How Shipping Insurance Really Works During a War

When the conflict with Iran started, some of the first headlines we saw had to do with shipping insurance. Marine insurers were said to be canceling war risk coverage for vessels going through the Strait of Hormuz. Premiums were said to surge. Meanwhile, the Trump administration announced it would offer its own insurance for ships traversing the Persian Gulf, in an effort to get things moving again. So why is insurance such a crucial part of maritime trade? And how does the system actually work? In this episode, we speak with Dorothea Ioannou, CEO of the American P&I Club, and Steven Ogullukian, the club's reinsurance director. We talk about the different roles of insurers, reinsurers, insurance clubs, and why ships need to have separate coverage for things like war, liability and hull loss. Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Joe Weisenthal?

  There are some market stories where you want every detail. Tracy and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and need to know what's moving markets and why. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and research get you up to speed on what matters and what to watch next. About the time it takes to grab a coffee, so search Barclays Brief wherever you get your podcasts.

• 0:26Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:07Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company, and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:51Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:06Tracy Alloway?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

• 2:10Joe Weisenthal?

  And I'm Joe Weisenthal.

• 2:12Tracy Alloway?

  Joe, you know, I'm slightly obsessed with insurers. Maybe obsessed isn't the right word, but fascinated, appreciative of insurers, because I think there's a tendency to think of them as sort of limiting factors in the world. So, you know, if you can't get insurance in California, you can't build a house. But I also think of them as enablers of certain behaviors, right?

• 2:33Joe Weisenthal?

  I think that's a really good way to put it. People do a lot of things that they wouldn't otherwise do were they not able to get insurance on it. So, yes, it does cut in both directions. So, we should appreciate the existence of the existence of insurance.

• 2:48Tracy Alloway?

  All right. Well, now-

• 2:48Joe Weisenthal?

  Actually, you know what? My daughter actually-

• 2:51Tracy Alloway?

  Your daughter has insurance?

• 2:52Joe Weisenthal?

  She, well, she asked me to explain insurance the other day, which I was like, you know, and then suddenly I was like, I have to explain insurance to a 10-year-old.

• 2:59Tracy Alloway?

  Wait, first of all, tell the listeners how old your daughter is.

• 3:01Joe Weisenthal?

  She's 10. I was trying, I can't remember the context exactly what it was. Maybe it was something about fire insurance, et cetera. But I think I was actually pretty proud of myself. I was basically like, there are these risks that happen where like, say, if your house burns down, you could like ruin you financially, but it doesn't make sense to like, save all that money in cash and always have that much savings available to be able to rebuild your house. And therefore, the way you solve it is by paying a small amount. I was pretty like happy. I think she got it.

• 3:29Tracy Alloway?

  I'm glad she's planning for home ownership at an early age. Okay. Well, now is a really good time to think and appreciate insurance. Because as you know, we are recording this on April 8th. I feel like, do I need to say the hour? Maybe I do. 12:06 PM on April 8th. It is not entirely clear at the moment what is going on in the Strait of Hormuz.

• 3:51Joe Weisenthal?

  Right.

• 3:52Tracy Alloway?

  We don't know if ships are being allowed to pass or not, but we do know, since the earliest days of this entire conflict happening, that one of the issues that's come up is war insurance and maritime insurance in general.

• 4:05Joe Weisenthal?

  Yeah. And we sort of like touched on it in our very first episode that related to the war. But of course, one major reason why ships haven't been moving through is the direct threat of- Being attacked and sinking. But then another element is the entire insurance element. And then beyond that, like that adds cost to everything and it's not, you know, how do you price war insurance? I have no idea. So I have many more questions on this topic.

• 4:31Tracy Alloway?

  Yeah, the whole ecosystem of maritime insurance in general, you hear these things thrown around, like whole loss protection and liability protection. And there's the reinsurers and then there's the normal insurers and then there are insurance clubs. Right. There are all these different players.

• 4:46Joe Weisenthal?

  Insurance, you belong to the Soho Club. Me, I belong to an insurance club. Like, think about that.

• 4:52Tracy Alloway?

  You kind of have the club jacket thing going on at the moment. Okay. Well, we do in fact have the perfect guest to talk about all of this. We're going to be speaking with Dorothea Ioannou. She is the Chief Executive Officer of the Managers of the American P and I Club.

• 5:06Joe Weisenthal?

  Amazing.

• 5:07Tracy Alloway?

  You can ask her if you can join.

• 5:08Joe Weisenthal?

  Can I join?

• 5:09Tracy Alloway?

  As well, as well as.

• 5:10Joe Weisenthal?

  I need like one, I need one member to endorse me and another one. That's how it works at these clubs.

• 5:15Tracy Alloway?

  All right. Well, the second member who could potentially endorse you is Steve Okaalukian. He is the Reinsurance Director at the American P and I Club. So truly the perfect guest. Thank you so much for coming on All Thoughts.

• 5:25Speaker 03

  Great to be here. Thank you for having us. Thank you.

• 5:27Tracy Alloway?

  Why don't you go ahead and tell Joe what is an insurance club and can he be part of them?

• 5:33Speaker 03

  Okay, great. First of all, I, I, I love that you talked about insurance, especially from our perspective. Clubs, we're enablers. So what are clubs? Clubs in our context, the P and I Club, which means protection and indemnity, is a collective. It's a non, not-for-profit, assessable mutual association. It's not a commercial insurer and it basically historically is a club that brought together shipowners in the industry that were trying to fill a gap. So they came from a need for society. And really what clubs do is while they insure the owner, they are protecting society because they are insuring the owner for what you referred to before as liabilities.

• 6:15Speaker 03

  So that would be like losses or damages that they caused to other people, not to themselves. So the clubs never pay own damages. We will not pay damages. That occurs to the vessel in an accident. Or if they have economic loss, their own economic loss. So what P and I clubs do is. They step in and they protect the owner and defend the claims. But they ultimately pay whatever is the fair compensation or whatever is adjudicated for. Passengers that perhaps get hurt on the ship due to negligence of the ship. Claims from a crew that might get hurt in an accident.

• 6:49Joe Weisenthal?

  Mm hmm.

• 6:49Speaker 03

  Liabilities related to collision. So if the ship hits another ship. And they cause damage or personal injury to people or crew on the other ship, they'll pay that. Oil pollution, environmental damage, you know, so cleanup related to that. So. Basically, the way we like to think about P and I, and you really should think about it like this, it's the safety net. And it is the only way that a ship can trade. So for example, let's look at what you do with your car, right? You're not allowed on the road if you don't have liability insurance, right?

• 7:19Joe Weisenthal?

  Mm hmm.

• 7:19Speaker 03

  You don't have to have own damages insurance, right?

• 7:21Joe Weisenthal?

  Yeah.

• 7:22Speaker 03

  But you do need to have liability because we need to know that all the cars on the road have financial security behind them. That if something happens and somebody else gets hurt. There's compensation that's going to come from somebody that's responsible. So that's the concept, let's say, of a P and I club.

