NORTH RESIDENTIAL TRAINING COURSE 2018

Transcription

1 NORTH RESIDENTIAL TRAINING COURSE 2018 Welcome

2 COURSE LEADERS North of England P&I Rod Maclennan Kelly Morton 2

3 AIMS & OBJECTIVES Aim To improve your knowledge of P&I Insurance and loss prevention Objectives Provide information on ships, cargoes, P&I insurance, marine law, and loss prevention Provide workshop training on P&I insurance Facilitate on the job support through networking 3

4 COURSE MATERIAL Available online - Presentations Documents Updates Everything! 4

5 WORKSHOPS Six workshops individual hand-outs Groups A, B, C, D One or two groups to present after each workshop Answer book will be online password protected 5

6 SOCIAL MEDIA Wi-Fi Name Guest_WiFi_2 Wi-Fi Key castle321 If anyone wants to tweet about the course then please do so BUT we would be grateful if you include both our account name and the North P&I Club #RTCUK2018

7 TODAYS PROGRAMME 08:30 REGISTRATION AND WELCOME COFFEE 09:00 INTRODUCTION TO THE COURSE 09:10 HISTORY, BACKGROUND AND STRUCTURE OF P&I CLUBS 10:00 OUTLINES OF RISKS COVERED 10:30 COFFEE BREAK 10:50 OUTLINE OF RISKS COVERED 11:20 OVERVIEW OF HULL AND MACHINERY INSURANCE 12:15 LUNCH 13:15 P&I UNDERWRITING 14:15 LOSS PREVENTION 15:00 COFFEE 15:20 FD&D 16:10 WORKSHOP 1 SCOPE OF COVER 17:20 WORKSHOP DEBRIEF 17:50 ASSESSMENT TEST 2

8 PROGRAMME REST OF WEEK Tuesday Ships and pollution very busy day, South Tyneside College Wednesday People Group photograph and Course outing (Beamish Hall) Thursday Cargo very busy day two workshops Drinks reception followed by Mediaeval Banquet Friday Guest speakers, prizes and certificates 8

9 ASSESSMENT 10 Questions The result will be recorded on your certificate at the end of the week Multiple choice Open book Feedback next morning 9

10 COURSE EVALUATION 10

11 TIME Full programme Start/end sessions on time 11

12 FIRE SAFETY Fire Alarms? Evacuation routes Any scheduled testing of alarms? 12

13 SMOKING No Smoking Please! During the lectures During the workshops Smoking is only allowed outside During coffee breaks During lunch breaks 13

14 MOBILE PHONES Please Silent mode BUT Download the app and vote! 14

15 DEMONSTRATION 15

16 THANK YOU

17 NORTH RESIDENTIAL TRAINING COURSE 2018 History, Background and Structure of P&I Clubs

18 INTRODUCTION Shipowners insurance requirements History of P&I insurance P&I clubs P&I departments and correspondents International Group of P&I Clubs Other insurance facilities Shipowners insurance requirements Hull and Machinery (H&M) Protecting and Indemnity (P&I) Freight, Demurrage & Defence (FD&D) War Risks Strike Insurance P&I provides cover for shipowners third party liabilities Protection Term generally used to describe cover for risks arising from people, ships and others Indemnity Term generally used to describe cover for shipowners liabilities from the carriage of cargo

19 HISTORY OF P&I INSURANCE 19

20 KEY LANDMARKS IN THE DEVELOPMENT OF MARINE INSURANCE 1000 BC Phoenicians accredited with rudimentary marine insurance practices 1874 North of England P&I Association formed 1680 Edward Lloyd opened first coffee house in London 1870 Westerhope & J Stanley Mitcalfe 1719 Bubble Act (repealed 1824) 1860 North formed as a Protecting Association 1836 De Vaux v Salvador 1855 First Protecting Club formed Fatal Accidents Act 1847 Harbour Docks and Piers Clauses 1854 Merchant Shipping Act

