Corruption in World Football

It now seems that most of the governing body of world football is on the take one way or another.

Football basically has got the global administration it deserves, all with their snouts in the trough. The amateurism which spawned the game, and pretty much stayed with it until the 1970’s, was not a progressive business model and failed to promote the game onto a global stage. What we have now does that, but at the cost of integrity. Which would you prefer?

Of course the problem as usual stems from the ridiculous amount of money circulating in the game and everyone wants their slice of it. For that we can “thank” Sky and their equivalents throughout the world. Toss in a few mega rich individuals playing with their new Premier league toys and we have a perfect recipe for finanical instability. Chronic hyper inflation in top end transfers, real fans being priced out of the game and the whole thing ultimately being controlled by TV revenue streams and spin offs.

I remember in the 70’s having no idea what happened in football beyond these shores. Now we can tell in an instant who is 3rd in the Azerbijani premier league at any given time. But by globalising we have created a monster that is out of control – think the latter days of the Roman Empire: infighting, corruption, greed and eventually collapse. What has been done to the people’s “beautiful game” ? When will it implode ? To be honest, its none too soon for me.

Advertisements

The perils of running high deductibles

$3 Million Judgment for Slip and Fall Against Carnival (SSM/STD)

On May 19, 2010, Denise Kaba filed suit against Carnival Corporation, alleging she slipped and fell on a multi-colored pool deck surface on the Carnival Pride cruise ship August 22, 2009. Kaba was on a Caribbean cruise sailing from Baltimore with her husband as a passenger and slipped when she was moving some pool chairs. She suffered a fractured knee and underwent 6 surgeries in 1 1/2 years. The attorneys for Kaba argued the cruise line installed a resin surfaced pool deck that “was hard and slippery as ice.” They said Carnival knew about numerous previous accidents on the same surface and on other ships and did nothing to make the surface safe.

Carnival conceded liability and setting up a bench trial on damages alone. U.S. District Judge Ursula Ungaro found damages of just under $3 million: $1.96 million for future non-economic damages; $595,476 for past and future medical expenses; $200,000 for pain and suffering; $170,500 for loss of earnings capacity and $72,198 for prejudgment interest.

Thanks to miamishipping law for the above.

Can they be justified at current levels

There would appear to be three main reasons that underlie the need for Release Calls:

1) Inadequate original premium levels: this only really applies in the first 12 months of the policy year, and, unless something has gone really awry with the underwriting function, ought not to be dramatic.

2) Claims deterioration after 12 months. Statistically, across the group in the past 10 years or so, this simply does not happen to any extent. If it did maybe the Clubs need to recruit new actuaries! Between 12 and 36 months, experience is just as likely to be favourable, and movements are rarely significant. Clubs also regularly report closed back year profits, again suggesting claims deterioration after the 12 month is more myth than reality.

3) Investment valuation movements. This is the real bete noir of the system as previously creditted investment gains can be reversed at a stroke at any point in the 3 years the policy stays open. For disbelievers, just look at the last bout of excess calls!

Does this justify current recurring high levels – up to 25% in some cases – on all open years? Probably not. The Clubs need to be a little more scientific, bearing in mind the totally random incidence of “type 3” issues. Throwing the baby out with the bathwater is no solution.

When is enough enough?

With publication of the first six interim results for members of the International Group of P&I Clubs we are looking at Free Reserves increased by about $ 460 million.  It looks likely therefore that by the time the year is complete, the Clubs could have aggregate Free Reserves of in excess of $ 3.75 billion, heading for $ 4 billion.

Now we all recognise that, in this world driven by an ever increasing compensation culture, a strong capital base is important, but what do shipowners feel about this much of their capital being locked up in their insurers pockets?  How will they feel if, in October, they again face the prospect of further premium increases?

I throw this open for comment