• 7:37Joe Weisenthal?

  And you mentioned. That it's a structured as a nonprofit. So I take it that. You're doing this just out of the goodness of your heart. No, that's a, that's a joke. But I talked to us about like, so then.

• 7:49Speaker 03

  What's the concept behind it?

• 7:50Joe Weisenthal?

  Well, so like, why is it that? And then who is bearing the risk for which they're taking a profit?

• 7:55Speaker 03

  Okay, so let's go a little bit to the history of it so you can understand it. So basically, if you go back in time, let's say, up until the 1800s. Up to a certain point, there was no liability for most of your marine liability insurers. As things started to change and they started to impose strict liabilities, regulatory changes started to happen in various countries. Passenger liabilities started to increase. And also the liability started to get a lot more volatile. Your regular commercial insurers did not want to touch it. They couldn't price it. They didn't want to deal with it. And also your classic policy would have a limit of the value of the ship. And a lot of times liabilities would exceed that.

• 8:29Joe Weisenthal?

  Oh, yeah.

• 8:30Speaker 03

  So what happened was the ship owners came together to say, well. We can't allow, like you said before. You know, number one, you can't put all of this money aside until the time is needed. And you also can't risk becoming financially destitute, right? In the instance that you have a catastrophe. So the shipowners came together and said, let's pool our risks. So the not-for-profit element is this. So the concept goes to, in principle, we each put a certain amount of money into a pool. It's based, let's say, on factors that they agree, club members. They have to be shipowners, by the way. So if you do have an ocean-going vessel, we could consider making you a member. Just to say. So there's a formula, or an underwriting formula, where everybody pays a certain rate per ton, okay? And then, dating back to the beginning of time, when they started this,

• 9:16Speaker 03

  if all of the losses were less than the amount that they had put aside into the pool, then they could either have it returned, or they could save it for the next year and pay less the next year. And each year, there would be a reconciliation. But if the losses were more, they each had to put in, you know, prorata, based on their tonnage and based on the formula. So that's the concept of not-for-profit. Now, of course, back then, regulation wasn't the way it is today. So now, you're not allowed to just keep enough to pay your losses. So now, there's regulatory requirements. So now, the not-for-profit has kind of increased to, you need to be healthy not-for-profit. So you have to meet certain solvency ratios under regulation. So that's the concept. I don't know if you wanted to add anything?

• 10:00Speaker 04

  No, but ultimately, it's providing at-cost insurance.

• 10:03Speaker 03

  Right.

• 10:03Speaker 04

  For the members of the club. So like you said, you want to join a club. If the four of us have vessels, and we want to form our own P and I club, you could theoretically do that, pool our money together, as Dorothea said, and say, hopefully, it's enough to meet the claims for the year. If not, we're fine putting in more. But it's better than going to a commercial underwriter, who's going to charge double that, because they need to make a profit.

• 10:24Speaker 03

  Right.

• 10:25Speaker 04

  And they don't want to take a loss.

• 10:26Speaker 03

  So it's kind of like self-insurance.

• 10:28Speaker 04

  Yeah, yeah.

• 10:28Speaker 03

  Right? So it's kind of like self-insurance.

• 10:30Joe Weisenthal?

  Like, self-insurance, you might think of something that exists at the firm level. And this is self-insurance kind of at the industry level.

• 10:36Speaker 03

  Right, exactly, right, exactly.

• 10:38Tracy Alloway?

  So one of the things that comes up immediately, if you type in "American P and I Club" into Google, is it says it's the only American. American Insurance Club. And there are a bunch apparently in London. And actually, I would like to talk about how London became like a big insurance capital in general. But why is there only one American insurance club?

• 10:57Speaker 03

  Okay, well, then we'd have to go back and talk about how the American club was born, right? So yeah, so historically, the the origins of organized insurance really are into the financial center of the London market. Actually started, I think, with, remind me, Steve, with some brokers in a coffee shop in London. That, you know, started to decide, well, you know, we actually, it's the same concept of how the clubs developed, but at the more fundamental level of the basic, well, we don't want to risk losing the cargo or the ship en route. So, you know, underwriters were kind of born through that process. But the American club actually was born much later. So the American operators historically were insuring with the London clubs.

• 11:37Speaker 03

  And then 1916, the Americans were not in World War One yet, right? The UK was. So the UK at that time passed what was called the UK Trading with the Enemy Act. And which basically says, you know, if you are, you know, trading with my enemy, then you're my enemy. And at that time, the United States was not in, certain American operators were still involved in certain types of trades. And the UK then, this act prohibited a lot of American operators from continuing to have their insurance with the UK clubs at that time. So back then, I think was the largest US broker, Johnson and Higgins, I think at that time, came together with ship owners, industry lawyers and lobbyists and legislators,

• 12:20Speaker 03

  and realized that they were going to have to create something in the United States. And I think that this, it's very interesting how it's kind of very timely of what's going on in the United States right now. Because we're seeing that, you know, in terms of our peers, in terms of other countries, even our allies or even non-allies, we've kind of fallen behind on the maritime side, right? So in the industry, like we used to be the number one maritime nation in the world. And now we're definitely not. And so they came together and they they surveyed the American operators to see, would you be interested and would you join an American P and I club that would fundamentally work the way the London clubs would work? Already work and they got a lot of favorable response and then within the year they had um enabling

• 13:00Speaker 03

  legislation in New York State which created the structure because it didn't exist before that and had needed to be have a regulatory structure. And on February twentieth, February fourteen, sorry, Valentine's Day, nineteen seventeen, the American Club was born. And since then, it's not an easy thing to put together a club, you know, because you have to, you start from scratch, really.

• 13:20Tracy Alloway?

  Right.

• 13:21Speaker 03

  And so since then, we have been the only club and we've brought, we've taken the United States through two world wars since then. But also been a part of this whole ebb and flow of the American maritime industry. Yeah.

• 13:35Speaker 04

  And I was gonna say, that doesn't mean that our members are only American.

• 13:38Speaker 03

  No.

• 13:38Speaker 04

  So historically.

• 13:39Joe Weisenthal?

  Oh yeah, explain this. Yeah, yeah. So explain why that is.

• 13:41Speaker 04

  I mean, it's just the name now is the American Club. And then you have the Swedish Club, you have the London Club, you have the Japan Club.

• 13:47Joe Weisenthal?

  But there are members who are.

• 13:48Speaker 03

  Global.

• 13:49Speaker 04

  Global, so.

• 13:49Speaker 03

  All over the world.

• 13:50Speaker 04

  Right. So I would say maybe thirty years ago, we were probably eighty percent, maybe even more.

• 13:56Speaker 03

  Yeah.

• 13:57Speaker 04

  US-based membership.

• 13:58Speaker 03

  Nineties, we went.