21 KEY LANDMARKS IN THE DEVELOPMENT OF NORTH OF ENGLAND P&I ASSOCIATION 1860 North formed as a Protecting Association 1874 North of England P&I Association formed 1995 North s Hong Kong office opened 1998 North s merger with Newcastle P&I 2000 North s Greece Office opened 2016 North s China (Shanghai) office opened 2014 North s merger with Sunderland Marine 2012 North s Japan office opened 2007 North s Singapore office opened Acquisition of Liverpool & London P&I Tonnage

22 P&I CLUBS 22

23 P&I CLUBS An Association of Shipowners Providing third party liability insurance cover On a mutual basis (sharing of risks) Non-profit making Owned by their shipowner members Controlled by their shipowner members Exist solely for the benefit of their members A service provider as well as providing insurance A Member may be a: Shipowner Ship manager Ship operator Charterer P&I policy is a TIME policy: From Noon GMT on 20 February To Noon GMT on following 20 February

24 P&I DEPARTMENTS AND CORRESPONDENTS 24

25 P&I DEPARTMENTS AND CORRESPONDENTS CHIEF EXECUTIVE OFFICER Paul Jennings GROUP SENIOR OPERATIONS TEAM SUNDERLAND MARINE CLAIMS FD&D UNDERWRITING FINANCE PEOPLE SMI OVERSEAS OFFICES CANADA NETHERLANDS AUSTRALIA NEW ZEALAND ASIA PACIFIC GREECE EUROPE MIDDLE EAST/INDIA UK/AMERICAS GLOBAL EXPERETISE GROUP P&I CORRESPONDENTS 25

26 P&I DEPARTMENTS AND CORRESPONDENTS 1559 P&I Correspondents listed by IG Clubs Of which North lists ports Of which North includes countries/states Of which North includes 143 Who/What are they? Pure Commercial correspondents Law Firms Surveyors Lloyds Agents Shipping Agents Brokers Shipowners Insurance Companies/P&I Clubs Representatives - not agents Available 24/7 Clubs eyes and ears Report to claims handler Protect the shipowners position Commercial Correspondents *Legal Correspondents Immediate advice to Members and Masters Legal representation and advice Arrangement of surveys Advice on defence and legal aspect of claims Negotiation with local interests Keeping P&I Club fully informed Assisting with release of a vessel under arrest 26

27 INTERNATIONAL GROUP OF P&I CLUBS 27

28 INTERNATIONAL GROUP OF P&I CLUBS (IG) 13 Member Clubs Over 90% of world tonnage Collective insurance and reinsurance Represent view of shipowners Exchange information

29 OTHER INSURANCE FACILITIES 29

30 OTHER INSURANCE FACILITIES Clubs and facilities for Shipowners, or others, who do not require the extent of cover provided by International Group Clubs Clubs and facilities who may be prepared to take tonnage which the International Group will not accept 30

31 SUMMARY 31

32 SUMMARY Shipowners insurance requirements History of P&I insurance P&I clubs P&I departments and correspondents International Group of P&I Clubs Other insurance facilities Owned by their shipowner members Controlled by their shipowner members Exist solely for the benefit of their members A service provider as well as providing insurance 32

33 THANK YOU 33

34 NORTH RESIDENTIAL TRAINING COURSE 2018 OUTLINE OF RISKS COVERED

35 INTRODUCTION Scope of P&I Cover Risks not covered Underlying principles of marine insurance

36 SCOPE OF COVER 36

37 RISKS COVERED 1. Seamen 2. Supernumeraries 3. Passengers 4. Third Parties 5. Stowaways 6. Diversion Expenses 7. Life Salvage 8. Persons in Distress 9. Quarantine 10. Collisions 11. Non-contact Damage 12. Damage to Property 13. Pollution 14. Wreck Removal 15. Towage 16. Contracts, Indemnities & Guarantees 17. Cargo 18. General Average 19. Fines 20. Legal Costs, Sue & Labour 21. Risks Incidental to Shipowning 22. Special Cover (s/c) 23. s/c - Salvors 24. s/c - Containers 25. s/c - Time Charterers.

