Issue 31 - Winter 2002

Club elects new Directors US Terrorism Risk Insurance Act 2003 General increase Limburg - P&I and war risks Maritime security laws

Value for money Club Service & Value Standards Mission to Seafarers Member survey results John Ferrie

Main picture: Messrs Aleco Kairis and Constandinos Caroussis
Top right: Mr Sato
Bottom right, left to right: Messrs Mike Carthew, Aleco
Kairis and Pavel Vasilchenko

They are Mike Carthew of Chevron Texaco Shipping Company LLC, Minoru Sato of NYK Line (Europe) and Pavel Vasilchenko of Far-Eastern Shipping Company (FESCO).

Mr. Carthew has spent all his working life in shipping and has been with Chevron for most of his career. He worked in the corporate trading and planning department before becoming President of Chevron Texaco Shipping Company LLC, based in San Ramon, California.

Mr. Sato joined NYK in 1973 and has worked primarily in the liner and car carrier areas of the business. He was based in New York and Milan before moving to London. He is now Chairman of NYK Lines (Europe) Ltd.

Mr. Vasilchenko joined FESCO in 1967 and was at sea for four years as an officer on general cargo ships. He spent two years in Manila as a financial officer before moving back to Vladivostock as manager of planning and finance. He is now Vice-President, Economics and Planning, of FESCO.

New Deputy Chairman

At the Annual General Meeting, Constandinos Caroussis of Chios Navigation Co. Ltd. was elected a Deputy Chairman and Vice-President, succeeding Tom Moore of Chevron Texaco who has retired from the Board.

Tom Moore had been a Director of the Club since 1994 and Deputy Chairman since 1997. Tadamasha Ishida, a Director since 2000, also retired from the Board. These Directors had contributed greatly to the success of the Club and they will be much missed.

Aleco Kairis was unanimously re-elected Chairman and President and Tullio Biggi and Klas Kleberg as Deputy Chairmen and Vice-Presidents.

The Terrorism Risk Insurance Act 2002 was signed into law by the President of the United States on 26 November and the Club has issued two circulars to Members giving background information and the required notice of coverage of US acts of terrorism together with the additional premium requirement. The circulars can be accessed on the Club website.

The article in this edition of Club News on war risks P&I cover shows that the existing insurance arrangements prior to this Act may be less than perfect, but the requirements of the new Act do not improve the situation for Members at all. They have had exactly the opposite effect by putting the Club and all its Members at grave risk because there is no pooling or reinsurance protection available to the Club for the cover, which the Act requires us to make available to Members. This accounts for the huge premiums, which the Club has been obliged to assess as set out in the notice.

This is a most unfortunate and quite unintended consequence of the way the Act was drafted. In due course we shall be working with the other International Group clubs managers to see if there is some way in which the potential benefit of the US government reinsurance of a US terrorism act might be turned to the positive advantage of Members.

Meantime our full efforts must be, and are being, exerted to minimise and hopefully eliminate the obvious danger to the Club and all its Members which this Act has created overnight.

In October the Board ordered a general increase in premium rating of 25 per cent plus the relevant increase in cost of the International Group's reinsurance programme for 2003. The cost and structure of that reinsurance programme have yet to be confirmed.

The increase in premium aims to reduce the underlying deficit of premium versus claims. It is one of the steps the Board believes necessary in the best interests of the Club and its Members in order to maintain the Club's financial strength.

Members will recall that the elimination of the underwriting deficit through the restoration of premium levels was a fundamental part of the Club's financial strategy as set out in our Club Chairman's letter of October 2001.

In that letter Mr Kairis explained that in past years healthy investment returns had enabled the Club to maintain its position as one of the most strongly-funded mutuals while at the same time reducing the premium cost to Members with successive cuts in planned supplementary calls.

During that same period the Club had been covering underwriting deficits that had been covered by buoyant investment returns. In the absence of subsequent investment income these deficits eroded the free reserves. The last edition of UK Club News carried an analysis of the consequent underwriting deficits.

