Chances are if you’ve been working with the marine insurance market for some time, the term “marine surveyor” may not be unfamiliar to you. But how many property and casualty insurance agents and brokers—even those who routinely work with marine risks—know not only what a marine surveyor is, but understand how such a professional can help clients manage their properties?
Professional marine surveyors, like Barry Tarnef, a marine loss control specialist for Chubb, are sometimes hard-pressed to apply a concrete definition of the term, partly because of the wide variety of surveys and services performed by marine surveyors. “I am not aware of any suitable definition of a marine surveyor,” Tarnef said. “I would describe a surveyor as one, who through a combination of education and practical experience—knowledge and skills, if you will—is able to competently assess a marine venture.”
No matter what the definition, however, the bottom line is that marine surveys are an integral part of underwriting marine risks. Tarnef said that Chubb views surveys, whether they are ongoing, monthly or for specific underwriting purposes, as part of the company’s “due diligence—to make sure that we have a better sense of what the risk is that we’re insuring. Whether it’s a prospect or whether it’s something that we’re entertaining or something that we’re writing at this point in time. And actually … it really benefits both parties.” In addition to providing the company with a perspective of the risk, any recommendations developed from the survey are delivered through the agent or broker back to the client. In that way the client can use the information to improve the safety and efficiency of their operations.
Specialization is the key
According to Ron Reisner, a principal with Reisner McEwen and Associates in Seattle and president of the National Association of Marine Surveyors (NAMS), marine surveyors can be categorized into three fairly distinct disciplines: yacht and small craft surveyors; hull and machinery surveyors; and cargo surveyors. Most surveyors, due to their background, experience and geographic location, tend to specialize in one of those disciplines.
Yacht and small craft surveyors deal principally with “pleasure boats and commercial vessels under, these days I guess the break line would be, about 300 feet,” Reisner said. He added that yacht and small craft surveyors are often involved with inspecting vessels in support of pre-purchase or damage, as well as valuing vessels. In addition, “some become involved in representing various parties during repair and/or construction of those vessels.”
Hull and machinery surveyors specialize in commercial concerns, dealing with the machinery and equipment found on or in working marine vessels. “There’s not a terribly convenient line there, but the hull and machinery guys tend to deal with things like tugboats, barges, engines in ships, cranes as they relate to their use in the water—things like that,” Reisner said. They may also be involved during repair and construction processes, but they are principally concerned with the commercially-related hardware and machinery on working vessels. “Within that discipline,” Reisner added, “there are fellows who specialize in certain kinds of machinery. There’s a fellow, for instance, in our organization who does cranes—but he does cranes on ships.”
As for cargo surveyors, they “have very little to do with the vessels” he noted. “They have everything to do with the stuff that the working vessels carry back and forth. For instance, if a load of apples comes in from New Zealand, and one of the freezer units in the ship has gone down, then they will be called up by the insurance company, because the load is insured. To determine a cause and origin of the failure, the condition of the goods, and oftentimes are charged with disposing of it.” The cargo survey, then, can represent the interests of the consignee—the entity receiving the shipment; it can represent the interests of the shipper; and/or it can represent the interests of the vessel.
“At Chubb, we view this specialization as a positive,” Tarnef said. “The key is always to select the right person for the right assignment. One of the fundamental rules of professional conduct of a marine surveyor is that they perform only in their areas of expertise. This is fair to the client—the party whose property is being surveyed—and the surveyor as well.”
While they may specialize in a certain discipline, Tarnef noted that marine surveyors nevertheless perform a wide variety of surveys, including: yacht condition and valuation (C&V), commercial hull C&V, cargo packing, cargo load and stow, cargo outturn (discharge), marine liability (marinas, terminal operators, stevedores, wharfingers, protection and indemnity, etc.), trip and tow, and draft.
Additionally, surveyors may “conduct loss investigations on any marine line of business—yacht, hull and machinery, cargo,” Tarnef said, adding that not all surveys are ordered strictly because a loss has occurred. “A lot of times you’ll have surveyors who specialize in what might be called underwriting surveys or risk analysis, or risk assessments. So there’s no loss involved, it’s just looking at a yacht, looking at a cargo shipment, looking at a vessel, all those types of things. There’s no loss but we’re looking at it to make sure that the vessel is sea worthy, that the cargo is suitably protected … packaged and marked correctly for the intended transportation. To see that the yacht is going to be able to navigate into the waters they anticipated.”