38 RISKS COVERED People Ships Cargo Others

39 PEOPLE Total cost of claims Value of Claims to % 21.5% People 22% 38.3% 37.6% People Cargo Ships Others

40 PEOPLE Seamen Supernumeraries Passengers Third Parties

41 PEOPLE Pay damages or compensation for death, personal injury or illness Statutory Contractual Duty of Care Crew Supernumeraries Passengers Third Party Depends Some jurisdictions? Possibly Merchant Shipping Act Depends Some jurisdiction? Contract of employment and crew agreement x Possibly if stowaway put to work? Passenger ticket x

42 PEOPLE People Claims Value to 2008 Total cost of people claims 13.5% Crew 81% 0.8% 4.0% 0.8% 30.7% 50.3% Crew - injury Crew - illness Crew - other Supernumerary Passenger Third party 42

43 STOWAWAYS

44 PERSONS IN DISTRESS

45 DIVERSION EXPENSES Expenses for: Landing injured or sick persons Assisting persons in distress Landing stowaways or refugees

46 SHIPS Total cost of claims Value of Claims to % 21.5% Ships 38% 38.3% 37.6% People Cargo Ships Others 46

47 COLLISIONS

48 COLLISIONS Institute time clauses hulls 1/10/83 ¾ Hull and Machinery ¼ P&I Clause 8-3/4 Collision Liability - Running down clause (RDC) The underwriters agree to indemnify the Assured for three-fourths of any sum or sums paid by the Assured to any other person or persons by reason of the Assured becoming legally liable by way of damages for Damage to the OTHER ship (includes property/cargo on OTHER ship) Delay or loss of use of the OTHER ship General average or salvage of the OTHER ship

49 COLLISIONS Institute time clauses hulls 1/10/83 4/4 P&I Clause 8 EXCLUSIONS 3/4 Collision Liability - Running down clause (RDC) 8.4 Provided always that this Clause 8 shall in no case extend to any sum which the Assured shall pay for or in respect of Wreck removal Property not on the OTHER ship Cargo on own ship Loss of life, personal injury or illness Pollution

50 NON-CONTACT DAMAGE TO SHIPS

51 DAMAGE TO PROPERTY

52 DAMAGE TO PROPERTY

53 POLLUTION

54 WRECK REMOVAL

55 WRECK REMOVAL

56 DURING TOWAGE

57 DURING TOWAGE

58 CARGO Total cost of claims Value of Claims to % 21.5% Cargo 38% 38.3% 37.6% People Cargo Ships Others 58

59 CARGO Loss, shortage or damage arising from any breach of the contract of carriage Hague Visby Rules care for the cargo Load, Handle Stow, Carry Keep, care for Discharge Due diligence to make the ship seaworthy

60 CARGO Additional costs Discharging or disposing Damaged cargo Worthless cargo

61 OTHERS Total cost of claims Value of Claims to % 21.5% Others 3% 38.3% 37.6% People Cargo Ships Others 61

62 GENERAL AVERAGE General Average Salvage Who contributes? Bunkers Ship H&M Value of ship Cargo Cannot pay! Bad debt Will not pay! Unseaworthy

63 FINES Manager s approval: Short or overlanded cargo Smuggling Immigration laws Accidental pollution Director s discretion: Others May compensate for confiscation of ship

64 LEGAL COSTS

65 RISKS INCIDENTAL TO SHIPOWNING The Omnibus Rule??

66 SPECIAL COVER FOR TIME CHARTERERS P&I - Cargo Hull Damage Bunkers Freight or Hire

67 DEDUCTIBLES The first part of each claim paid by the Member Effect on premium Claims below deductible

68 DEDUCTIBLES Third party claim US $100,000 Crew Claim paid by P&I insurer US $85,000 Cargo Claim paid by P&I insurer US $75,000 Deductible paid by Member US $ 15,000 Deductible paid by Member US $ 25,000