Protecting against unforeseen falls in the Club's free reserves was the purpose behind the Club's purchase of its special reinsurance contract with the Swiss Re. However as the effect on the free reserves of continuing underwriting deficits is now quite foreseeable it is not appropriate to rely upon this contract in these particular circumstances. A significant increase in premium levels is required.

The Club is achieving its long term strategy of financial stability without the need to resort to unbudgeted calls. At the latest review of the open policy years, there are no supplementary premiums forecast for any of the 2000, 2001 or 2002 policy years. Furthermore, the Club is confident of maintaining its release call at 5 per cent of mutual premium, one of the lowest in the International Group.

The Club's circulars, including the recent Circular 13/02 explaining the general increase and review of recent policy year performance, are available on the Online Services section of the Club website - www.ukpandi.com. In the event of difficulty accessing the site, Members should contact their usual Club contact.

The graph below illustrates the trend of the Club's total income in contrast with total outgoings as well as the 30 per cent fall in premiums between 1995 and 2001. The total calls and total outgoings are reproduced on a policy year basis. The total income portrayed is the same total calls figure on a policy year basis but with the addition of the investment income for that year on a financial year basis.

However the deficit persists. Investment returns continue to be volatile and unreliable. So more remains to be done to secure the long term financial security of the Club. Whilst the Club acknowledges that premium increases are unwelcome, the requirement for a 25 per cent general increase this year is clear.

In the early 1990s the reductions in the free reserve caused by increased claims in the recent policy years had to be covered by large unbudgeted supplementary calls. Our Club's financial strategy sets out to reduce the likelihood of such unbudgeted supplementary calls being repeated. In addition to protecting free reserves from attrition by persistent underwriting deficits, the Club has in place a unique long-term reinsurance contract with Swiss Re.

The reinsurance contract is a ten-year contract which enables the Club to make a recovery of outstanding claims if the ratio of assets to total outstanding claims falls below 125 per cent. It does not matter whether the ratio falls as a result of an increase in outstanding claims or a reduction in assets, for instance caused by investment losses. Outstanding claims to a value sufficient to restore the ratio to 125 per cent will be recoverable from the reinsurer.

The premium is a fixed sum per year which does not vary with the claims experience. It is paid out of the Club's contingency account and is not included in the policy year outgoings which need to be covered by the annual call requirement through the acceptable loss ratio formula. The Directors decided to account for the premium in this way because the Club's contingency account will benefit from any recovery of outstanding claims under the policy and the reserves in the contingency account will also bear the financial impact of any adverse results from the specialist reinsurance subsidiary of the Club which was established in connection with the Swiss Re arrangements.

Claims on the contract will therefore not have any direct impact on the premium payable by Members in future years, although if the aggregate limit of $300 million were exhausted before the end of the contract, the annual premium would still have to be paid for the remaining life of the contract unless the terms of the reinsurance were renegotiated. The contract in any event provides for a full review after the first five years of its operation. The additional $100 million of overspill cover which the contract provides will also cease at this point.

The contract provides for a significant refund of premium paid, which would reduce the average annual cost of the policy to $1.3 million if there are no claims at all. The value of this refund (which can be claimed by commuting the contract at any time when it exceeds the claims payable) is included as an asset in the Club's accounts. This will of course be lost in the event of a claim exceeding the amount of the refund due, but the ratio of assets to outstanding claims will still be restored to 125 per cent when the claim is made. What the contract cannot do is replace any overall loss in the assets of the Club - it can only effectively remove outstanding claims from the Club's liabilities by recovery from the reinsurer.

The contract thus provides an important protection for the Club's solvency ratio against unexpected increases in claims (which have not occurred in recent years) or against a failure to achieve the projected investment income on which the Club has traditionally relied to balance underwriting deficits. Since investment income cannot yet be realistically forecast to make up this difference, the gap must be filled by increasing the level of premium, leaving the Swiss Re reinsurance as a protection against the unexpected, just as the Directors originally intended, and not as a means of subsidising the premium for the forthcoming policy year.

