“moving forward together”, brazil, november 2009 … · 1 itopf/ transpetro “moving forward...
TRANSCRIPT
1
ITOPF/ Transpetro“Moving Forward Together”, Brazil, November 2009
“The role of the P&I Clubs in pollution prevention and response.”p p p
Nigel Carden, Deputy Chairman Thomas Miller P&I,
Chairman, IG Ships’ Standards Subcommittee
International Group Clubs
• 13 Clubs in the Group• Cover more than 90% of the world oceangoing
tonnage• Provide insurance coverage, advice, claims
handling services• Provide input on liability and insurance issues
at various intergovernmental and international organisations – Observer status
IG P&I Clubs
• Unique role• Insurance companies that are part of the shipping
industry more than the insurance industry• Not-for-profit (although managers may makeNot for profit (although managers may make
profit)• Risk management advisors • Liability experts • Financial guarantors
International Group principal members
• American Steamship Owners Mutual Protection and Indemnity Association, Inc • Assuranceforeningen Gard • Assuranceforeningen Skuld • The Britannia Steam Ship Insurance Association Limited • The Japan Ship Owners' Mutual Protection & Indemnity Association • The London Steam-Ship Owners’ Mutual Insurance Association Limited• The North of England Protection and Indemnity Association Limited• The Shipowners' Mutual Protection and Indemnity Association (Luxembourg) • The Standard Steamship Owners’ Protection and Indemnity Association
(Bermuda) Limited • The Steamship Mutual Underwriting Association (Bermuda) Limited • The Swedish Club • United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited• The West of England Ship Owners Mutual Insurance Association (Luxembourg)
Underlying Agreements
• Constitution
• International Group Agreement (IGA)
• Pooling Agreement
IG Structure
Club Members (Shipowners and Charterers)
Club Boards elected from Club Members
Club Managers
IG Secretariat
IG sub committees and working groupsIG meetings
2
IG Function
• to co-ordinate the operation of the claims pooling agreement and the collective reinsurance arrangements of the Group clubs
• to represent the view of clubs’ shipowner members on matters of concern to the shipping industry in relation to insurance and liability issues
• to provide a forum for the exchange of information between clubs
2009 Reinsurance arrangements
US$ 1,000m
Collective Overspill Protection
Third General Excess
US$ 3,050m
US$ 2,050m
One Reinstatement
Changes on 2008 arrangements
The Group Pool has combined the previous two layers into one to permit a single formula for allocating contributions.
First General Excess
Unlimited Reinstatements
US$ 20mUS$ 23mUS$ 7m
Upper Pool – Reinsured by Hydra
Excess
Unlimited Reinstatements
Oil Pollution
Second General Excess
First General Excess
Unlimited Reinstatements C
oins
uran
ce 2
5%
Rei
nsur
ed b
y H
ydra
Coi
nsur
ance
25%
R
eins
ured
by
Hyd
ra
Second General Excess
Unlimited Reinstatements
Individual Club Retention
US$ 1,050m
US$ 550m
US$ 7mUS$ 30mUS$ 50m
US$ 1,000m
US$ 500m
US$ 500m
Unlimited Reinstatements
Individual club retention
Reinsured by Hydra $20m XS $30m
The reinsurance of the Pool by Hydra continues to operate for claims in excess of $30 million up to a limit of $50 million and the 25% coinsurance of the first layer of the reinsurance contract.
The upper pool layer although folded into the lower pool, continues to be pre-funded and the cost included in the reinsurance rates.
Individual club retention limit is maintained at $7 million.
Club Cover for Pollution Risks
• Typical rule for pollution cover: “liabilities, losses, damages, costs and expenses incurred in consequence of the discharge or escape from an entered ship of oil or any other substance or the threat of such discharge or escape…”
• Also cover for liabilities incurred under approved agreements, such as STOPIA and TOPIA (and in the past TOVALOP)
• Also cover for fines imposed for accidental discharges
Usual conditions applying to Club Cover
• Marine Insurance Act of 1906, or broad equivalent• Requirement to maintain ship in class, to observe
statutory requirements, etc • Requirement to pay insurance premiumsRequirement to pay insurance premiums• Requirement that shipowner discharges liability
first, before Club indemnifies
Position of Clubs under the CLC Conventions
• CLC/FC: a most successful regime in compensating pollution claims
• Success due in large part to a special requirement for compulsory insurance of first tier of compensation (and available fund for second tier).