69 RISKS NOT COVERED

70 PRIMARY EXCLUSIONS Risks covered under Hull Policy War Risks Radioactive Materials Imprudent or Hazardous Operations

71 RISKS SPECIFICALLY EXCLUDED Damage to entered ship Equipment Repairs to entered ship Freight Salvage

72 RISKS SPECIFICALLY EXCLUDED Charterparties Bad Debts Demurrage Towage Members other interests

73 SPECIALIST OPERATIONS EXCLUSIONS Blasting pile-driving well stimulation dredging cable or pipe-laying construction installation or maintenance work core sampling depositing of spoil professional oil spill response

74 UNDERLYING PRINCIPLES OF MARINE INSURANCE

75 INTRODUCTION Marine Insurance Act Seaworthiness Payment first by Member Provision of security

76 THE MARINE INSURANCE ACT 1906 All contracts of insurance made by the Association are subject to the Marine Insurance Act, 1906.

77 THE MARINE INSURANCE ACT 1906 MSA Section 39(5) - Warranties of Seaworthiness In a time policy: There is no implied warranty that the ship shall be seaworthy at any stage of the adventure. If the ship is sent to sea in an unseaworthy state, with the knowledge of the assured, the insurer is not liable for any loss attributable to unseaworthiness

78 PAYMENT FIRST BY THE MEMBER Condition precedent No direct action

79 THIRD PARTIES RIGHTS AGAINST INSURERS Intended to give a right of direct action against insurer where insured becomes bankrupt or insolvent Third party only takes same rights as insured No rights for persons not party to the contract (Contracts (Rights of Third Parties) Act 1999) Club s Rules specify Pay to be Paid Therefore no direct action

80 SECURITY

81 SECURITY Discretionary Club Letters of Undertaking (CLU) Bank Guarantees No cash deposits (unless Directors authorise)

82 SUMMARY Scope of P&I Cover People Cargo Ships Others Risks not covered Underlying principles of marine insurance Security

83 ANY QUESTIONS?

84 NORTH RESIDENTIAL TRAINING COURSE 2018 Hull & Machinery Insurance Iain Gilchrist

85 INTRODUCTION Standard clauses Insured perils Partial loss Total loss Owner's obligations 85

86 H&M COVERS: (i) Ship (ii)equipment on-board Propulsion, Cargo Handling, Navigation Equipment. (iii)ship s contributions in GA and salvage. (iv)part liability in case of a collision (RDC).

87 STANDARD CLAUSES 87

88 STANDARD CLAUSES Markets: London Scandinavia Europe USA Others 88

89 STANDARD CLAUSES LONDON MARKET Institute of London Underwriters (ILU) Institute Time Clauses (ITC) - Hulls International Underwriting Association of London (IUA) International Hull Clauses (IHC)

90 INSURED PERILS 90

91 INSURED PERILS Traditional Inchmaree 91

92 TRADITIONAL PERILS ITC Hulls Clause October 1983 Loss or damage caused by: Perils of the seas, rivers, lakes or other navigable waters Fire, explosion Violent theft by persons from outside the vessel Jettison Piracy 92

93 TRADITIONAL PERILS (CONT D) Breakdown of or accident to nuclear installation or reactors Contact with aircraft or similar objects, or objects falling therefrom, land conveyance, dock or harbour equipment or installation Earthquake volcanic eruption or lightning 93

94 INCHMAREE PERILS ITC Hulls Clause October 1983 Loss or damage caused by: Accidents in loading discharging or shifting cargo or fuel Bursting of boilers, breakage of shafts or any latent defects in the machinery or hull Negligence of Master Officers Crew or Pilots 94

95 INCHMAREE PERILS (CONT D) Loss or damage caused by: Negligence of repairers or charterers, provided such repairers or charterers are not an Assured hereunder. Barratry of Master, Officers, or Crew Provided NOT from want of due diligence by assured, owners or Managers 95