At 0800, local time, on 6th October 2002 the two year old VLCC Limburg had a fire and explosion on board, while approaching the single point mooring at the Ash Shihr Terminal. A hole was blown in the vessel's side, and oil spilled into the sea.

Although not entered in the Club, the case of the Limburg will have raised a number of questions in the minds of Members regarding the scope and extent of P&I and war risks cover. In this article Luke Readman writes on how the Club may be helpful in answering some of those questions.

Extent of P&I cover

It now seems clear that this incident was caused by the impact of a small boat packed with explosives. This means that the incident falls within the scope of Rule 5(E) (exclusion of war risks). The incident was "caused by .... explosives" and would thus fall within the exceptions. This would have been the case even before Rule 5(E) was changed at 20th February this year to include "or any act of terrorism". It is thus not necessary to go any deeper into the motivation of those who perpetrated the incident that could otherwise be necessary to confirm that the incident falls within the scope of "an act of terrorism". In the Spring 2002 edition issue 29 Nigel Carden summarises the change to Club Rules which excludes terrorist risks.

Since the exception in Rule 5(E) applies, the Club will not pay for any liabilities, costs or expenses arising out of the incident.

Under the terms of the Club's special war risks P&I cover, the Member does have his ordinary P&I cover restored in respect of liabilities arising out of the incident but only in excess of the proper value of the ship concerned. The Winter 2001 issue 28 of UK Club News includes an explanation of the redefined special war risks P&I cover.

The Member should therefore have war risks P&I cover from war risks underwriters for all his P&I liabilities arising from the incident up to the proper value of the ship (as a minimum). This is either as an add-on to his ordinary hull war risks cover or as a separate market placement.

First aid

But can the Club offer any practical assistance to a Member in this situation?

It is likely that the initial circumstances surrounding the incident, as in the Limburg case, will be unclear and possibly remain so for some days while the true source of the incident is established.

The Member should of course notify his war risk underwriters immediately as well as notifying the Club in the usual way. The Club will request a copy of the relevant war risk policy for immediate review and analysis of the primary cover provided under that policy by the war risks underwriters.

One of the first priorities for the Member will be the safety of the crew. In respect of personal injury issues, the Club can assist the owner in making arrangements for the proper treatment of any crew who have been injured or even killed. All arrangements will be for the account of the owners until such time as either the war risk underwriters have confirmed their cover or the extent of the Club's involvement has become clear. Where possible, the consent of the war risk underwriters to any proposed actions for the treatment of the crew should be obtained.

Salvage will also be an immediate issue. The salvage contract will primarily involve the war risk hull underwriter or the marine hull underwriters in the first instance and this is something the owners should notify to them. The Club cannot commit to paying any special compensation (such as SCOPIC) which may be included in the salvage contract. However subject to a firm reservation of the Club's position in the event that the war risks P&I underwriters are involved, the Club should be able to assist the owner in negotiating any special compensation provisions in the salvage contract.

Oil pollution, particularly if the ship is a tanker like the Limburg, may be a major concern. The Club can also assist the owner, again under the same reservation of the Club's position, to establish with the local authorities the required level of response and arrangements for oil pollution prevention measures.

If the incident occurs in a country which has ratified the Civil Liability Convention (CLC), the owner should have a defence to any claim under the CLC. This is based on the exception in the convention that the damage was "wholly caused by an act or omission done with intent to cause damage by a third party". If the owner successfully relies on this defence, the International Oil Pollution Compensation Fund (IOPC Fund) will be responsible for paying all proper pollution responsibilities from the ground up to the IOPC Fund maximum. The Club as guarantor under the "Blue Card" system will also be able to avail itself of the same defence under CLC. However, the Club can assist the Member in notifying the IOPC Fund and in making appropriate arrangements, again with the appropriate reservation of cover, particularly while the circumstance of the incident remain unclear.

