Barratry ... bumbershoot ... bottomry bond ...
LIG Marine Managers offers solutions, service, and savvy
By Elisabeth Boone, CPCU
Barratry ... bumbershoot ... bottomry bond ...
These arcane terms, and others like them, make up the colorful language of the oldest form of insurance, ocean marine, which dates back as far as 2,000 years ago and in its more modern form was first seen in 14th century London. Today, four hundred years later, you'll still encounter these words in marine insurance policies. And if you need a steady hand to help you navigate the complex commercial marine insurance market, you'll find it in the seasoned specialists at LIG Marine Managers. Based in Tampa Bay, Florida, with a branch office in southern California, LIG operates throughout the United States and the Caribbean as a wholesaler/MGA for top domestic, London, and other markets worldwide.
Firmly at the helm of LIG is its owner and president, Ian Greenway, who acquired the firm in 1989 and reorganized it to provide specialized marine insurance services to independent agents who usually aren't experts in this challenging market. LIG currently places business on behalf of some 250 contracted retail agents in 30 states; most of these agents write between one and four pieces of marine business a year. A native Briton, Greenway began his career as a Lloyd's broker in London and then was transferred to the New York branch of the same broker and ran its U.S. operations for 13 years. Knowledgeable and engaging, Greenway is the author of two books on marine insurance, works as an instructor for CIC, the Florida Association of Independent Agents, and other professional organizations and also acts as an expert witness on marine and international insurance issues.
Pictured at right is the president of Florida-based LIG Marine Managers, Ian Greenway, who acquired the firm in 1989. A native Briton, he began his career as a Lloyd's broker in London, later moving to the United States where he ran the broker's U.S. operations.
The "Vivian B" (top photo) and "Constellation" (bottom photo) are two of the commercial vessels that LIG Marine Managers insures.
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LIG writes all forms of commercial marine insurance including Longshore (workers compensation) and maritime employers liability, hull (physical damage), P&I (Protection & Indemnity, or liability), and marine CGL. Coverage is available for both blue water (oceangoing) vessels and brown water (river) vessels, including tugs and barges as well as charter, excursion, and casino craft. LIG also insures shipyards and ship repairers; marine contractors, boat repairers, stevedores, terminal operators, Wharfingers, and related marine industries; dock and pier builders; dredging contractors, and related risks. "We don't tend to write the 'sexy' side of the marine market, like cruise ships," Greenway says wryly; "the bulk of our business is what we call 'dirty' marine."
Shape of the market
"The marine insurance market is divided into two completely different sectors that operate independently of each other: the Longshore or workers compensation side and the rest of the business," Greenway explains. "The Longshore coverages typically are written by standard workers comp carriers, so this business is affected by the same problems as the comp market overall." Today, he says, "The Longshore market is very tight; there's little competition and little market availability. Prices for Longshore coverage haven't changed much because they're controlled by state workers compensation rate filings." Particularly troublesome, he points out, are states like Florida, Virginia, and a few others where carriers are unable to obtain regulatory approval for requested rate increases. "In Florida, the recent action of the insurance commissioner to delay any rate increase has caused a big drop in capacity," he comments. "The political pressure to keep rates low has forced carriers out of the business. I know of at least two major carriers that don't want any new business and have dropped some renewals. That affects the whole workers comp market, including Longshore."
The problem is less severe in jurisdictions that don't have a controlled rate base, and premiums in those states are going up, Greenway notes. One such state is California, which has open rating. Ironically, Greenway says, "Now that prices are up in California, a lot of the carriers are gone. We see an opportunity here because prices are at a reasonable level and there's not a lot of competition."
LIG Marine Managers management team (from left): Sharon Nash, Ian Greenway, Karen Tischler and Ginger Hayes.
In line with the overall property/casualty market, the non-Longshore marine insurance sector is experiencing some constriction of capacity, owing principally to tightening in the reinsurance market, Greenway observes. "Carriers that provided limits of $25 million to $50 million a year ago now are offering only $10 million," he says. Certain segments of the marine market also are affected by the threat of terrorism. "Coverage for cruise ships and similar target risks, as well as vessels sailing into the Middle East, is expensive but still available," Greenway says. In marine liability, "There's still plenty of capacity, and prices are up between 15% and 25% for most risks." On the hull, or property, side, "The recent spate of losses worldwide is pushing rates up quickly in all areas, particularly the blue water oceangoing classes," Greenway explains.