96 PARTIAL LOSS 96

97 PARTIAL LOSS (PARTICULAR AVERAGE) Loss other than a total loss Damage caused by a peril 97

98 PARTICULAR AVERAGE Cover includes reasonable costs for: Repair Removing ship to place of repair Cover does not include: Wear and tear Ordinary use 98

99 OTHER PARTIAL LOSSES 99

100 GENERAL AVERAGE There is a general average act when, and only when, an extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure. York-Antwerp Rules

101 GENERAL AVERAGE Contributing parties: Ship (H&M underwriters) Cargo (Cargo underwriters) Bunkers (Time charterers) 101

102 COLLISION LIABILITIES [ITC HULLS CLAUSE 8] Third party liabilities covered under standard collision clause (RDC): ¾ damage to other ship ¾ damage to cargo and property on other ship ¾ detention of other ship ¾ general average and salvage of other ship [upto 3/4 insured value of the vessel] 102

103 COLLISION LIABILITIES Third party liabilities not covered under standard collision (RDC) clause: Loss of life or personal injury Pollution Wreck removal 103

104 TOTAL LOSS 104

105 TOTAL LOSS Permanently deprived of use of ship Actual total loss or constructive total loss 105

106 ACTUAL TOTAL LOSS Ship is lost and cannot be salvaged 106

107 CONSTRUCTIVE TOTAL LOSS Recovery and repair exceed the insured value Recovery is unlikely 107

108 OWNER S OBLIGATIONS 108

109 DUE DILIGENCE Proviso to clauses describing perils: Loss or damage has not resulted from want of due diligence by the assured, owners or managers ITC Hulls dated 1 October 1983 IHC - dated 1 November

110 DUE DILIGENCE Proviso to clauses describing perils: Loss or damage has not resulted from want of due diligence by the assured, owners or managers or superintendents or any of their onshore management ITC Hulls dated 1 November

111 SUMMARY 111

112 SUMMARY Standard clauses Insured perils Partial loss Total loss Owner's obligations 112

113 THANK YOU 11 3

114 NORTH RESIDENTIAL TRAINING COURSE 2018 P&I UNDERWRITING

115 INTRODUCTION Introduction Underwriter s role Premiums Loss ratio Reinsurance

116 WHAT WE DO? P&I FD&D Extended and ancillary covers War Newbuilding cover

117 TONNAGE DEVELOPMENT Year Ending 20 February

118 GT (Millions) IG CLUB TONNAGE COMPARISON AT APRIL

119 THE UNDERWRITER S ROLE Premium Levels Cost of Claims Cost of Reinsurance Cost of Running the Club Reserves Terms of Cover Rules International Group Pooling Agreement Reinsurance Terms

120 THE UNDERWRITER S ROLE DAY TO DAY New Business New Owners KYC New Members IGA Business Existing Business Addition to Fleet Renewal 20 February

121 THE UNDERWRITER S ROLE QUOTING Vessel details Age, GT, Type, Flag, Class (IACS) Member details Owner, Operator, Manager, Charterer Trade and crew Compatibility Trade references Financial standing Condition of vessel Ship type / Member Information Claims experience Club wide record Member specific record Reinsurance costs Administration costs

122 PREMIUM DEFINITIONS RULE 2 Premium: Amount that can be quantified prior to entry MUTUAL PREMIUM FIXED PREMIUM

123 PREMIUM DEFINITIONS RULE 2 Call: Amount that cannot be quantified, but which member may become liable to pay as mutual member ADDITIONAL CALL OVERSPILL CALL RELEASE CALL

124 PREMIUM STRUCTURE Traditional Structure Additional Call 4th Instalment 01 Dec Mutual Premium 3rd Instalment 2nd Instalment 01 Sep 01 Jun 1st Instalment 01 Apr

125 LOSS RATIO Loss Ratio = Level of Claims x 100% Premium Fleet Example: Claims = US$300,000 Premium = US$500,000 Loss Ratio = 60%