• 13:59Speaker 04

  Right, more of a globalization effort in the nineties.

• 14:02Tracy Alloway?

  Wait, how do, how do ship owners decide which club to be a member of?

• 14:06Speaker 04

  A lot of it's service oriented. Again, who you know, right? You have a friend who owns a ship and he's like, I'm with the American Club, I'm with this club. Have a great experience with them, close with the claim handlers, underwriters. If I need something, they pick up the phone, I can talk to them, I'll make the introduction. So it could be as simple as that. Or some people just go on Google and say, I need to join, I need P and I insurance, where could I go? And maybe if they're American, they see American P and I.

• 14:31Tracy Alloway?

  Is there like a maritime insurance comparison site where you get all the different rates or something like that?

• 14:37Speaker 03

  Yeah, no.

• 14:39Speaker 03

  But there is an international group of P and I clubs. I don't know, Steve, if you want to talk about that, how that works.

• 14:44Speaker 04

  So there's collectively, now there's twelve international group clubs, known as the International Group of P and I Clubs. Collectively, we insure ninety percent of ocean-going tonnage. So being a member of one of those clubs, it effectively, the same way the clubs work together and they pool risks, the group works together in the same way. So being a member of the international group, it allows you, and I, there's a few core functions of the IG. As the reinsurance director, selfishly, I'll say the most important is the reinsurance purchasing power that the group clubs have. So collectively, the twelve clubs come together every year. And they purchase policies. I think it's the largest reinsurance policy in the world.

• 15:29Speaker 04

  There's roughly eighty-five separate reinsurers on this, various points of the world. And we insure risks up to, well, we provide cover about, for about eight million, eight billion dollars per incident. But we buy reinsurance collectively with the other clubs, up to three billion. So it's fairly unique because they are competitors of ours, but together we realize the best thing for an individual ship owner is to have this group purchasing power and allows us to buy high levels of reinsurance at pretty, pretty inexpensive costs.

• 16:00Joe Weisenthal?

  It's so interesting because I guess like insurance by per se is all about pooling, right?

• 16:05Speaker 03

  Right, yes, spreading the risk, right, spreading the risk in sectors.

• 16:09Joe Weisenthal?

  So I certainly want to get more soon to like the sort of the role of this P and I insurance within the context of the war right now and so forth. But one quick question I have, um, you mentioned that, uh, entities contribute based on their tonnage.

• 16:26Speaker 03

  Yeah.

• 16:26Joe Weisenthal?

  And, you know, when I, when you use the driving insurance analogy to talk about liability, you know, there are various factors that go into how much, how old are you? Have you taken defensive driving? How many tickets you've gotten, et cetera? Why is tonnage, which is not a metric that would suggest risk to others in my mind, an important proxy here?

• 16:49Speaker 03

  No, it's not, it's not a risk factor. It is how we multiply. The rate is per ton. But the rate, the rate per ton comes from all of those risk factors. I don't know if Steve, you want to get it?

• 17:00Joe Weisenthal?

  Oh, I see what you're saying.

• 17:01Speaker 03

  So one might pay one dollar a ton, somebody else pay two dollars a ton, somebody may five dollars a ton.

• 17:06Joe Weisenthal?

  Oh, I see. So it's not that there's like a fixed per ton?

• 17:09Speaker 03

  No, no.

• 17:09Joe Weisenthal?

  Okay, so talk about that pricing of, got it.

• 17:13Speaker 04

  Yeah, not all tonnage is created, right? So if you have a small barge, for instance, that doesn't have any crew, it's just carrying coal up and down a river versus a large cruise ship, where you have multiple crew members and passengers on there. You know, that one ton, if you will, on each vessel is not the same.

• 17:33Joe Weisenthal?

  So they're gonna get priced differently. Right. Okay, so it's not really about.

• 17:37Speaker 03

  It's not about, it's just a measuring tool.

• 17:40Joe Weisenthal?

  I see.

• 17:40Speaker 03

  Yeah, it's just a measuring tool. But like, let's say you have the same sector, you have the same type of ship. A lot of the same factors. The smaller ship's gonna pay less than the larger ship, simply because of the tonnage, let's say. So they might both be charged at five dollars a ton, for example. But, because also, that is also a factor in assessing limitation of liability.

• 18:02Joe Weisenthal?

  Do the clubs play a role in like, ensuring training of the crew and things like that? That would be proxies for safety?

• 18:12Tracy Alloway?

  Well, this was gonna be my question, because one of the other reasons we appreciate insurers here is because like, they're arbiters of behavior, right? And especially at a time when a lot of governments seem to be, you know, stepping back from certain markets. It's often like, the private insurers who are saying like, this is what you need to do in order to get insurance. What are the requirements for ship owners in order to be eligible for club membership?

• 18:37Speaker 03

  Great, great. That's a great question. So one, there are a lot of requirements. And yes, loss prevention is a big thing, and that also differentiates us from commercial. And as you go to the website, you'll see a whole section on loss prevention. So, we do look at the quality of the operation. We do look at the experience of the people that are running the management. There are warranties as well. So, number one, you have to be of a technical level in terms of quality. So that, we're gonna get a little bit complicated here.

• 19:06Joe Weisenthal?

  Please.

• 19:06Speaker 03

  Okay, so ships are also subject to other requirements, independent of the club. And that's subject to the requirements of their classification society. So the classification society are like the surveyors, the technical arbiters, let's say, that come in and make sure that the ship is of certain quality, technically.

• 19:23Joe Weisenthal?

  Okay.

• 19:24Speaker 03

  So you have to be in, we call it in-class, is what we call it. That's definitely a requirement. And then, of course, we also require that you are conducting only legal trade. So that is another aspect of that. I will hand it over to Steve to add other aspects on the underwriting side.

• 19:39Speaker 04

  The main, I mean, we do management audits as well, obviously. So we bring, because sometimes it's a startup, right? Which is tough, because there's no history there to see where they've been. Ideally, as an underwriter. You're looking at a client who's been with another club and is looking to switch. So they come over, you see a loss record, you have a pattern, you know where they're operating, what they're doing. When it's a startup, it's a bit more difficult than that. Where we'll go out, and again, sometimes it could just be proactively. We haven't met this member, let's see them in person, what they're up to, get on their ships.

• 20:13Speaker 03

  We do condition surveys, yeah, from that perspective. Quite often, we would do a condition survey.

• 20:17Speaker 04

  So we would do, in that case, like a pre-entry condition survey. Where if the vessel is older than 10 years of age, we'll say, we need to see it. Even though it's in class, we just want to make sure from a P and I perspective.

• 20:28Speaker 03

  It meets our requirements.

• 20:29Speaker 04

  That there's certain things that check all the boxes for it to come into the club.

• 20:33Tracy Alloway?

  Wait, what actually constitutes risky behavior on the part of a ship? Because, again, if we go to the driving analogy, like, okay, speeding is bad, that would be risky. Driving drunk would be very bad. What's like the equivalent?