Like many other specialty lines, marine insurance became intensely competitive during the prolonged soft market of the mid-1980s and 1990s. "Four or five years ago, it seemed as if every carrier in the world was writing marine coverages," Greenway remarks. "Since then the market has retrenched, and the business has gone back to the specialists. We've found a lot of agents who are involved with marine risks on only an occasional basis, and in some cases their markets have completely disappeared."
Blue water, brown water
To marine underwriters, blue water (ocean) and brown water (inland waterway) exposures are as different as night and day. "The people who underwrite ocean business are different from the people who underwrite inland business," Greenway explains, "and few of them really are familiar with the other's exposures."
On both the blue water and brown water sides of the marine business, what exposures typically generate the highest frequency and severity? "Most of our premium dollars go to insure employees," Greenway responds. "That's where we see the highest frequency and severity of claims: in Longshore, Protection & Indemnity, and maritime employers liability. A claim under Admiralty law coverages can be three to five times as high as a regular workers compensation claim. These claims typically go to a jury trial, so the award is whatever the claimant can persuade the jury to give."
With respect to property and liability exposures, Greenway says, frequency and severity vary with the type of vessel and the waters in which it operates. "Certainly a fishing boat working in Alaska is more hazardous than a small riverboat on the Mississippi," he comments, "but on the flip side, there's more claim frequency on the Mississippi, whereas in Alaskan waters we see higher severity."
LIG Marine Managers staff at their Tampa headquarters.
A particularly troublesome exposure is pollution, he notes, citing last November's oil spill off the coast of Spain, estimated to be twice the volume of the 1989 Exxon Valdez spill in Alaska's Prince William Sound. "There's also a hull claim associated with the spill near Spain because the vessel sank," Greenway says, "and there's a salvage claim for the towboats that went out to try to help the oil tanker. There's also a cargo claim because 20 million gallons of oil were lost."
Will the magnitude of this loss cause the owner of the sunken tanker to have difficulty obtaining insurance? "Probably not," Greenway replies. "That would be the case only if the underwriters saw this loss as a symptom of some other problem or if it were part of a recurrent pattern of losses. The issue isn't so much the size of the loss as whether the insured has sustained similar losses before, even if they were small. After one large loss, underwriters aren't likely to refuse coverage; however, they might increase the premium a bit."
Support for agents
"Most of the retail agencies we work with are small to medium sized and have a good book of general property and casualty business," Greenway says. "We tend not to deal with the really big houses." With the vast majority of its retail producers being generalists rather than marine specialists, "We're sought out by the agent who suddenly has a marine risk and comes to us saying, 'We need your help understanding this risk; we need help putting the submission together and placing the business.' We don't simply photocopy the agent's submission and send it to as many carriers as possible," Greenway asserts. "We work with the agent to develop the top-quality submission that is essential to obtaining the best quote in today's market."
Because most of its retail producers are not marine specialists, Greenway says, LIG has developed three specific methods of helping them understand and place marine risks:
1. Seminars on a wide range of topics offered by LIG Educational & Consulting Services, Inc. (a sister company of LIG Marine Managers), CIC, and others
2. LIG Web site: a source of useful information, news, and guidance, including AppSelect, a mechanism that asks a series of questions and steers the producer to the appropriate applications and coverages
3. One-on-one discussions with agents
At LIG, Greenway says, "We are 100% wholesale. We have no retail accounts and will never be a competitor for our producers' business." On larger accounts, an LIG representative will accompany the producer to meetings with the client and help explain the nuances of marine exposures and coverages.
What's ahead?
At the same time as it's working to help retail producers find good markets for their marine risks, LIG Marine Managers also has its eye on the future. A key initiative for LIG, Greenway says, is "developing markets that will respond quickly to a need--particularly in California, and also in Florida where so many carriers are leaving the state or suspending the writing of new business. We work every day with new and existing carriers to keep Longshore markets available in Florida." In addition, Greenway says, "we're expanding to fill the void in the brown water business for the Mississippi River, its tributaries, and other inland locations."