• Clubs provide the evidence of financial responsibility of the shipowner
• But Clubs also act as guarantors of compensation to third parties under CLC
Clubs are indemnity insurers
• Principle of “pay to be paid”• So if Owner bankrupt and can’t pay, usually
nothing for Club to pay • BUT….BUT….• CLC is an exception to “pay to be paid”• Claim can be made directly by third party against
insurer (Club) without going through owner
3
Clubs’ guarantor liability under CLCs
• Insurer’s liability has unbreakable limit• Insurer has Owner’s defences, plus defence
where loss caused by owner’s wilful misconduct• BUT……BUT……• Policy defences of Clubs are abandoned under
the Convention’s compulsory insurance requirement
• Including policy defences based on fact that loss is caused by excepted war risks, terrorist risk, or nuclear risk.
CLC certificates v “Blue cards”
• Two types of CLC certificates, but all States have accepted 92 CLC certificate
• Certificates are issued by flag States to owners• Blue Card issued to flag States by ClubsBlue Card issued to flag States by Clubs• Some current issues about signatures
Position of Clubs under US OPA 90
• Clubs acted as guarantors under FWPCA• But Clubs have refused to act guarantors under
OPA 90, because limitation rights not secure
Pollution Cover
• Examples of risks covered under pollution rules:• Property damage• Consequential damage• Pure economic loss• Preventive measures• Damage by preventive measures
2003 Fund = SDR 203 million
1992 Fund = SDR 135 million
SDR
SD
R
200200
175175
150150
125125
‘STOPIA’ increase in small ships’ limit,‘STOPIA’ increase in small ships’ limit,with 1992 and 2003 limits with 1992 and 2003 limits
1992 CLC = Min/Max SDR 3/59.7 million
2003 CLC = Min/Max SDR 4.51/89.7 million
Voluntary scheme
0 20 40 60 80 100 120 140 1600 20 40 60 80 100 120 140 160tonnage ‘000stonnage ‘000s
millions
millions
33
100100
7575
5050
252520 m
SDR
SD
R
750750
350350
300300
250250
TOPIA (Tanker Oil Pollution Indemnity Agreement)TOPIA (Tanker Oil Pollution Indemnity Agreement)
Supplementary Fund shared 50/50, limited to SDR 750 million
50 cents per $ from owner of spilling ship
50 cents per $ from oil receiver
2003 Fund = SDR 203 million
1992 Fund = SDR 135 million
0 20 40 60 80 100 120 140 1600 20 40 60 80 100 120 140 160tonnage ‘000stonnage ‘000s
millions
millions
33
250250
200200
150150
100100
5050
4
SDR
SDR
375375
350350
325325
300300
275275
250250
225225
OPA vs CLC/FC (OPA vs CLC/FC (including STOPIA/TOPIAincluding STOPIA/TOPIA) ) 1 SDR = 1.5 US$1 SDR = 1.5 US$
562.562.
525525
487.487.
450450
412.412.
375375
337.337.
300300
UU
50 cents per $ from owner of spilling ship
50 cents per $ from oil receiver
Supplementary Fund shared 50/50, limited to SDR 750 million
2003 Fund = SDR 203 million
0 0 2 3 52 3 5 20 40 60 80 100 120 140 16020 40 60 80 100 120 140 160tonnage ‘000stonnage ‘000s
R m
illionsR
millions
200200
175175
150150
125125
100100
7575
5050
2525STOPIA
20m
300300
252.252.
225225
187.187.
150150
112.112.