• 20:47Speaker 03

  Well, the other thing that we look at is the history and the claims record, right? So we would see the incidents and the types of incidents. So if we see patterns or trends, a lot of times it has to do with their trading. So certain trades might be a little bit riskier than others. And that just comes from our actuarial analysis. So each club also takes their portfolios and analyzes the trends on the claims. And you'll determine the levels of risk and your risk appetite with that. So like, for example, our experience has shown us that container ships have certain types of risk that might not be the same as others. So while some people might look at a container ship and say, okay, well, they do liner business, so they're quite organized, right? They're quite sophisticated.

• 21:29Speaker 04

  What's liner business?

• 21:30Speaker 03

  So going from one port to another often, right? So that means that they're very familiar with the two ports, the people are very familiar, the approach of management is quite sophisticated. And then you might look at it from a risk perspective and say, okay, how much are each of the containers worth in case there's an accident, they fall? But you have to think bigger than that. So for example, if there's a casualty on a container ship, and it's a total loss in any seaway, in any ocean in the world, the catastrophe risk is much different than, let's say, a bulker that might sink or a tanker. Because those individual containers, for example, will start to pop up and float to all different places on all different coasts, wherever, whatever is adjacent to the sea that it has sung, that it's sank in.

• 22:14Speaker 03

  In which case, though, part of the liability includes cleaning those all up. And those types of containers are considered hazardous waste. So there's a special disposal process that has to go, can be quite expensive. It can also cause danger to navigation in seaways. So you see what I mean?

• 22:30Speaker 04

  Yeah.

• 22:31Speaker 03

  Really, you look at the type of ship that you're looking at and you look at the type of claims that it might, that can possibly arise. But we look mainly, Steve, I would say, at, we look at industry, but we look mainly, each club will look at their own experience and decide that, you know, what they classify as risky behavior. We look, we analyze claims and we learn from the claims to decide what we're willing to tolerate and what we're not willing to tolerate. Or what we're willing to tolerate, but we're going to charge a lot more, for example, because the risk is higher. I don't know if you wanted to add something?

• 23:03Speaker 04

  No, I was gonna say, a lot of it, too, is human error.

• 23:05Speaker 03

  Yeah.

• 23:06Speaker 04

  So you could do all these actuarial studies.

• 23:07Speaker 03

  And you still have a mistake.

• 23:08Speaker 04

  To say that this vessel operating in this region is likely to have X amount of claims per year, but you can't account for a crew member not sleeping or being, or falling asleep at the wheel, basically, and causing an accident, which has happened.

• 23:20Speaker 03

  Yeah.

• 23:21Speaker 04

  So a lot of it's human error, not being trained properly, small things. I mean, as P and I insurers, people look at us and think, large oil spills, wreck removals.

• 23:29Speaker 03

  Yes.

• 23:30Speaker 04

  The big headline claims, but our average claim is about twenty or thirty thousand dollars per claim.

• 23:35Speaker 03

  Yeah.

• 23:36Speaker 04

  So it could be a small crew claim, a cargo claim.

• 23:38Speaker 03

  Definitely.

• 23:39Speaker 04

  So these are the things that add up and determine how a P and I club is operating, not so much the one-off big incident.

• 23:44Speaker 03

  Yeah. And, sorry, I just wanted to add one more thing, going back to the original question that you posed in terms of what is our role in terms of training, let's say, or loss prevention. So while we are not the primary people or group that's responsible for training crews, because there's crew managers, the operators themselves have to do that, the training that they get in the schools that they go to and stuff are really, what we do, though, is based on our analysis of our claims, though, we identify gaps, we identify issues, we identify trends, and then We do actually have programs that enhance training. So from whatever they're doing, we will add things. So you'll look on our website and you'll see that we have regulatory training that the owner can use to actually track the training of their crews that make sure that they know certain minimum standards of the regulatory knowledge.

• 24:29Speaker 03

  Let's say, are they familiar with how to handle like the collision regulations, for example, and other types of modern regulation for navigating it? See, we've also done vlogs. We've done interviews. We do seminars and then we also do like a good catch series. So you'll see that we take our cases and we analyze near misses. And then we identify what our owners and their crews and their people assure can do better in order to prevent that in the future.

• 25:13Tracy Alloway?

  There are some market stories where you want every detail. Joe and I have made quite a few podcasts on that basis, but sometimes you've only got 10 minutes and just want to know what's moving markets fast. That's the Barclays Brief Podcast. Every week, experts from Barclays Markets and Research get you up to speed on what's happening and what to watch next. Concise, focused, and brief. Search Barclays Brief wherever you get your podcasts.

• 25:39Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 26:21Speaker 01

  Hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there. It's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 27:02Tracy Alloway?

  So I have a personal question, which is, this is kind of Odd Lots lore, but I'll repeat it for people that don't know the story, but many years ago, I guess four years ago or so. It feels longer, doesn't it? Yeah. Okay, four years ago, my furniture got stuck on a container ship called the Ever Forward that ran aground in the Chesapeake Bay. And I think an investigation found that the pilot had been using his phone or something, which is kind of crazy to think about. I didn't see any insurance payout from that. I know my property wasn't like actually damaged, but it was kind of annoying not having a couch for a couple of months or however long it was. If something like that happens, what is the actual distribution of the insurance payout?

• 27:46Tracy Alloway?

  So who does it actually flow to ultimately? Like, does it eventually reach the customer who's shipping stuff on these ships?

• 27:54Speaker 03

  Uh, it's not, and there's not like a straightforward answer. There's a lot of dependencies that go along with that and it has to do with, you know, the contract that you have, right? And the various insurances that are placed. Now, to a certain extent, there has to be a certain limit on what could be considered too remote, for example. And under certain regimes, you would probably have to have physical damage in order to be able to claim the economic loss related to that. That is probably the reason why a lot of times when you ship things, they ask, do you want insurance so you can, so you can insure yourself? Cause there's no guarantee that ultimately that will get up to the, the P and I club. For example, because it it just flows into contractual liabilities I see. Under that.

• 28:37Speaker 04

  But but the the shipper would have cargo insurance

• 28:39Speaker 03

  Yeah.

• 28:40Speaker 04

  As a whole to get from point A to point B. And obviously, part of that is it's going to be on a vessel, most likely. So if the ship owner is negligent and they're found liable for that loss.

• 28:49Speaker 03

  Yes.

• 28:50Speaker 04

  So like you said, he was on the phone, vessel grounded. Then the cargo underwriter would go after the owner, which ultimately gets covered by the P and I clubs.

• 28:58Speaker 03

  I see. Okay.

• 28:59Joe Weisenthal?

  By the way, I'm on your website and you guys have some great posters. These safety posters that people should go check out.

• 29:07Speaker 03

  Do they say, don't be on your phone?

