TIANJIN HOW WE CAN HELP YOU

Transcription

1 TIANJIN HOW WE CAN HELP YOU

2 02 INCE & CO The Tianjin Official Investigation Report (the Official Report ) published on 5 February 2016 by the PRC State Administration of Work Safety lays bare the scale of the disaster which befell the port of Tianjin in northern China in August The Official Report, which runs to 107 pages including 5 annexes, finds the accident to be the most serious grade possible of work safety accident under PRC law and regulations, with: > > 165 people dead > > 8 people missing > > 798 people injured > > 304 buildings, 12,428 vehicles and 7,522 containers damaged > > Atmospheric, water and soil pollution The Report holds responsible the operators of a private company that operated a dangerous goods warehouse, and also 13 local government departments found to have been involved in the illegal approval and issuing of permissions to the warehouse operator and/or lack of daily supervision of it. Bribes are found to have been paid to 12 different local government officers. Market exposure Market estimates of the insured losses flowing from the explosions vary significantly; early estimates ranged from US$2 billion to US$3.5 billion but a figure of US$6bn has recently been suggested. There is little consistency as to the basis upon which these estimates are calculated. What is certain, however, is that Tianjin is a very significant loss. Many of the initial insurance claims will fall on policies issued locally but the explosions are already reverberating in the International markets, which are exposed to claims under a wide range of different policies, from cargo, property and ports and terminals insurance through to product liability and contingent business interruption. Inevitably, the International markets will also be exposed to claims in the reinsurance context, on both a facultative and a treaty basis.

3 03 INCE & CO Direct insurance issues The direct insurance issues are complex and range from the correct policy under which a claim should be made (marine cargo or property damage, depending on the storage circumstances and cover in place), to factual questions about whether the insured property has actually been damaged for the purposes of the insurance cover. Issues likely to affect many of the claims in the local and International markets include: > > Whether the relevant property has actually been destroyed or damaged > > Who has suffered a loss for the purpose of making a claim > > Which policy responds > > Double insurance and contribution > > Subrogation Reinsurance issues Whilst the Official Report expressly did not deal with the obligation of insurance companies in respect of the losses, Guidelines issued by the China Insurance Association to local insurers on how the claims should be dealt with strongly suggest that Chinese insurers and foreign insurers with a licence to write business in China will be under intense pressure to pay claims as quickly as possible. There is a real danger in these circumstances that claims which are not fully within the scope of the applicable insurance may be settled or compromised or that the quantum of valid claims will not be adjusted so that it is fully in line with the terms of the insurance. Clearly, this will be of concern to reinsurers and it will be important to be aware of the differing obligations on reinsurers to follow their cedant s settlement imposed by different forms of reinsurance contract wording.

4 04 INCE & CO How we can help you If you are a reinsured seeking to recover or a reinsurer facing claims for payment from your cedant, or if you are concerned about the level of claims oversight on matters to which you are exposed, our lawyers on the ground in Beijing, supported by our international insurance and reinsurance team, can help. Our extensive factual knowledge of these losses and long experience of handling major catastrophes across the world allows us to provide you with expert, commercial and time-sensitive advice across all classes of insurance and reinsurance. In particular, we can offer: > > On the ground investigations and claims oversight > > Advice on coverage, quantum, claims settlement and defence > > Cross border recovery > > Advice on reinsurance issues including follow the settlements, claims control and cooperation. We believe that our Beijing based, Mandarin speaking lawyers will add great value when resolving your legal and commercial issues. We have unrivalled local knowledge and connections, not least because one of the senior members of our team lives in Tianjin, and before joining Ince worked there for many years as the insurance buyer for COSCO, the state-owned shipping company. Contacts For further information please contact: Wai Yue Loh Partner, Beijing and Shanghai waiyue.loh@incelaw.com +86 (0) (0) Xu Guo Consultant, Beijing xu.guo@incelaw.com +86 (0) Allan Hepworth Group Managing Partner, London allan.hepworth@incelaw.com +44 (0) Kelvin Lee Partner, Hong Kong kelvin.lee@incelaw.com

5 Ince & Co is a network of affiliated commercial law firms with offices in Beijing, Dubai, Hamburg, Hong Kong, Le Havre, London, Monaco, Paris, Piraeus, Shanghai and Singapore. E: firstname.lastname@incelaw.com incelaw.com 24 Hour International Emergency Response Tel: + 44 (0) LEGAL ADVICE TO BUSINESSES GLOBALLY FOR OVER 140 YEARS The information and commentary herein do not and are not intended to amount to legal advice to any person on a specific matter. They are furnished for information purposes only and free of charge. Every reasonable effort is made to make them accurate and up-to-date but no responsibility for their accuracy or correctness, nor for any consequences of reliance on them, is assumed by the firm. Readers are firmly advised to obtain specific legal advice about any matter affecting them and are welcome to speak to their usual contact Ince & Co International LLP, a limited liability partnership registered in England and Wales with number OC Registered office and principal place of business: International House, 1 St Katharine s Way, London, E1W 1AY.