs and the TT Club; the considerable degree of overlapping expertise will enhance the value to all Members. And, most importantly, the use of the Miller name is evidence of the uniformity of high quality service which Millers is committed to delivering to the Clubs through all its offices.

REX PALMER BIDS FAREWELL TO THE CLUB

After more than thirty years with the UK P&I Club, Rex Palmer, one of the industry's leading advocates of quality in shipping has decided to retire. Rex Palmer, a partner of Thos R Miller & Son (Bermuda) and a director of Thomas Miller P&I Ltd, retired on 30th April.

Educated at Tonbridge, Rex went to sea in 1949 as a cadet with Strick Line, whom he served for more than 14 years, sailing in dry cargo ships on the run between London and the Persian Gulf and ultimately rising to chief officer. In 1957, he was with the "Seistan" in port at Bahrain when a fire got out of control, resulting in the gelignite cargo exploding. He was one of the nine survivors out of 65 people involved in the incident.

He joined Thomas Miller in London in December 1963 to work in claims validation and handling, specialising in collisions, groundings and strandings. In 1972, senior partner James Wright asked Rex to take special responsibility for oil pollution matters on behalf of the UK Club. As a member of the International Group's oil pollution sub-committee, he was plunged into a hectic period of change for tankers.

In retrospect, one can see what a spur these events were to the club managers' advisory role. We all had to face up to pressure from interest groups, media and especially governments and to direct what influence we could upon measures aimed at reducing the likelihood of pollution incidents and combating their effects.

It also reminded us of the need for top flight representation of the UK Club's interests in North America. Rex was very much involved in the early days of TMS, set up in the United States in 1979 and, for a period in the 1980s, was responsible for its day-to-day performance.

He was a senior member of the team managing the UK P&I Club's affairs from the 1970s. On the formation of Thomas Miller P&I in 1985, he became a director, serving as deputy chairman to Terence Coghlin and chairman between 1986 and 1993.

"The major concern during my chairmanship was the claims explosion of 1987 to 1991, which produced some very unpalatable rises in supplementary calls and general increases in premiums. The Club steered itself through this but there were lessons to be learned. If the Club was to survive and prosper as a mutual organisation, there had to be a very clear strategic view about what Members wanted and what should be done for them. Directors and managers undid the Club, nut and bolt, and then put it together again. The result was the three-pronged strategy of financial strength, membership quality and value for money, which provides the foundations for the Club's operations today." - Rex Palmer

In developing and refining this strategy, the managers worked closely with the board of directors. "The vagaries of international politics and a realisation that clubs were becoming more competitive in service areas has produced an increasingly professional relationship between directors and managers, which has had tremendous benefits for the Club". In the latter part of his career, Rex became closely associated with wider issues affecting the P&I industry as a whole. He has chaired the International Group's management, ship's standards and International Group Agreement committees.

"Looking ahead, I see the quality aspect of the strategy assuming even greater prominence. Every member of a mutual organisation with high standards must be confident that those who do not reach their levels will be strongly encouraged to do so with the ultimate sanction of withdrawal of membership, exercised when necessary. Despite the increase in the range of work, the speed and efficiency with which we have to do it and the scope offered by ever increasing information technology, we should never forget that P&I is a people business. The pattern is for our people to stay with us for a very long time and that is reflected in the number of customers who do the same. Long may it continue".

Rex now retires to spend more time with his wife Helga, a great support to him over the years, and in the pursuit of his twin interests of golf and bird watching. He will be much missed by his colleagues and shipowners alike, and the poem that follows - written as a tribute to Rex by a UK Club Member - captures the affection and respect we all hold for him.

Rex Palmer

after Longfellow's 'Hiawatha'

Near the bank of broad Tamesis, in Londinium's ancient City
In the lane that passes Creechurch sits the home of Thomas Miller,
Sits the stately House of Miller's, landmark of the Ward of Aldgate.
Deep within the busy mansion lies the smoke-filled Inner Sanctum,
Home of Rex, the far-famed Palmer, wisest of the Men of Miller.
Once he led them into battles, fought the wars of Reinsurance,
Parlayed with the men of Bilbrough, pacified the West of England,
Kept at bay the Viking Gardsmen and the folk of Tindall Riley;
Ordered barristers to battle over claims affecting Members.
Later he enforced the Standards, urged all Members to uphold them,
Made them Carefully to Carry, to deliver cargo only
To those holding Bills of Lading (three originals are needed);
Sent inspectors o'er the seaways checking on the entered vessels
To uphold the Miller Standards for avoiding damaged cargo:
No pollution, no collisions, healthy crew in well-found vessels.
Miller legend says the smoke-clouds that were noted in the Sanctum
Were not caused by conflagration of organic leafy matter
But by frequent overheating of the Palmer's cranial circuits
As he issued wise pronouncements, solving problems of the Members,
Passing on acquired wisdom to the young and eager staffers.
Now it's time to close the Sanctum: time for change at T.R. Miller.
Rex is leaving, gone from Creechurch, change of watch at Thomas Miller.
Send the message o'er the sea-lanes, even to the far Bermoothes.
Soon the Palmer's normal haunts will be the tees and greens of England,
Far from Oceans's storms and hazards, far from threats of oil pollution.
Void the sanctum, but remembered by the Members and Directors
For help received and not forgotten, standards kept,
commitments honoured,
Another chapter in the story of the august House of Miller.
Thank you, Rex, your friends all thank you Fare you well, and
long and happy!

Anonymous UK Club Member