OPA90 liabilities

In the United States, the position may be different. Under Oil Pollution Act 1990 (OPA90) the owner will have the primary obligation to respond, even though he may be able to take advantage of the defence under OPA90 by establishing "by a preponderance of the evidence that the discharge... and the resulting damages or removal costs were caused solely by... an act or omission of the third party...". In order to avail himself of this defence, the owner must establish by a preponderance of the evidence that he "a) exercised due care with respect to the oil concerned and b) took precautions against foreseeable acts or omissions of any such third party and the foreseeable consequences of those acts or omissions". This process may take further time and, in the absence of any intervention by the federal government, the owner will still have his normal responsibilities under OPA90 as the responsible party. Again the Club can assist the owner in making the necessary arrangements, but this assistance will always be subject to a full reservation of the Club's position and the Club cannot commit to the payment of any expenses either to the owners or to the relevant authorities pending clarification of the involvement of the war risk P&I underwriters. This situation is likely to be the most difficult for the owner to face since it is possible that the war risk P&I underwriter will not be in a position immediately to commit funds for the initial response. Although the Certificate of Financial Responsibility (COFR) guarantor may still be involved as the party ultimately liable (subject to his eventual recovery from the owner or the appropriate underwriter, either the war risks P&I underwriter or the Club) it is most unlikely that the COFR guarantor will be in a position to give immediate assistance in this respect. Although the Club will try to assist the owner as best it can, this assistance cannot extend to payment or the commitment to pay any of the costs which would fall for the account of the war risk P&I underwriters.

In respect of the other liabilities that the owner would normally face following a casualty, such as liability to cargo interests, the relevant provisions of the appropriate law should provide the owner with a good defence to any claims. To the extent that claims are nevertheless made, it would be up to the owner to resist those claims, hopefully with the support of his war risk P&I underwriter for whose account they will ultimately fall.

Any Member interested in further information on this subject should contact Luke Readman - email: luke.readman@thomasmiller.com or telephone: +44 20 7204 2142

In this article Nigel Carden provides a brief overview of the initiatives to develop an international maritime security regime, alongside US domestic lawmaking on maritime security. The Club will provide more detailed advice as the final form of the legislation outlined below becomes clearer.

Background

There have been a number of documented incidents involving maritime terrorism. The most well-known of these were the 1985 hijack of the cruise ship 'Achille Lauro'; the 1988 attack on the cruise ship 'City of Poros'; and the attacks by small boats with explosives on the US navy ship 'USS Cole' in October 2000, the tanker 'Silk Pride' in October 2001, and the VLCC "Limburg" on 6 October 2002.

In all these incidents, terror was caused or threatened by attacks against a ship and the people onboard. However, since the attacks of 11th September 2001 there has been a greater awareness that certain kinds of ship (liquefied gas carriers, oil and chemical tankers, for instance) might themselves be susceptible to being used as terror weapons, and others (especially container ships) could be used as delivery vehicles for weapons of mass destruction, precursor materials for such weapons, or terrorist personnel. All these risks are therefore under consideration in the work currently under-way to develop protective measures.

Development of an international maritime security regime

At IMO it is the Maritime Safety Committee (MSC) that has oversight of maritime security matters. An Intersessional Working Group on Maritime Security (ISWG) met in February and September 2002 and a key outcome of its work will be the adoption of amendments to the Safety of Life at Sea (SOLAS) Convention at a diplomatic conference in December 2002. Changes to Chapter V will involve advancing the implementation dates of existing provisions for automatic identification systems. However, the bulk of the proposed changes, which would affect all commercial ships of 500 gross tons or more engaged in international trade, are amendments to SOLAS, Chapter XI.

Chapter XI currently covers "special measures to enhance maritime safety", but will be extended to encompass a wide range of new security requirements. These include: mandatory ship security alarms; permanent visible hull markings of IMO numbers; a "continuous synopsis record" issued by the Flag State (certifying the life history of the ship's identity, ownership, registration, ISM and classification details); and, not least, an "International Ship and Port Security (ISPS) Code".