126 LOSS RATIO

127 P&I LOSS RATIO POLICY YEAR NET PREMIUM IG RI COSTS¹ POOL COSTS² ABATEMENT COSTS³ NET NET PREMIUM⁴ CLAIMS PAID CLAIMS OUTSTANDING CLAIMS TOTAL CLAIMS NET OF ABATEMENT⁵ LOSS RATIO % PRO RATA GT USD USD USD USD USD USD USD USD USD , ,811 56,432 85, ,297 10, ,636 10, , ,335, , , , , ,072 16, , , , ,460, ,064 86, , ,872 31,472 10,000 41,472 41, , ,289, ,651 99,851 89, ,800 6, ,670 6, , ,044, ,829 41, , , ,002 27,002 27, ,048 Total 9,101,145 2,152, ,115 1,131,443 5,155, ,922 53, , , , , , , , ,000 35,000 35, ,046

128 LOSS RATIO POLICY YEAR NET PREMIUM IG RI COSTS¹ POOL COSTS² ABATEMENT COSTS³ NET NET PREMIUM⁴ CLAIMS PAID CLAIMS OUTSTANDING CLAIMS TOTAL CLAIMS NET OF ABATEMENT⁵ LOSS RATIO % PRO RATA GT USD USD USD USD USD USD USD USD USD ,593 8,157 3,473 3,107 57,856 30, ,660 30, , ,493 40,220 8,824 49, , ,228 9,622,987 9,789,215 3,002, ,592 Total 459,086 48,377 12,297 52, , ,888 9,622,987 9,819,875 3,033, ,336 36,411 25,307 35, , ,501 46,501 46, ,591

129 P&I LOSS RATIO REPORT POLICY YEAR NET PREMIUM IG RI COSTS¹ POOL COSTS² ABATEMENT COSTS³ NET NET PREMIUM⁴ CLAIMS PAID CLAIMS OUTSTANDING CLAIMS TOTAL CLAIMS NET OF ABATEMENT⁵ LOSS RATIO % PRO RATA GT USD USD USD USD USD USD USD USD USD ,123 79,951 65,704 67, , , , , , , ,310 92,710 38, , , , , , , , ,079,882 96,974 55,832 49, ,128 50, , , , , ,221, ,167 30, , ,992 1,472, ,175 2,299,322 2,299, ,886 Total 4,952, , , ,161 3,684,005 3,480,262 1,626,716 5,106,978 5,106, ,272,026 98,034 83, , ,608 42,447 2,079,379 2,121,826 2,121, ,916

130 REINSURANCE

131 REINSURANCE Re-insurance is passing risk to another insurer Pooling with other Clubs Market Reinsurance Purpose of Reinsurance Avoids excessive fluctuation between years and provides stability Provides higher limits of cover Cost effective and efficient use of funds

132 IG REINSURANCE CONTRACT 90 95% world s ship owners enter ships in an IG Club 13 International Group Clubs Levels of cover provided are vast but not defined Estimated to be approx US$7 Billion All 13 IG Clubs pool claims All 13 buy re-insurance RI policy - largest marine policy in the world Pooling agreement & International Group Agreement foundation of P&I Sharing of risk then some control of rating required TradeWinds Cartel - but most efficient system and proven

133 IG REINSURANCE HYDRA Independent reinsurance vehicle/segregated cell company Based in Bermuda Reinsures each IG Club s liability to the pool within the Lower and Upper Pools - US$50 xs $30 million BUT Individual Claiming Club Retentions in the Upper Pools Reinsures 30% - 60% of each claim within the First General Excess Layer - US$80 to US$580 million

134 IG REINSURANCE STRUCTURE

135 IG REINSURANCE COST USD Category 2017/ /19 Difference % % Difference Dry Cargo Dirty Tanker Other Tanker Passenger

136 IG REINSURANCE CLUB RETENTION

137 IG REINSURANCE CLUB RETENTION Claims up to US$10 million (currently) Maintains underwriting discipline Cost Effective Retention Reinsurance Excess of Loss Stop Loss

