The SIGCo Philosophy – Adding value is priority number one
Since our inception, we have been engaged in providing a COFR Guaranty product to satisfy the regulatory requirement for shipowners trading to the United States.
It became clear very early in our business life that, whilst providing the COFR guaranty in a shipowner-friendly, low-cost and efficient manner would meet our initial goals, innovative thinking and smart delivery could provide our members further value.
The result has been a consistent track record of value-added initiatives that have repositioned our business from mere product providers to service providers and guardians of our members’ long-term interests. Here are some of our notable developments:
- Unique, optimal structure: SIGCo was the first COFR guarantor to be structured to provide the benefits of mutuality without any mutual liability for our members. This was achieved by an innovative corporate structure that saw SIGCo Limited incorporated as a limited-liability company whose ultimate beneficial ownership and control lies with shipowner members.
- COFR certificate processing: Shortly after we commenced writing COFR Guaranties, we realised the potential benefits to our members of SIGCo preparing and submitting both COFR Guaranty and CG5585 application, since most of the information in the two applications is the same. The savings in both time and administration expense for the owner, as well as the absorption by SIGCo of all certification fees, has been recognised by our members to such an extent that around 80% of our members now take advantage of this service.
- Service fee entry: We introduced the concept of “service fee” entry for shipowners who were required to have the COFR documentation, but had no short- or medium-term plans to enter the US. Sometimes charter parties, or even non-US jurisdictions, would specify provision of a OPA90 COFR Guaranty to provide them with certainty regarding the owner’s insurance arrangements. To recognise this need without shifting an inappropriate expense onto our members, SIGCo allows a member whose vessel fits the criteria to enter it based on payment of a $500 “service fee”, essentially an amount to cover SIGCo’s administration costs. This is treated as a deposit in the event that the ship goes to the US, and the difference up to annual full premium is required to be paid.
- International Carrier Bonds: We created and introduced a low-cost, administratively efficient programme to provide International Carrier Bonds to our members in response to a new regulatory requirement promulgated by the US Customs and Border Protection in 2004. By channelling our large membership base and the unique “buying power” it gave us, we were able to overturn accepted market practice in the provision of surety bonds, lower the costs of surety, and cut through the usually onerous documentation requirements.
- Cyber Insurance: The increasing need for Cyber insurance solutions to cover specific shipping related risks aligns with SIGCo’s strategy to create and offer stand alone elements of Cyber coverage that we consider would be of interest to shipowners, at an affordable price. SIGCo has worked with its partners at Lloyd's to create a defined perils insurance policy at low cost and with a simple application process to be able to offer Cyber Hull and Cyber Loss of Hire Insurance products, where, due to a Cyber related cause, the H&M policy does not respond.
- Risk retention: In 2006, in order to leverage our strong Balance Sheet, we embarked upon a long-term and increasingly beneficial strategy of retaining COFR guaranty risk, thereby reducing effective reinsurance costs. This increased our bottom-line profit, which contributed to the amount returned to members through the “continuity credit” scheme.
- Online oversight: We pioneered the ability for brokers and members to monitor application status, track payment status and review correspondence online through our “broker access” portal. The amount of information at our clients’ fingertips has empowered their oversight role and improved their productivity.
- Profit sharing: Our ability to earn profits from our business activities that would normally have gone to third parties, combined with the strength of our financial structure, has allowed us to implement and expand a “continuity credit” programme, or profit-sharing mechanism, by which we disburse a portion of our profits to our members.