On the administrative side, he says, "We're looking for ways to respond quickly to agents' inquiries. We've recently dedicated four of our staff to work exclusively with agents on new accounts and have established a new business call center and fax number."
For the agent who needs a seasoned guide through the sometimes turbulent waters of the commercial marine business, an excellent choice is the can-do crew at LIG Marine Managers. *
For more information:
LIG Marine Managers
Phone: (727) 578-2800
Web site: www.liginsurance.com
E-mail: Helm@LIGInsurance.com
(This is a general guide only; individual circumstances and policy forms vary.)
Bareboat Charter: The charter of a vessel without captain/crew.
Blue Water Vessel: One that sails outside the United States, typically ocean-going or to/from the Caribbean.
Brown Water Vessel: A vessel, most typically a tug/barge, that operates in the river system or coastal U.S. waters.
Bumbershoot: See umbrella.
Collision Liability: Liability for physical damage to another vessel the insured might hit. Typically included in the hull policy up to the limit of that hull policy.
DBA - Defense Base Act: A federal workers compensation program for private workers on a U.S. Defense base. It is usually required by contract and is most frequently written as part of an international policy.
DOHSA - Death on the High Seas Act: Available to seamen and non-seamen. A federal law that permits a tort-based action to be brought for anyone who is killed upon the high seas beyond U.S. territorial waters.
Excess: See Umbrella.
Hull: Physical damage to the insured's own vessel.
Jones Act: The Merchant Marine Act of 1920; allows seamen a remedy to sue their employer for negligence in the event of injury or illness incurred in service of the vessel.
LOLL - Landing Owners Legal Liability: The inland version of Wharfingers Legal Liability. See below.
M&C - Maintenance & Cure: Absolute, "no-fault" liability for injury to seamen (captain and crew). Maintenance is living expenses, and Cure is medical expenses incurred until maximum medical improvement.
Marine Umbrella: See Umbrella.
MEL - Maritime Employers Liability: A method of insuring an employer's liability under Admiralty law (Jones Act, Maintenance & Cure, etc.) to his or her employees. It provides similar coverage for employers as that contained in a P&I policy. It does not cover Longshore or any third-party liabilities.
MGL - Marine General Liability: Similar to a normal general liability policy, it is adapted to expand or eliminate the watercraft exclusion. Typically includes products/complete operations and all usual CGL coverages. Often based on older versions of CGL forms.
MOLL - Marina Operators Legal Liability: Covers liability for physical damage to vessels in the insured's care, custody, and control. Often limited to "private pleasure vessels" only.
OCSLA - Outer Continental Shelf Lands Act: A federal workers compensation act that allows fixed platform workers on the Outer Continental Shelf access to the Longshore Act benefits.
ORVA - Oceanographic Research Vessel Act: Allows scientists on officially classed research vessels access to the same benefits as seamen, without having to qualify under the Jones Act or sign papers.
P&I - Protection and Indemnity: The marine equivalent of automobile liability, it covers the liability of a boat owner for bodily injury and property damage. It may include or exclude liability for injury to captain or crew.
SrLL - Ship Repairers Legal Liability: Covers liability for physical damage to vessel, its cargo, and equipment in the insured's care, custody, and control for the purpose of being repaired or serviced.
StLL - Stevedores Legal Liability: Covers liability for cargo being loaded or unloaded from a vessel and damage to a vessel. Usually written with Terminal Operators Legal Liability in a combined form.
TLL - Terminal Operators Legal Liability: Covers liability for cargo in the insured's care, custody, and control at a terminal prior to loading or after discharge from a vessel. Most commonly written in combination with Stevedores Legal Liability.
Towers Liability: Covers liability for damage to a vessel and its cargo that the insured is towing
or pushing.
Umbrella or marine umbrella: A combined excess policy. Sometimes has a dropdown provision. May or may not be excess over employers liability, automobile, or other non-marine policies. Wordings vary greatly.
USL&H: United States Longshoreman's and Harbor Workers Compensation Act: A federal workers compensation program designed predominantly for "dockside" workers.
Wet Charter: The charter of a vessel with a captain/crew.
WhLL - Wharfingers Legal Liability: The marine version of garagekeepers legal liability. Covers damage to vessels and cargo that are in the insured's care, custody, and control for storage, mooring, docking, etc. Usually specifically excludes any repair work.