• 29:08Joe Weisenthal?

  Yeah, there's one. Yeah, there's one that's

• 29:10Speaker 04

  As simple as that.

• 29:11Joe Weisenthal?

  Yeah, there's one that's I kind of want to get one of these framed like for my house. They're really cool looking. I'll blow it up. But like, does it feed your focus on shut off personal cell phones?

• 29:20Speaker 04

  Right.

• 29:20Joe Weisenthal?

  I see you guys, you know, it's like safety stuff.

• 29:23Speaker 03

  Yeah.

• 29:23Joe Weisenthal?

  Anyway.

• 29:23Speaker 04

  And this will go out to all our members.

• 29:26Joe Weisenthal?

  Yeah, that's what I'm saying. So I'm telling you, but also listeners should just go out and download these because they're pretty cool looking.

• 29:30Speaker 03

  You know, we also, sorry, just so you said that, something that could also apply to people not in the maritime industry. We have a whole series related also to like sexual harassment that creates awareness for you to understand what that means. That's simple things that even based on certain cultural or even habitual type of behaviors that can be considered sexual harassment creates awareness for it. It's a really fantastic.

• 29:51Joe Weisenthal?

  Yeah, there's a lot of good, uh, there's a lot of good resources here. All right, let's talk about like the context of this conversation within the war in Iran. And the reason, I mean,

• 30:00Speaker 03

  Yeah.

• 30:01Joe Weisenthal?

  The issue to my mind is like, okay, so are you affected by it? Because when I think about the situation, I'm by and large not thinking about risks that ships are going to pose to others in the context of war.

• 30:13Speaker 03

  Yeah.

• 30:13Speaker 04

  Right.

• 30:14Joe Weisenthal?

  As opposed to risks to the ships. So like, talk to us about like the degree to which for your

• 30:21Speaker 03

  P and I gets involved.

• 30:22Joe Weisenthal?

  Yeah.

• 30:22Speaker 03

  Okay.

• 30:23Joe Weisenthal?

  Is a factor or the Iran war is a factor in the world of P and I insurance.

• 30:27Speaker 03

  Well, I'm going to give you the big picture and then Steve will analyze it. We'll break it down. So traditionally, war has its own special sector of war underwriters, war insurance. The P and I standard policy excludes liabilities that arise out of war acts. However, there is An excess level of cover that is offered by the PNI club simply because the standard policies are limited by the value of the vessel. I'm gonna hand it over to Steve.

• 30:59Speaker 04

  We've been talking about PNI and liability. But if you're a ship owner, you so you come to us for your PNI insurance. You go to a hull and machine underwriter for hull and machinery for the vessel's value, what's on the ship. So you have two separate towers of insurance. So we cover the liability, they cover the hull. But because we exclude war risks, it's traditionally offered, there's a few places they could go. Traditionally, the hull underwriter will give you war risk cover for PNI and hull up to the value of the ship. So if you have a $10 million ship, you're insured, so the ship sinks, it's a total loss, you're covered for 10 million. Underwriter writes you a check.

• 31:42Speaker 04

  There's a pollution element, they'll cover 10 million of that loss as well. So that's traditionally PNI, but because we exclude it, the hull war underwriters.

• 31:51Joe Weisenthal?

  Just to be clear, if a ship is sunk in the war, then there could also be a liability on the part of the owner for the pollution caused by their own ship having been sunk.

• 32:04Speaker 03

  Potentially. There's a lot of nuances to that, too. It has to do with also convention, there's certain international conventions that exclude if it's subject to war, but then there's certain national legislations that carve that out. So it depends on where it might happen.

• 32:19Joe Weisenthal?

  Sorry, just to be clear, though, like when you talk about like, you said there's a war exception, or you don't cover war?

• 32:26Speaker 04

  We don't cover it. Standard PNI cover would exclude it.

• 32:29Joe Weisenthal?

  But why would PNI ever include war risk? Because the question is like, war to my mind does not.

• 32:35Speaker 03

  What if a crew member dies? That's liability.

• 32:39Joe Weisenthal?

  So that is, okay, I see, I see. Okay, so this is really important. So the, a crew member's death in a war would be, or a crew member's death would be PNI.

• 32:50Speaker 03

  Yes.

• 32:51Joe Weisenthal?

  But you don't, in a war, you do not.

• 32:54Speaker 03

  Unless.

• 32:55Speaker 04

  Got it. Right. And on top of it, so we mentioned pollution, we mentioned crew, wreck removal would be one, so, you know, vessels going through the strait. There's mines. If it were to sink and it's a wreck and it's in a shipping channel, eventually, and let's say the conflict ends, well, now you have a wreck there that needs to be moved.

• 33:15Speaker 03

  Yeah.

• 33:16Speaker 04

  So P and I clubs would have to step in and remove that wreck, which will cost a lot more than the value of the vessel. So what the P and I clubs do offer is what Dorothy mentioned, excess insurance. So excess of the hull's value, knowing that a wreck or pollution event, likely not crew, but a, you know, a larger loss could breach that 10 million or whatever the value is. But in this example, 10 million, you breach that threshold. The P and I clubs, as part of our collective reinsurance buying, we buy reinsurance for war P and I. And every ship owner who's entered in any IG club, every year pays a small amount. It's not a lot, but they pay a small amount for that coverage. So we fill that gap.

• 34:01Joe Weisenthal?

  So just to be clear, just to spell this out, in a war,

• 34:04Speaker 04

  Right.

• 34:05Joe Weisenthal?

  you're, do not provide war insurance, the vessel would go to some other commercial carrier.

• 34:10Speaker 04

  And they would have that in place.

• 34:11Joe Weisenthal?

  And they would have that, but the P and I club does offer this excess based on the reinsurance purchasing power beyond what the commercial carrier may offer. Okay, this is great.

• 34:22Speaker 04

  And effectively, we're buying it on their behalf.

• 34:25Joe Weisenthal?

  Yep.

• 34:25Speaker 03

  Yes.

• 34:26Tracy Alloway?

  So I have what might be a dumb question, but like, why are all these different risks so bifurcated between different players? Like, why is there a separate whole protection provider, a war risk provider? If I'm buying home insurance for the most part, like I just go to an insurer and it's like, okay, we're going to cover your roof damage as well as like whatever else might happen. I don't have to go to three different insurers for the most part.

• 34:50Speaker 04

  Yeah. I think it comes out of exclusions. So originally the hull underwriters didn't want to offer coverage for liabilities because like Dorothy said, they didn't know how to price it. It wasn't their forte. So there was a gap in cover. Right. Yeah.

• 35:04Joe Weisenthal?

  I see.

• 35:05Speaker 04

  So P and I clubs were born out of that. So now you have a club and. What do you want? You want some kind, you want to be able to project what your claims will be in a given year? So the club members are ensuring themselves or each other for what I'll call predictable risks, right? Going from port A to port B with a certain cargo, accidents happen. But if something is

• 35:29Speaker 03

  Yeah.