7575
37.537.5
US$ m
illionsU
S$ millions
See next slide
US
US
3030
2828
2626
2424
2222
2020
1818
OPA vs CLC (tonnage below 30,000) OPA vs CLC (tonnage below 30,000) 1 SDR = 1.5 US$1 SDR = 1.5 US$
2020
18.618.6
17.317.3
1616
14.614.6
13.313.3
1212SDR
SDR
STOPIA 20m
S$ millions
S$ millions
1616
1414
1212
1010
88
66
44
22
10.610.6
9.39.3
88
6.66.6
5.35.3
44
2.62.6
1.31.3
R m
illionsR
millions
0 3000 6000 9000 12000 15000 18000 21000 24000 27000 30 3000 6000 9000 12000 15000 18000 21000 24000 27000 300000000tonnagetonnage
Club’s role in spill response – post spill functions Initial Contact
• Shipowners representative• Club correspondent• ITOPF• Salvor• Salvor• IOPC Fund
Priorities
• Safety of crew• Salvage• Pollution response• Establish expert team• Establish expert team
TourismFishery
Leisure
Cooling intakesAquaculture
Environment
5
Expert team:
• Lawyers:• prima facie position under Conventions• local law (includes OPA 90 and State law in USA)• criminal proceedings
• Local Club correspondent• ITOPF• Other technical experts and surveyors• SMT (and OSRO) in USA• Public relations and media assistance
Claims handling
• In the US• Owners obligation to clean up• Private contractors, spill managers, OSROs, etc
• In CLC countries• Affected parties clean up, but cost claimed back under
CLC and IOPC Fund
Claims investigation
• Club and Fund co-operate if both involved• Technical expertise from ITOPF, to assist
and guide local experts• Good record keeping is important, to have p g p
evidence to support claims• Appointing a financial controller can help• Necessary to investigate admissibility and
‘reasonableness’ of claimed costs.
Admissible claims
• Reasonable pollution prevention and clean-up measures (e.g. skimmers, dispersants, booms and shoreline clean-up)
• Damage to property (e.g. oiling of fishing boats and gear)
• Economic losses (e.g. lost income by fishermen, hotel operators)
• Costs of reasonable measures to reinstate damaged environment.
Claims that may not be admissible
• Claims for damage to the environment which….• are made on the basis of an abstract quantification a e ade o t e bas s o a abst act qua t cat o
of damage, and • are calculated in accordance with theoretical
models
Other issues in a big spill
• Review with Funds, ship owner and government whether local claims office is required
• Staffing of claims officeStaffing of claims office• Computer database; standard forms for
recording details; standard receipt/release wordings
6
Future Trends
• Expansion of damages claimed – more NRDA.• NRDA – a philosophical challenge. • Use of criminal sanctions for environmental
ddamage.• Restrictions on navigation / places of refuge.• Other environmental liability: ballast water, air
pollution, anti-fouling paints, effects of ship-scrapping, etc.
IG contribution to ship safety and standards
Involvement of the International Group in ship quality initiatives:
• International Group involvement – joint and co-ordinated action – effective but measured
• Co operation with Governments IOPC Funds EU IMO Classification Societies• Co-operation with Governments, IOPC Funds, EU, IMO, Classification Societies, Port State Control, shipowner and cargo industry organisations, other insurers
• Ships’ Standards Subcommittee, and Ship Technical Committee
• Initiatives of individual Group clubs – competition to develop lead industry positions – less co-ordinated but more agile
MSC NAPOLI Grounding
English ChannelLondon
YOUNG LADYDamage to
Pipeline Slipped Anchor
TeessideBritannia
SHANGHAI BRIDGE
Damage to Gantry Crane
Japan
SIERRA
REPUBBLICA DI GENOVA
CapsizingGard
GIANT STEPGrounding
Japan
OCEAN VICTORYGrounding
WOE
ROKIA DELMAS
GroundingSwedish
SERVERGrounding
Gard
KIRAN ATLANTICDragged AnchorSkuld
KRITI FILOXENIA
Contact Terminal
NOE
GOLDEN SKYGrounding
WOE
QUEEN OF THE NORTH
GroundingStandard
COUGAR ACEDamage to
CargoJapan
FINNBIRCHCapsized
Gard
2006 and 2007 Pool Claims
MILLENNIUM Cruise curtailment UK Club
SIERRA NAVA
Pollution/Wreck
standard
MAIN OREDolphin Damage
Standard
CMA CGM AEGEAN
Oil PollutionSwedish
SEA DIAMONDSinking following
groundingWOE