The draft ISPS Code contains mandatory provisions for ships to undergo formal security assessments and to have an approved security plan based on such assessment. There are provisions for the appointment of both company and ship security officers, and for plans to be backed by appropriate training and tested by regular drills. Both for the ship and port aspects of the Code, three levels of security are defined, so that ports and ships may co-operate in adjusting the level of security for a particular ship, port, and threat assessment. Non-mandatory guidelines provide a framework for the detailed form of the plans.

Compliance with the ISPS Code will have to be verified and certified by officers of the flag state or by a 'recognised security organisation'. Classification societies are acquiring security expertise in order to offer their services for the latter role. Implementation dates will be subject to negotiation at the diplomatic conference, but for most requirements are expected to be July 2004. Members will therefore have a reasonable period in which to prepare for compliance with the new international regime.

In parallel with the IMO work, the International Labour Organisation (ILO) is seeking to develop an enhanced international system for uniform methods of seafarer identification, while the World Customs Organisation (WCO) is studying measures to improve security in multi-modal transport. Reports from these organizations to IMO are expected in 2003.

Development of the US maritime security regime

The United States has been the chief advocate of many of the proposals being developed in IMO. However, it was widely anticipated that separate security requirements would be imposed under US domestic law in advance of the SOLAS amendments taking effect and this has now been confirmed in provisions contained in the US Maritime Transportation Security Act, passed on 14th November, 2002.

This Act provides, amongst many other measures, for the development of a National Maritime Transportation Security Plan, together with Area security plans for each Captain of the Port (COTP) zone. Ships of a type that the Coast Guard considers to be at risk of involvement in a security incident will have to maintain approved security plans consistent with these national and local area plans. The ships concerned are likely to include tankers, gas carriers, cruise ships, and containerships, and will be determined by vessel vulnerability assessments to be conducted by the US Coast Guard.

The Coast Guard is required to develop detailed regulations for security plans by 1st April 2003. It is expected that the regulations will generally reflect guidance indicated in the Navigation and Vessel Inspection Circular recently published on the US Coast Guard website, but will also include provisions to identify a qualified individual and other contractors necessary to ensure the security requirements can be met.

Shipowners affected will have at least six months from the implementation of regulations in which to develop their US security plans. Many Members are familiar with the expertise of companies who provide plan-writing and compliance services in relation to OPA '90. These companies have extended their expertise in order to provide similar assistance under the new security requirements and Members who use the Club's default QI and spill management arrangements, provided by Corbett & Holt / Gallagher Marine Services, will receive more details of their security planning services as the form of the regulations becomes clear.

The Club will continue to monitor the development of both the US and the international regulations and will provide more detailed commentary after December's diplomatic conference at IMO. Members are recommended to keep in touch via the website for the latest news. In the meantime, any questions on insurance issues relating to security matters may be addressed to Nigel Carden or Luke Readman in London.

Any Member interested in further information on this subject should contact Nigel Carden - email: nigel.carden@thomasmiller.com or telephone +44 20 7204 2147

Charles Fenton highlights some key aspects of the programme and explains more about what will be involved going forward.

Conceived during the year 2000, our value for money programme has the twin aims of reducing claims handling costs and achieving further improvements in the efficiency and effectiveness of the claims process.

Early initiatives were developed in 2001, and full implementation started this year.

While it is too early to say what we can ultimately achieve through working more closely together with Members and external experts, the programme's aims do appear achievable, and indeed some progress has been made. This has been achieved without damaging the relationships with major external suppliers; quite the reverse.

Certain misunderstandings have emerged. It has been suggested that: (1) the programme is solely concerned with legal fees, (2) we want to create a fixed panel of law firms and (3) we merely want lower hourly rates from our lawyers. These suggestions are false. That is not to say that keeping a close eye on hourly rates, or monitoring performance of external suppliers are not important parts of the programme. They are. But we will go much further.