• 35:29Speaker 04

  A little more specialized. So if you have a vessel operator who's involved in drilling and production operations, that would be excluded as well because that's not a mutual poolable risk. Because that might be a one-off where you may be doing that with your vessel, but the three of us may be saying, whoa, whoa, whoa, we don't want to cover that.

• 35:46Speaker 03

  Yep.

• 35:46Speaker 04

  That's a complete different risk.

• 35:48Speaker 03

  Yeah.

• 35:48Speaker 04

  So war falls into that.

• 35:50Speaker 03

  Yeah.

• 35:50Speaker 04

  It's hard to predict. So the P and I underwriters excluded war traditionally.

• 35:54Speaker 03

  Yeah.

• 35:55Speaker 04

  And now created, there's war clubs, or Hull would step in and offer limited war cover.

• 36:00Speaker 03

  Yeah. I mean, it's important to keep in mind too, that like war risk is not actuarially stable, right? It's not like the rest of the risks. It's really just subject to, you know, geopolitics and, you know, national relations, you know, between countries. And it's really just, it's just based on that. Whereas most other types of insurance is actuarially stable. Um, can't, not always predictable, but actuarially you can analyze it. You can't really do that for war. And then one thing I think is important to note, and this has been a topic of discussion, I think, on the war side, is that during the year in peacetime, it's very cheap.

• 36:37Speaker 04

  Yeah.

• 36:37Speaker 03

  Okay. It's very cheap. And so I know that there was a lot of talk about the cancellations and stuff like that. It's really, they have to do that because they're not underwriting based on the ships transiting war areas. They're underwriting based on trading in peaceful areas. So once an area then becomes subject to a war act, they do have to be able to re-rate that. And so even though they gave a notice of cancellation,

• 37:05Tracy Alloway?

  So these are the headlines we saw at the beginning of the conflict, saying that like war risk insurance has been pulled right at the start of a war, which was very confusing for a lot of people, me included.

• 37:15Speaker 04

  Yeah, I was getting Instagram reels sent to me of people trying to explain it and complete misconception. And when you're getting reels on P and I insurance, you know, something big is going on.

• 37:27Speaker 03

  Yeah, I don't know if you want to explain why the P and I clubs had to give that notice that we gave. Because everybody said, oh, the P and I clubs are canceling war. We don't cover war, but in certain instances we do. Why don't you explain where we cover it?

• 37:38Speaker 04

  Right. Well, or just to kind of back up a bit on what the cancellation means. It's really a cancellation of the rate, not of the cover. So everyone was saying, oh, these vessels are trapped because they don't have insurance.

• 37:49Speaker 03

  It's not true.

• 37:50Speaker 04

  And, you know, Lloyds in London is almost doing this to get back to the US. First of all, all those, not all, but many of the underwriters at Lloyds are American companies. So it wasn't the UK saying, you know, we're going to get the US back for this. We don't support the war. Pull insurance coverage, the vessels are trapped. That's not the case. Every war policy, even though we're not war experts or war underwriters, the way it works, every war policy has a notice of cancellation clause saying if, basically if a war were to break out, like you have here, and vessels are now in the Gulf, well, we didn't price for that. We gave you a cheap rate because you're sailing around the world. Now you're in a war zone, the risk changes.

• 38:30Speaker 04

  So we cancel your policy and meaning we cancel the rate you paid, give you three day notice. You're covered if something happens. So if you're struck, you're still covered, right? But now after that three days lapses, you have to buy your cover back at a higher rate based on what's going on.

• 38:49Speaker 03

  If you're not trading there, it didn't affect you at all. Yeah. So if you're trading there.

• 38:53Speaker 04

  Right. So that's what we, those were the headlines, the notice of cancellation. So it looks like.

• 38:58Joe Weisenthal?

  This is so helpful.

• 38:59Speaker 03

  But why, why'd the P and I clubs give a notice?

• 39:02Speaker 04

  Right. So P and I, so our mutual risks were not, so anything that's pulled and has this excess war was not impacted. But we also offer cover to charterers. So not just ship. Owners if you're chartering a vessel and that.

• 39:17Speaker 03

  Do we know what a charter is for?

• 39:19Speaker 04

  No. Tracy's not, I have no idea.

• 39:22Speaker 03

  A charter, it's kind of like when you lease a car, you're kind, it's like you're chartering it. So you don't own it, you're paying somebody to use it. Okay.

• 39:29Speaker 04

  And the owner is liable most of the time for big oil spills, wreck removal, whatever it may be. Yeah. But a charter could be found liable for some of this.

• 39:37Speaker 03

  Yeah.

• 39:37Speaker 04

  So a charter is risk because it's not pooled with an E I G and there's separate re insurances for that. That includes war.

• 39:44Speaker 03

  Right.

• 39:44Speaker 04

  So that's always been a pass through. So we'll, we will include charterers P and I war cover. And because we received a notice of cancellation from our reinsurers, we tell them we have to cancel your war cover in the Persian Gulf. But give us two days and then we're going to come up with a solution, which is what came up.

• 40:03Speaker 03

  Yeah.

• 40:03Speaker 04

  We had a solution, they could buy it back at a higher rate.

• 40:06Tracy Alloway?

  How much did the premium actually change?

• 40:08Speaker 04

  Um. It depends on where they were calling, but it was. To give an example, there was like one vessel, we saw their war slip. Their traditional war before the war broke out. They were paying about fifteen thousand dollars a year for that. And then when the rates first came out from the underwriters to get the vessel out of the Gulf. It was going to cost about sixty thousand dollars. Just for a seven day period to get it out. And then once the straight closed and there were mines in the straight, there was a separate notice given. If you're transiting the straight, so now you have a war, we call it a buyback. It's a reinstatement of the cover. You have your war buyback for the Persian Gulf.

• 40:50Speaker 04

  You're covered in there, but if you're transiting the straight, there's a new exclusion that may apply with new rate, uh, rating.

• 40:57Tracy Alloway?

  Sorry, you said mines in the straight.

• 40:59Speaker 04

  Right.

• 41:00Tracy Alloway?

  A, are there definitely mines? Cause I think there's been some discussion of that. And then B, this kind of gets to the question that Joe mentioned at the intro. I know I talked about insurers as enablers of behavior, but when you're in a war situation, I assume people also don't want to be killed.

• 41:15Speaker 04

  Exactly.

• 41:15Tracy Alloway?

  Even if they can get insurance.

• 41:17Speaker 03

  Yeah, that wasn't the factor, exactly.

• 41:19Speaker 04

  That's what we wanted to get to. The vessel, they weren't trapped because there was no insurance or because the rates went up. It's they just.

• 41:26Speaker 03

  Don't want to put their crews at risk.

• 41:28Speaker 04

  You don't want to put your crew at risk.