CALIFORNIACollision with
SINOKOR SEOUL
American
HYUNDAI FORTUNE
FireBritanniaSOLAR I
Pollution/Sank
Shipowners
ANNA PC
PollutionLondon
GRIGOROUSSA ITouched bottom of
SuezWOE
NOE
OOCL FAITHInjury to Deck
CadetSteamship CROWN
PRINCESSMultiple
Passenger Injuries
UK Club 40%
PACIFIC ADVENTURER
CollisionStandard
STAR PRINCESS
Fire onboardUK
MMM GALVESTON
Grounding WOE
CAPE BIRDDock DamageSteamship
ZHI QIANGGrounding off Long
ReefUK
MSC JOANNACollision
UK
HYUNDAI INDEPENDENCE
PollutionNOE
MIGHTY SERVANT 3BV
SankStandard
ALEXANDROS TSinkingLondon SAFMARINE
AGHULASGrounding
Gard
Club procedures to identify risk
• Clubs assess risk by desk based procedures and by physical surveys of ships
• …as precondition for entry of older ships, and at any time for ships identified as higher risk y p g
• Clubs suspend or limit cover when required repairs are not made
• Clubs use common Rules to link cover to compliance with flag state and class requirements
• And run extensive loss prevention programmes
Club Rules and shipping standards
• Insured must:• Promptly report to Class any matters in respect of
which Class might make recommendations • Comply in timely fashion with Class Rules• Authorise Class to disclose information to Club• Advise Club if Class Society is changed
• IG policy no insurance without valid ISM/ISPS • IG Clubs policy to deny rights of recovery for
claims arising from failure to comply with Flag State requirements
7
Loss prevention examples
• Newsletters, circulars, books, posters, videos…. • Close co-operation with other institutions with
maritime expertise• Websites – with ‘fresh’ advice, eg. Weekly lossWebsites with fresh advice, eg. Weekly loss
prevention bulletins• Practical help in compliance with
• International law - eg. ISM, STCW, ISPS.• National law - eg. US federal and State law
• Distance learning• Tools and statistics to help focus on risks
IG additional measures to combat substandard shipping
• Submission made to 3rd IOPC Fund Working Group in 2005 reported on:
i. risk selection - checklist of common standards ii. common scope of P&I club surveys,ii. common scope of P&I club surveys, iii. agreed 12 year trigger for entry surveys, and new
surveys for ships that carried HFOiv. process to record and share information regarding
condition of ships, v. introduction of a financial consequence – “Double
retention procedure” – if a Club knowingly underwrites substandard ship.
‘Double retention’
Concept of ‘designated vessels’ included in Pooling Agreement with effect from 20 February 2007
•Can be used where ship confirmed to be in unacceptable “condition”
•Wide meaning of “condition” . Agreed way to determine “unacceptability”.
•Mechanism to apply “double retention” to risks of a designated vessel included in Pooling Agreement from Feb 2007, which means….
•… for each claim, insuring Club takes $14 million for its own account before it can pool (instead of $7 million)
•Mechanism to deny all pooling for risks of “proscribed vessel” – a vessel continuously designated for more than 12 months
•Mechanism for owner to reverse designation and its effects by making demonstrable changes to condition of ship
Future safety issues for P&I…..
• Some disturbing trends in 2008
• Supply of experienced and capable officers unable to keep up with demand arising from new ship building
• Supply of experienced and capable ship designers and builders unable to keep up with demand for new ship building
• Ships from yards that don’t know how to build them, run by crews that are unfamiliar with operating them……
Future safety issues for P&I…..
• Some disturbing trends
• Supply of experienced and capable officers unable to keep up with demand arising from new ship building
• Supply of experienced and capable ship designers and builders unable to keep up with demand for new ship building
• Ships from yards that don’t know how to build them, run by crews that are unfamiliar with operating them……
• But perhaps some relief in 2009 from downturn in shipping market, reversing interest in building, and lessening (not solving) officer shortage...?
Thank you for listening