FRENCH TANKER OWNER URGES INSURERS TO SHIFT FOCUS TO SHIP MANAGEMENT

FRENCH TANKER OWNER URGES INSURERS TO SHIFT FOCUS TO SHIP MANAGEMENT

A prominent tanker owner is pressing marine underwriters to shift attention

from the condition of ships that would be insured to the quality of management that runs those vessels.

Shipowners that operate well-managed businesses should be rewarded through lower hull and machinery insurance premiums than those charged to negligent owners, said Francis Vallat, chairman of French group Van Ommeren Tankers.Addressing the International Union of Marine Insurance conference, Mr. Vallat acknowledged that judging management quality is much more difficult than assessing the technical condition of a ship. For that reason, hull and

machinery insurers should develop much closer relationships with their clients in order to obtain a better picture of management attitudes, he said.

Marine insurers also should give credit to those operators that have undergone quality management audits by one of the top classification societies.

"Insurers should reward those owners that go for quality," said Mr. Vallat, who also is a vice president of the International Association of Independent Tanker Owners.

"It's better to have a good crew on a bad ship than a bad crew on a good ship," he said in criticism of those underwriters who rate risk purely on the basis of the ship itself without any regard for how it is managed or crewed. Marine underwriters that evaluate risk on the basis of available statistics ''may prove to be completely wrong," Mr. Vallat said.

Those insurers that take into account loss-prevention programs and other safety initiatives "will be the future winners," the tanker owner predicted.

A number of classification societies, the organizations that check ships for seaworthiness, now audit management as well. The Norwegian classification society Det Norske Veritas said recently that many of the companies voluntarily audited so far had never issued written instructions to ships' crews, had not explained to crews their duties and responsibilities or ever set out guidelines about how to respond in an emergency.

In another speech to the IUMI meeting Wednesday, Tor-Christian Mathiesen, Det Norske's vice president, supported Mr. Vallat's views on importance of good management.

Most accidents are caused by human error, Mr. Mathiesen reminded delegates, and a lack of procedures is often to blame. This is a pure management problem, he said, whether it is lack of competence and crew training, poor maintenance or the wrong cargo handling methods.

All these factors "are exclusively controlled and influenced by management onshore and aboard," Mr. Mathiesen said.

In calling for larger differentials in insurance premiums between those owners that have introduced quality management systems and those that have not, Mr. Vallat said shipowners would have to be more open with insurers for evaluation purposes.