What do we want to achieve?

Put simply we want to help Members avoid or prevent claims where possible but, when claims do arise, to achieve the best outcome for each claim at the lowest cost. At present, we all fall short of perfection.

Sometimes, members don't act in their own best interests. They may want to instruct external experts that aren't the most suitable or they may expect unrealistic outcomes.

Sometimes, the managers are at fault. The management of budgets and costs could be improved and we could do even more to help our Members to avoid risks and claims. We could use technology better to improve efficiency, communication and cost-effectiveness. We could do more to ensure that we all apply the highest standards of best practice to achieve the best result.

Lawyers and other experts instructed on behalf of Members could also do better. They do not always make the best use of technology or best practice. Sometimes they also lack commerciality and a true understanding of Members' needs and businesses, show poor cost management, and spend overly long on technical issues rather than commercial and practical needs.

Research shows that much is done well, but there is undoubtedly room for improvement. There are claims which:

• involved a protracted legal battle, where reductions eventually achieved were considerably less than costs incurred;
• revealed no clear strategy and a limited understanding on the part of the external experts about Members' commercial needs;
• contained overly optimistic advice given at the outset, followed by increasingly pessimistic advice as trial approached;
• produced excessive and unexpected costs through lack of budgeting and poor cost management;
• involved routine or mundane work being carried out manually, when proper use of technology could have handled that work faster, more efficiently, and at less cost;
• showed that people involved had not understood respective roles and objectives, leading to duplication and lack of clarity;
• showed inordinate delays, leading to increases in costs and an inability to resolve the claim quickly, efficiently and cost-effectively.

However, there is good news. Our research, largely carried out independently, shows that claims management generally works well and those involved have much to be proud of. We can make it better and cheaper still. That is at the heart of our value for money programme.

How do we achieve this?

The programme is still under development. So far we have carried out a detailed review of the claims management process, obtained views from a small cross-section of Members, and worked with a number of law firms, principally in the UK and the US, to explore how we can together improve the claims process. We have developed, with law firms, a best-practice training course. This is just the beginning.

With help from some law firms regularly used by Members, we have created a set of value and service standards. (See panel below).

So as to ensure a clear, agreed, achievable and commercial strategy for each claim, we are introducing a consistent approach to early case assessment in relation to all contentious claims.

To avoid uncertainty and unpleasant surprises which can occur in relation to claims costs, we are introducing a consistent and simple budgeting process which can act as a management tool as well as a guide to the likely costs.

Work often goes to an external expert simply because the Member's work has always historically gone there, or because of lowest hourly rate, or because the expert happens to be in the right place at the right time. That does not always serve the Members' best interests. Currently, we have no objective way of measuring and assessing performance both of own claims executives and of our external experts. We will introduce some simple but relevant and informative methods to measure performance and cost-effectiveness.

Our Members expect, and deserve, the best possible advice to avoid or minimise claims. Through better use of technology and communications and by better use of the talents and expertise of internal and external experts we can do more to achieve this.

This only gives a flavour of how, working together, we can achieve the programme's objectives. So far we are delighted by the positive and enthusiastic reaction of many law firms involved. This is a global programme which will eventually involve all our managers and claims executives and our major external experts. Just how much we can eventually achieve will depend on the commitment and support of everyone involved.

How can Members assist?

Ideally, we would like to achieve everything tomorrow. But best results usually come through taking one step at a time. We ask for patience. However, Members are entitled to expect and demand the highest possible standards of service; we don't therefore ask anyone to tolerate delay or inefficiency.

Principally, we seek your comment. If you want to know more about the programme, how it may affect you, or how you can help, please tell us. If you have time to be involved, or to be used as a sounding board, so much better. If you want to see the best practice standards and guidelines so far developed, we would be pleased to supply these.

It is planned that in the future, at the end of each new claim, claims executives will undertake and record an assessment of the claim and the performance of all experts involved, plus a summary of lessons learned which might be useful in the future.