Claudio Crivici, president of a marine consulting company, Castlerock Risk Services, in the New York area, said a large part of the services his firm performs are “risk management type solutions. I would say that’s probably 50 percent—where we not only do a physical inspection of the vessel, we also take a look at the operational aspects of let’s say a small shipping company, their hiring practices, their crewing practices, their maintenance practices, etc. It’s kind of a complete risk management process.”
Crivici added that surveyors may have some involvement in casualty investigations, including those in which “the casualty is not just physical damage to a yacht or to cargo. It’s also the liability, the personal injuries—the operation side of the claims.”
If some 50 percent of the survey business concerns risk management, the other half relates to losses that have already occurred. Tarnef believes, however, that the two areas are not that far apart. “When you look at it, it’s more circular than separate, because the information that you determine or develop from a loss investigation can be used to not only improve the surveyor’s skill and knowledge—because now that person will have a better understanding of what can go wrong—but they also can actually help the client, whether that’s a yacht owner, a vessel owner or a shipper, importer-exporter, to take some steps to minimize their risk in the future.”
Crivici noted that a common misconception among both insureds who’ve been instructed by the insurer to get a survey of their property and retail agents who may not be familiar with marine risks, is that the survey is a “vehicle to obtain insurance.” He explained that a survey is actually “a physical description of the vessel on the date of the survey, good or bad. Sometime that’s a real big misunderstanding. People think that once they get a survey they’re entitled to get insurance. For that reason, sometimes either surveys are made to look a little bit more colorful than they should be, or maybe a vessel that’s not in good shape reads like it’s in better shape so that someone’s able to get insurance. … Really the job of the marine surveyor is to put an accurate description of what the vessel looks like on the day of the survey, and not to write a report that is basically going to be an advertisement for someone to get insurance.
“As a risk manager I read many survey reports and sometimes I’m a little upset at what I read because I know the vessel isn’t in as good a shape as it says. … It’s like getting a car inspection and someone telling you the car is great. And you actually get the car and it’s not in as good a condition.”
Know your surveyor
For precisely that reason, Crivici and Tarnef warned that it’s important for the entity that orders the survey—whether it’s an agent or broker, a lawyer, an underwriter, an insurance company, a financial institution, a P&I club or a property owner—to know the background and expertise of the surveyor. If the surveyor is a members of an accrediting society, the extent of their educational background, whether they have experience in the area of marine risks for which the survey is needed, are all important factors to consider when hiring a surveyor. “Also, like any other professional, whether or not they have E&O insurance and general liability insurance, etc … I think that’s an important process when you’re screening a surveyor,” Crivici said.
“There are a lot of people who know about boats or cargo,” he added. “But really to understand all the different relationships—the legal relationships, the policy relationship, the agency, the state boards, the federal laws and everything—that’s what really makes a difference.”
As Crivici pointed out, not all marine surveys, or surveyors, are equal. There are two main accrediting associations, NAMS and the Society of Accredited Marine Surveyors (SAMS), that certify their members, mandating a certain level of field experience. Accredited surveyors are required to prove their technical capability though written exams and submission of completed surveys for review, among other things. Both organizations’ Web sites provide listings of their members categorized by location, and include both contact information and accreditation status. NAMS also identifies its member surveyors’ areas of specialization.
However, no accreditation or even licensing is required for people to set themselves up as a marine surveyor. And, according to Reisner, only a small percentage of surveyors become accredited.
“One thing that I’ve asked people,” Tarnef said, “even people in our own company … ‘How many in the room here think they can be marine surveyors?’ My response is always that anybody can. There’s really no licensing. All you need to do is … maybe you need a business license—a local business license—and (you) get some cards printed up and you become a marine surveyor. So that’s why it’s really important that people kind of vent the survey a little bit to get a feel for the (surveyor’s) experience and knowledge … Because there’s a lot of people out there that are in the survey field and like anything else, some are going to be better attuned for a certain job than others.”
Still, Tarnef noted that just as clients have their own expectations of the survey, the surveyor also has requirements. “The surveyor should be given specific parameters of scope and authority,” he said. “This clarity of responsibility should improve the likelihood that the survey and the subsequent report will cover the necessary items.”
For more information about the role and accreditation of marine surveyor, contact: the American Institute of Marine Underwriters (AIMU), www.aimu.org; the National Association of Marine Surveyors (NAMS), www.namsurveyors.org; and the Society of Accredited Marine Surveyors (SAMS), www.marinesurvey.org.
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