• 41:30Speaker 03

  And it should, people should know though too, that ultimately the decision. To do that type of course is for the master of the vessel to decide. It's not, you know, you can't direct him to do something that he believes will put the crew and the ship at risk. That is rule number one. I did want to comment. This is a core maritime principle. Yeah, yes, exactly. The other thing I wanted to mention is that actually I was speaking to one of our colleagues that manages our European subsidiary, and he has extensive experience in hull and on war. And I was given to understand that the ships that were trapped on the inside were given different rates than ships that were looking to go in and out. So the ships that were trapped, it was taken into account that there, this is not a voluntary,

• 42:15Speaker 03

  it's not an initiative to trade in a high-risk area. Right. That they are trapped, and if they want, the rates were significantly lower to come out if you were trapped. Oh, that makes sense. Than it was for those ships looking to actually transit to do regular trade through the high risk. And in those cases, when they were looking to trade, the rates were ranging from anywhere from three to 10% of the hull value. The ones that were initiating this type of trade, whereas compared to the ones on the inside, the average rate I was told was about 0.5. It's a big difference. So that is very important to understand, and insurance was always available. It's just. Yeah. Whether you wanted to do it really ultimately.

• 42:55Speaker 03

  And the operators and our members that we spoke to all made it very clear that the safety of their crew was much more important than everything else.

• 43:21Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk, and job candidates must understand that a commitment to SpaceX means adhering to this culture. And exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs. And hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 44:04Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 44:44Joe Weisenthal?

  It makes a lot of sense to me that like certain types of insurance that are like, that end up in this sort of reinsurance, or sorry, self-insurance model, are the types that are like highly stable and predictable. Tracy, do you remember 2014 AOL? It was still a public company. Oh, wow. And I don't know if anyone remembers this, a little bit of insurance history. The CEO said on its earnings call that the company's profits had taken a hit because one of their employees had a very high complicated pregnancy. And it was so big that they actually, he noted. And then everyone sort of figured it out, I think, who it was. And it was like a pretty egregious like privacy violation.

• 45:28Joe Weisenthal?

  But they were self-insured because it's a large company. And over time, you're like, you know, your health insurance costs are going to be stable from one year to another. But it was just, I guess, such an expensive.

• 47:53Speaker 04

  But what you pay is there's a there's a there's a formula which we're not going to go through. It gets complicated, but it's based on your relative size. So if you're a smaller club, right, you're paying less for these large maritime casualties. Where a larger club is going to take a big hit, even if it's not their claim.

• 48:09Speaker 03

  So it's all scaled. It's all scaled and it's quite fair. And the concept actually is that everybody pays their share over time.

• 48:18Speaker 04

  Right.

• 48:19Joe Weisenthal?

  Yeah.

• 48:19Speaker 03

  Yeah.

• 48:20Speaker 04

  Yeah, over and it works.

• 48:21Speaker 03

  What you take out, you need to put back in.

• 48:23Speaker 04

  Right.

• 48:23Speaker 03

  And that's at the at the club level and at the at the the in the group level. Yeah, the group level, let's say, yeah.

• 48:30Tracy Alloway?

  Just going back to the Strait of Hormuz for a second, there are some ships from certain companies that have been like running through despite everything going on. And the one that springs to mind is Dynacom. And I actually, I sent an email to them asking if if I could get their owner.

• 48:46Speaker 04

  The captain on the phone.

• 48:47Tracy Alloway?

  On odd lots. And I haven't received a response, perhaps unsurprisingly. But like, what is enabling them to get through versus other ships?

• 48:56Speaker 03

  Yeah, I don't think that that's something that we'd be able to really.

• 48:59Tracy Alloway?

  Okay.

• 48:59Speaker 03

  They're not our members. We're not familiar. We do have another member, though, that was hit. The other thing I wanted to mention is that despite the fact that the P and I clubs are not the primary insurer on a case of war, we actually do take an active part. So we are involved. We are close to the member because we have a very close relationship with all of our members to begin with, right? We are most of the time copied on all the correspondence, so we also provide some guidance. Because besides the P and I side, we also have what's called an FD and D cover, and that's freight, demarge and defense. And so that helps the owners with disputes that may arise, contractual disputes. We don't insure the claims themselves, but we provide the guidance, the legal guidance. We have a lot of lawyers within the club.

• 49:43Speaker 03

  But we also support them if we have to hire lawyers outside to defend or to pursue any claims that they may have. And that's a legal costs cover. So a lot of the times, even on cases that we are not directly responsible for or not directly not responsible for but covering, we're usually quite involved because, like I said, we're protection and indemnity. The protection. Part of it involves standing next to the member and guiding them. But the intricacies of any particular owner being able to cross the street is not something that we're actually privy to. So, but yeah, I mean, the only thing I can say is that I know that there are certain factors that are looked at by the Iranians when they are attacking, you know.

• 50:20Joe Weisenthal?

  This is such an interesting conversation. You can go a lot longer. I'm looking at a, um, this article about Dynacom. The owner of the billionaire shipping magnate, Greek buccaneer, George Prokopew. Is, that's the name of the firm. I noticed, so at the American club, you have office locations in New York, London, also in Piraeus in Greece. And then also Shanghai and Hong Kong. And I'm just curious, like, so like I said, this current moment aside, we all sort of know that Greece specifically is one of the centers of shipping for a long time. But has it moved east over time? Okay, we know that a lot of the shipbuilding is happening in Asia.

• 51:01Joe Weisenthal?

  And we also know that so many of the routes are Asia dominated, et cetera. Have the financial flows of insurance moved east in the same way the physical flows? Have the financial flows of insurance moved towards Asia? I should say specifically rather than.

• 51:18Speaker 03

  On the insurance side?

• 51:18Joe Weisenthal?

  Yeah, on the insurance side. Has the, has insurance finance moved towards Asia in the same way that the trade flows have?

• 51:25Speaker 03

  No, not from an international perspective. China does have its own P and I club. It's not a member of the international group of P and I clubs. They do have reinsurance relationships with some of the clubs that are members of the group. It's a very large P and I club, but it generally ensures Chinese managed and owned tonnage.

• 51:42Joe Weisenthal?

  Building and trade is so Asia dominated. The financial element of the insurance has not.

• 51:48Speaker 03

  On the insurance, no, it hasn't really, not from the international side of things. Not, yeah, not from the international side of things. I think even all the major traders are still insuring with the UK, Scandinavian and, and the American, American clubs. Yeah, I would say that's, Dave, I don't know if you've seen anything different. I've not seen anything different.

• 52:10Tracy Alloway?

  If the US starts building ships again,

• 52:13Speaker 03

  Yeah.

• 52:13Tracy Alloway?

  Is that great for the American P and I Club? Does your, would your like, membership automatically increase?

• 52:18Speaker 03

  It wouldn't automatically increase, no, because there's no directive, and there's no directive in any country that you need to, that your insurance has to be, you know, domestic.

