Jacob Munch, Chief Executive Officer at the Danish Shipowners’ Accident Insurance Association (UFDS), looks back at an unusual year.
The year 2020 will undoubtedly be remembered as the COVID-19 year. The COVID-19 pandemic has had major consequences for the whole world including the shipping industry.
Danish as well as international shipping companies have faced big challenges changing crew as planned due to closed harbors and airports together with various restrictions in the different countries.
Consequently, many crews have had long periods at sea with an increased workload physically as well as mentally. In principle, the increased workload could have caused an increase of industrial injuries, but fortunately, it does not seem to be the case.
For the shipping companies with domestic activities the lockdown has caused a decrease in the activities and for the employees that meant either temporary laying-off or notice.
A decrease in reported injuries
UFDS has experienced a decrease by a third in the number of reported injuries. Part of the explanation may be the worldwide pandemic. The response from the shipping companies suggests a lower activity level due to the COVID-19 pandemic, thus decreasing the number of injuries.
Another explanation may be that the COVID-19 situation has increased focus on security and health among the crews - paying more attention to the guidelines. We cannot be sure, which explanation covers the decrease in reported injuries, but it seems reasonable to assume that the COVID-19 situation was a contributing factor.
Due to the decrease in the number of reported injuries, the year 2020 can financially be seen as a satisfactory year for UFDS.
We end the year with a modest surplus, which was the goal. The surplus is not only due to the decrease in the number of injuries, but also to the budgeted costs of previous years’ cases, which have not been as high as expected.
In addition, we have optimized a series of processes and positions in the administration have not been replaced – without impacting the service level.
Negative interest rates are challenging
Despite the positive development with less injuries and a positive economic return, the new year begins with a paradox. Unfortunately, the falling and negative interest rates affect the future economy, and that is the overriding explanation, why it has been necessary, despite of a satisfactory 2020, to raise the premium for 2021.
The premium increase has to be viewed in the light of the falling interest rates, which may erode the entire capital base of UFDS, as the current price for future compensations increases and our compensation payments typically begin after three to five years after the accident.
However, we generally have a positive outlook on the year to come, as we, among other things, are working on further measures to optimize the costs and strengthen the competitiveness of UFDS, and with one more social worker, it is our hope that we can provide even better service and help to the injured parties.
In conjunction, with the ongoing effort of the shipowners to optimize safety on board, we can hopefully look forward to a continuation of the decrease in number of injuries continuing the positive development in 2021.
Happy New Year!