Turk P&I turns focus to passenger and tourist markets - 16/03/2015

New reinsurance deal has been agreed with RaetsMarine as cover rises to $1bn

An increased share of the cover on Turkish passengerships has been won by a new Istanbul-based protection-and-indemnity (P&I) insurer as it completes its first year in business.

Turk P&I Sigorta estimates it has picked up 80% of the local ferry business carrying more than a million passengers per day.

Car-ferry operator Gestas, with a fleet of 10 vessels carrying up to 400 passengers and more than 100 vehicles on routes in the Dardanelles, Aegean and Marmara seas, is the latest to sign up — joining companies such as Istanbul Deniz Otobusleri (IDO) and Istanbul City Lines — for Turk P&I cover.

There has also been new tonnage owned by Izmir municipality and further vessels from a tie-up with Turkey’s bunker barge association joining at the recent P&I renewal.

The Turkish P&I market is being given a boost by the enforcement of higher liability limits under a protocol to the Athens Convention, which requires shipowners to have 250,000 SDR (special drawing rights) of death or injury cover per passenger.

For the biggest 2,000-passenger vessels on Turk P&I’s books, this amounts to a ship limit of SDR 500m, or more than $700m, with $1bn of cover leaving a comfort zone available to meet other P&I risks such as pollution and wreck removal.

Demand for high limits of cover from passengership operators led to Turk P&I becoming one of a growing number of insurers raising cover from $500m to $1bn from last month’s renewal.

Turk P&I has renewed an existing treaty reinsurance arrangement with the Standard Club but switched the remainder of its reinsurance protection from the Shipowners’ Club to RaetsMarine, a Dutch fixed-premium arm of the Lloyd’s-based Amlin insurance group.

Natural partner

The Shipowners’ Club, which focused on smaller and specialised tonnage, has its own Turkish account so is a competitor to Turk P&I, making RaetsMarine more of a natural partner.

Turk P&I signed more than 600 vessels in its first year and is aiming to double in size through the current policy year, with the tourism sector a particular target.

These include modern cruiseships, wooden sailing gulets, large yachts and diving boats, with all vessels carrying 12 or more passengers requiring Athens Convention compensation limits.

Although the vessels involved in Turkish tourism may individually be small, this is compensated for by the large numbers operating along the Turkish Riviera and resorts such as Kusadasi and Marmaris.

“There are around 1,000 tourist craft in Bodrum alone,” said Turk P&I general manager Ufuk Teker.

“This kind of business is too small for the International Group clubs or the big facilities but we are local and can concentrate on it.”

Conflict in Syria has had only a limited impact on Turkish tourism and, according to Teker, almost none on the local cruise and sea sport market.

Last year, Turk P&I only got its insurance licence on 18 February so missed out on a number of 20 February renewal opportunities — but last month was a different story.

“We renewed 99% of clients,” said Teker. “We are still a small operation but things are going well and this year we are predicting business will double.”

Teker says the only losses at the renewal were of a few bunker barges that moved their P&I cover to the Romanian market.

The first year has also gone well in claims terms, with the only notable incidents being two collision claims, although there has also been a fatality, with settlements reached within a couple of months.

The biggest vessels on Turk P&I’s books are ro-ro cargoships of up to 15,000 gross tons (gt), although reinsurance arrangements restrict the vessels routinely covered to 10,000 gt.

However, larger vessels can be accepted if they are part of a fleet of predominantly smaller ships.

“We are not targeting business above 10,000 gt,” said Teker.

He also indicates that Turk P&I is not in a hurry to expand beyond Turkey by writing business in the Black, Aegean or Mediterranean seas.

Turk P&I is backed by the Turkish state insurance companies Ziraat Sigorta, Halk Sigorta and Gunes Sigorta and local P&I correspondents Omur Marine, Vitsan and Metropole — but it also has the support of the Turkish authorities.

A government-supported scrap-and-build programme is planned, which will not only have benefits for Turkey’s shipowners, shipbuilders and demolition yards but should also bring new business to Turk P&I.

“We will do our best to get our share as a local insurer,” said Teker.

in www.tradewinds.com 06 March 2015