• 52:26Tracy Alloway?

  Mm-hmm.

• 52:27Speaker 03

  But it would probably increase our potential to grow if we began to build ships in the United States, yeah.

• 52:34Tracy Alloway?

  Do you see any signs of that actually happening? We've done a number of episodes on how to get-

• 52:37Joe Weisenthal?

  People who want it to happen.

• 52:39Tracy Alloway?

  People who want it to happen, yeah.

• 52:40Speaker 03

  Yes, yes. I mean, we want it to happen, too. We want the American maritime industry generally to become stronger. We think it's a, we do think it's a shame how it's developed over time. The American Club also was a part of that. You know, like I said, up until we internationalized, you know, our membership was very, very small because it was only American and the maritime fleet was shrinking at that time. Obviously, we are the only, we are the only club, while the, while all the clubs have a presence in the United States, not all of them, but many of them, they don't have an actual regulatory domicile like we do. So, if the American Club and all of its people in the United States are probably the most significant and the deepest bench

• 53:19Speaker 03

  in terms of know-how of managing and underwriting maritime casualties. And we're very proud of that. We've been doing that for almost 110 years now. So, we're, not us personally, but the company itself. But, yeah, obviously, we are very supportive and we are actually very active and we have relationships also with all of the agencies. We, we actually insure all of the MARAD training vessels. We know all of the agencies very, very well. We have active relationships and we are very much a part of that American industry that is looking to bolster what's happening here in the United States.

• 53:56Tracy Alloway?

  Jo, you need to build a ship and then, and then join the club.

• 53:59Joe Weisenthal?

  Well, you mentioned that our shipping startup, so it could happen.

• 54:02Tracy Alloway?

  All right, Dorothea Ioannou and Steve Okalukian, thank you so much for coming on All Bots, really appreciate it.

• 54:08Speaker 03

  Thank you so much for having us.

• 54:09Joe Weisenthal?

  That was so great.

• 54:10Tracy Alloway?

  Great conversation.

• 54:11Joe Weisenthal?

  That was really good.

• 54:12Speaker 03

  Thank you.

• 54:25Tracy Alloway?

  All right, Joe, that was a fascinating episode.

• 54:27Joe Weisenthal?

  Yeah, that's great.

• 54:28Tracy Alloway?

  For sure. I feel like I am slowly getting a better handle on the maritime insurance industry. It is interesting to me how like divided all those different risks are. And to Steve's point, the idea being that like, well, if you're a P and I club, you can kind of price out the risks of going from A to B with like a certain type of cargo in a certain like predictable manner. But if you're doing war risk insurance, that's a very different kettle of fish.

• 54:55Joe Weisenthal?

  You know, it's sort of.

• 54:56Tracy Alloway?

  That's a maritime expression for you.

• 54:58Joe Weisenthal?

  Oh, yeah. Good job.

• 55:00Tracy Alloway?

  Thanks.

• 55:01Joe Weisenthal?

  It actually makes a lot of sense to me, this idea that like war, the pricing for war insurance would reset very quickly, right? Because one could imagine, say, like buying a multi-year, you know, oh, you're going to buy this insurance and it's going to cover you for the next few years. Most of the time, there's not war. And so most of the time, you don't want to be paying a war premium, et cetera. So it's all just like a trade-off. It's like, okay, like no one loves it. A war breaks out, so suddenly like your premiums are going to surge the next week.

• 55:33Tracy Alloway?

  Yeah.

• 55:34Joe Weisenthal?

  I don't think anyone's very excited about that. But that's just the flip side for getting really low war risk insurance. The vast majority of the time when war is not going to be an issue for you. It's just a trade-off in terms of like, how long do you want to be paying for it and so forth? So that that actually made quite a bit of sense to me.

• 55:53Tracy Alloway?

  Well, it also seems like the limiting factor on ships getting through the strait at the moment isn't in fact insurance at all. It's like whether you can survive.

• 56:03Joe Weisenthal?

  Yeah, the survive, yeah, the captains and the safety of the crew and just being sort of like a sane.

• 56:08Tracy Alloway?

  So even though insurers run the world, there are limits to the abilities of insurers, I would say, to affect human behavior.

• 56:14Joe Weisenthal?

  I think it's really interesting. I also like, like, you know, at first I was like, well, how is a ship and their liability like a car where there's, you know? But, you know, then you see like all their posters and it's saying all of these very safety.

• 56:28Tracy Alloway?

  You love those posters.

• 56:29Joe Weisenthal?

  They're really interesting because it's something like, you know, make sure you're getting enough sleep.

• 56:33Tracy Alloway?

  Are your hatches tight?

• 56:34Joe Weisenthal?

  Yeah, are your hatches tight? Don't, don't check your email all the time. I think there's a drinking one, too. Oh, yeah. Take control of fatigue, everything in moderation. So it's actually very similar to car, to sort of liability insurance for a car, just in the fact that like, the basics of safety apply to a ship as well.

• 56:54Tracy Alloway?

  I'm going to print out the cell phone one and get it framed and put it on your desk, Joe. As a present.

• 57:00Joe Weisenthal?

  That would, I would like that. I would like that.

• 57:02Tracy Alloway?

  All right. Shall we leave it there?

• 57:03Joe Weisenthal?

  Let's leave it there.

• 57:04Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 57:09Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashell Bennett at Dashbot, and Kale Brooks at Kale Brooks. And for more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all these topics 24/7 in our Discord, discord.gg/oddlots.

• 57:30Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about maritime insurance, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 58:20Speaker 05

  Congratulations, you've built a dashboard. But now comes the follow-up question, and the follow-up to the follow-up, and the dashboard for that. Meet Hex. Give everyone the power to ask their own questions, explore data, and build with AI, all in natural language. Because every answer should spark another question, limited only by your curiosity, not your data team's bandwidth. Go deeper than dashboards. Join over 2,000 leading data

• 58:47Speaker 03

  Organizations. Visit hex.ai.

• 58:51Speaker 06

  Empower is all about helping you invest well so you can go out and live a little. And their Free Empower Personal Dashboard shows you your full financial life in one place. You'll be able to see your net worth, monitor budgets, analyze your portfolio, set retirement goals, and more. Whether you're saving for something big, want to treat yourself, friends, or family, or meet long-term goals, Empower helps you see where you stand. You've worked hard for your money, and Empower can help you make the most of it. Download the Empower Personal Dashboard or visit empower.com. Not an Empower client paid or sponsored.

• 59:23Speaker 07

  With ChatGPT, you can do more than get answers. You can get things done. Whether you're leading a big project, planning an elaborate trip, or trying to balance work and life, ChatGPT can help. Give it a goal, plus things like files, notes, or project plans, develop a trip itinerary with daily updates, or create a prioritized schedule. So you can spend less energy sorting out the details and more on bringing your biggest ideas to life. Get started at chatgpt.com.