Please, if possible, make time to participate in this process, as we can only get better from constant feedback.

Meanwhile, our research has identified three ways in which Members could do more to help themselves.
1. Be prepared to share with us and the external solicitors your principal commercial objectives and all relevant information and material concerning a claim. Cases can be lost, or settled unsatisfactorily, because relevant information is not available or not provided.

2. Be realistic about possible solutions.

3. Be willing to pay a fair amount at an early stage, where liability is not an issue, rather than incurring exorbitant and disproportionate costs. Claims records are affected not only by claims paid, but also by costs. Even if the claim itself is substantially reduced, the combination of the Member's own costs plus the other side's costs can sometimes equal or exceed the reduction achieved. We don't advocate an "always settle" policy, nor one that involves overpaying.

Every Member, and every supplier, has an important part to play in this process. Over the next year or so we will be talking to, and working with, as many as possible about these initiatives. If you would like more information in the meantime please contact Charles Fenton on +44 207 204 2346 or via email: charles.fenton@thomasmiller.com

The Club will be making a Christmas donation to The Mission to Seafarers, the organisation that cares for seafarers of all nationalities and creeds in some 300 ports around the world. This is in place of Christmas cards. The organisation maintains a network of chaplains, lay staff and volunteers who offer seafarers a welcome, friendship and practical and spiritual help. Details of their work and how you can help can be obtained on the web at www.missiontoseafarers.org and email: pr@missiontoseafarers.org. The staff of the managers would like to wish Club Members and friends seasonal greetings and very best wishes for 2003.

91 per cent of all Members responding to the survey declared themselves satisfied with the Club's recent performance, surpassing the target set by the Board of 90 per cent. The high response rate to the survey of 32 per cent (see last edition Club News) suggests that this is representative of the views of Members overall.

This survey is the third such survey conducted by Research International directly with the Members in the past ten years. The results from all those surveys demonstrate a steady upward trend in satisfaction with the Club's overall service and performance.

In their recent presentation to the Board, Research International pointed out that the positive trend was driven by increases in the highest satisfaction rating. The percentage of respondents declaring themselves "very satisfied" rose from 10 per cent to 18 per cent and, in this most recent survey, to 26 per cent.

Whilst it is gratifying for the Board to observe this trend, the essential purpose of the survey is to examine in detail the many facets of Club performance. This will then determine which individual areas of service still require improvement and which areas should be targeted for developing new and enhanced services in order to maximise the value of Club membership.

A detailed report has been compiled for Members and is prefaced by a letter to the Members from our Chairman, Aleco Kairis. In addition to reporting on the main trends and views that were received from Members, this report explains the future developments in Club services that have been proposed as a result of this valuable feedback from Members. The report will be produced as a special edition Club News and mailed to Members in December. Further copies of the newsletter may be obtained from your local Club office or from Jane Homans in London.

John Ferrie retired from the managers' San Francisco office at the end of September 2002.

John joined the managers in 1986 shortly after the San Francisco office opened, following a number of years as a claims manager for shipping lines based firstly in his native New York and subsequently on the west coast. John learned how to handle personal injury claims at the "front line" on the piers of New York City where seaman and passenger claims were numerous. That experience laid the foundation for his skills in handling all aspects of personal injury claims in a wide variety of jurisdictions.

In recent years, John lead the Club's American bodily injury team with distinction and Club Members trading to the USA enjoyed his practical and experienced guidance whenever they had the misfortune to become involved in personal injury litigation. John's ability to evaluate cases and his low key but effective case management style was popular with Members, attorneys and colleagues alike. John developed accident report forms and systems for a variety of Members and conducted a number of on board crew training sessions for the cruise line Members, explaining and implementing loss prevention programmes. Professionalism, the ability to think and adapt quickly to changing circumstances, plus an ever present sense of humor always makes John a pleasure to work with.

John plans to move back to New York where he will be close to his beloved Yankees baseball team. We are delighted that John will remain available as a consultant on specific projects.