Vessel Damage Cost Differentials: Bulk, Container and Tanker Accidents
- PDF / 324,825 Bytes
- 16 Pages / 442 x 663 pts Page_size
- 64 Downloads / 144 Views
Vessel Damage Cost Differentials: Bulk, Container and Tanker Accidents WAYNE K TALLEY1 1
Old Dominion University Norfolk, Virginia 23529, USA E-mail: [email protected].
This paper investigates whether there are accident vessel damage cost differentials among container, tanker and bulk vessels. Tobit estimates of accident vessel damage cost equations suggest that vessel damage cost differentials exist for container versus bulk and tanker versus bulk vessel accidents, but not for container versus tanker vessel accidents. The vessel damage cost per vessel gross ton of a container (tanker) accident is $33.37 ($18.37) less than that of a bulk accident, all else held constant. The damage cost differentials are associated with fire/explosion accidents and human and environmental accident causes. The accident vessel damage cost differentials found in this paper may be compared with vessel hull insurance rates for investigating whether the latter reflect the former. Also, such comparisons may reveal whether there is cross-subsidisation among vessel hull insurance payees. International Journal of Maritime Economics (2002) 4, 307 ± 322. doi:10.1057/palgrave.ijme.9100049
Keywords: Vessel; accident; damage; cost differentials.
INT RODUCT ION There are two major types of commercial vessel insurance: hull insurance which protects vessel owners if their vessels are damaged or lost, and protection and indemnity insurance which protects vessel owners if their vessels incur liabilities, eg personal injury claims by seamen (see Nixon, 1996). In recent years, hull insurers have questioned whether expected insurance claims upon which they base insurance rates are correct. They have been highly critical of classification
WK Talley Vessel Damage Cost Differentials
308
societies which inspect and class vessels to be seaworthy but subsequently are found to be non-seaworthy, resulting in higher than expected hull insurance claims. As a consequence, hull insurers now routinely order their own vessel inspections which are then used with those of classification societies to determine hull insurance rates for particular vessels. Do hull insurance rates reflect the accident vessel damage cost differentials among types of vessels? If not, the rate payments by owners of one type of vessel may be cross-subsidising the rate payments by owners of other types of vessels. Cross-subsidisation among insurance payees occurs when rate payments in excess of insurance claims by one group of payees are used to cover rate payment deficits (where rate payments are less than insurance claims) of another group. For example, are container and bulk vessel hull insurance rates such that the payees of the former cross-subsidise the payees of the latter? This paper takes the first step in answering the above questions by investigating whether there are accident vessel damage cost differentials among types of vessels and if so, the extent of these differentials. Bulk, container and tanker vessels are used in the investigation. Accident microdata for these vessels
Data Loading...
