Marine
Marine Hull
Introduction
Marine Hull premium in 1999 amounted to THB 159 million (US$ 3.9 million), or
0.3% of the market total.
Only about ten companies write Hull business, and the lack of local insurance
capacity is compounded by the tendency of Thai owners to insure directly
abroad, particularly if they have foreign shareholders or mortgages. Local
underwriters are properly conservative, and will only accept well-managed
fleets paying an economic premium. Poorly managed fleets are placed by brokers
in the international market at rates which the local companies are unwilling to
match.
Major Fleets
• The major fleets include:
• Thai Maritime Navigation Co., Ltd.
• Thai Marine Line
• Jutha Line
• Thai International Maritime Enterprises Ltd. (TIME)
• Thai Overseas Line Ltd.
• Unithai Shipping
• Petrolane Co., Ltd.
• Sang Thai Navigation
• Philsawat Navigation
All vessels flying the national flag are under 20,000 tons, and until the
deep-water ports on the eastern seaboard were finished, only vessels of up to
12,000 GRT could be berthed. The average age of the national fleet is over 15
years.
Fishing Vessels
Thailand has about 53,400 fishing vessels, most of which are
uninsured. Fishing vessels only insure if they are forced to by a bank, and
since the banks don't grant many fishing vessel loans, the insured fleet tends
to be of the highest quality. Local insurers charge a 7% rate for Total Loss
Only cover on blue-water vessels, and report good experience. Policies are
normally subject to 30% self-insurance.
Reinsurance
Hull business is reinsured with a combination of Quota Share, Surplus
and Fac Oblig Treaties.
Marine Cargo
Introduction
Marine Cargo premium income in 1995 amounted to THB 1.950 billion (US$ 48.7
million), or 4.2% of the market total.
Perhaps the most striking feature of the Cargo market is the amount of
insurance bought offshore, largely because of the tendency for exports to be
C&F and imports CIF. It is estimated that only 8% of Thailand's
international trade is insured locally, implying that over US$ 1 billion in
Cargo insurance premiums are paid to foreign shippers.
In an effort to strengthen the local insurance industry and improve the balance
of trade, the Department of Insurance has proposed a requirement that all
Government imports and all imports and exports that enjoy Board of Investment
support be insured locally. It remains to be seen whether this will be enacted.
Special Clauses
The market uses the MAR Form.
Loss Experience
General Average claims make up about one third of the total by value. Although
management attitudes are improving, there is still a marked tendency for
shippers to accept the cheapest freight rates, regardless of the age or quality
of the vessel. The problem of inferior tonnage is particularly acute during the
Typhoon season when foreign owners are less willing to risk their vessels in
South East Asian waters.
Other problems highlighted by Cargo underwriters include the following:
1. Large Cargo losses are mainly related to infrastructure projects. For
example, the largest loss in 1996 arose from the sinking of the 'Patrikos' en
route from Singapore to Bangkok carrying transformers for new power stations.
2. Seasonal flooding can affect Bangkok port when high river levels and high
tides coincide. Containers were submerged in both the 1995 and 1996 floods,
though the situation is improving as flood control measures are implemented.
3. There is a lot of congestion at Bangkok port and cargoes can be held up for
a long time. Cargoes also suffer rough handling. Port Authority reports do not
give details of the cause of loss, making it difficult for insurers to pursue
recovery.
4. The computer components industry is subject to moral hazard, with a tendency
for obsolete parts to 'go missing' in transit.
5. There can be problems applying the Institute Replacement Clause in respect
of high-precision manufacturing equipment imported for the computer industry.
Clients will always insist on damaged equipment being replaced rather than
repaired.
6. Bulk agricultural cargoes are subject to sea water damage.
7. There are regular short-loading claims on cargoes received from China, South
Korea and India.
Dock and Port Facilities
Incoming ships have to wait up to a week for a berth at Bangkok's
congested Khlong Toey Port. Access is limited to ships of less than 12,000 tons
or 8.5 metres draft. Larger vessels must off-load at the mouth of the Chao
Phraya River. Deep-water ports at Laem Chabang and Mab Ta Put on the eastern
seaboard are now operational.
It is normal procedure to use inland waterways, such as the Chao Phraya, to
transport cargoes to the main port areas. The usual method is by barge with
perhaps 7 or 8 vessels towed by a tug.
Standards of stevedoring and tallying are said to be fair and customs
procedures are not too lengthy. Claims for bad handling and pilferage are
routine, particularly at Bangkok International Airport.
Oil & Energy Risks
General
Thailand has useful natural energy resources, comprising gas reserves of 15.2
trillion cubic feet and oil reserves of 400 million barrels. The gas reserves
are mainly located offshore in the Gulf of Thailand. The existence of local
feedstocks has encouraged the development of the petrochemical industry which
is targetted to overtake Singapore as the largest in the region by the year
2000.
The country's Energy industry, including offshore production facilities, gas
separation plants, refineries and petrochemical plants, is under the control of
the Petroleum Authority of Thailand.
Property sums insured in respect of some of the larger Energy installations are
as follows:
• Thai Oil Refinery US$ 2,360 million
• Bangchak Oil Refinery US$ 708 million
• Thai Aromatics US$ 300 million
• Thai Olefins US$ 300 million
Thai Oil suffered a major fire loss in 1999.
Aviation
Introduction
The Aviation account mainly comprises the national carrier Thai Airways
International and the much smaller Bangkok Airways.
There is very little General Aviation because of government restrictions on the
number of private licenses. These have been imposed in an effort to curtail
drug-trafficking out of neighboring Laos and Burma.
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