138 IG REINSURANCE LOWER & UPPER POOL

139 IG REINSURANCE LOWER POOL Claims from US$10 million to US$30 million Each Club contributes in relation to: Entered tonnage Total mutual premiums Pool claims record Claims from US$30 US$50 million Reinsured by Hydra

140 IG REINSURANCE UPPER POOL Reinsured by Hydra Upper Pool Claims from US$50m to US$100m 7.5% Back to individual club responsible for claim

141 IG REINSURANCE EXCESS OF LOSS REINSURANCE

142 IG REINSURANCE EXCESS OF LOSS REINSURANCE The General Excess of Loss Contract Multi-Year Fixed Contract First GXL Layer (US$100m to US$600m) / Hydra Participation Second GXL Layer (US$600m to US$1.1b) Third GXL Layer (US$1.1b to US$2.1b) Lloyds and world markets Costs apportioned on record and exposure

143 IG REINSURANCE OVERSPILL PROTECTION Further US$1b of protection (US$2.1b to US$3.1b) above Hydra pool/gxl participation Upper limit not fixed precisely Currently approximately US$7 billion

144 IG REINSURANCE EXCESS OF OVERSPILL Back to individual Clubs Upper limit not fixed precisely Currently approximately US$7 billion

145 IG REINSURANCE OIL POLLUTION The pool and GXL layer and participation structures for the separate Oil Pollution cover mirrors the main (P&I) placement up to the Oil Pollution cover limit (US $1 billion).

146 IG REINSURANCE STRUCTURE

147 SUMMARY

148 SUMMARY Introduction Underwriter s Role Premiums Loss Ratio Reinsurance

149 NORTH RESIDENTIAL TRAINING COURSE 2017 LOSS PREVENTION & SURVEY

150 INTRODUCTION North of England s loss prevention strategy Provision of information General Targeted Bespoke Risk based assessment Condition survey 150

151 PUBLICATIONS

152 25 YEARS AND COUNTING In the 25 years since the Loss Prevention Department was founded, we have produced numerous publications on a wide range of topics.

153 INDUSTRY NEWS Up-to-date information about topical issues is provided by the Industry News service.

154 MTI The Maritime Threats and Incidents Picture, brought to you by Gray Page in partnership with North, globally monitors maritime incidents, casualties and threats to shipping

155 INFORMATION Bespoke loss prevention Enquiries 2,500+ in 2017 Training for Members staff at North Seminars at Members offices Residential courses UK Singapore 155

156 RISK BASED APPROACH Risk and claims avoidance Proactive approach to identify and reduce exposure to risk factors Internal benchmark and review evaluates exposure to risk External loss prevention review works with Members particularly exposed to risk factors PSC Performance for 2018 Policy Year Number of PSC inspections 7859 Number of PSC detentions 95 Percentage of PSC detentions 1.21 Average number of deficiencies 1.32 RightShip Star Ratings on 01 June 2018 Number of vessels above 3 star rating 2,601 Number of vessels with 2 star rating 362 Number of vessels with 1 star rating 19 Average vessel star rating

157 CONDITION SURVEYS In April 2002 the OECD (Organisation for Economic Cooperation and Development) released a policy statement on action needed to combat sub-standard ships. The OECD statement required the marine insurance industry to cooperate and to be in a position to identify deficiencies on insured ships that rendered those ships unsafe. As a result the IG P&I clubs set up a ship condition survey programme. 157

158 CONDITION SURVEYS Responsibility for the condition of a ship? Owners and managers Responsibility for monitoring condition? Flag State Recognised Organisation Port State Classification society 158

159 CONDITION SURVEYS Role of the P&I Club Third party liability insurer Assess the risk posed by the ships condition for insurance purposes 159

160 CONDITION SURVEYS Routine Entry surveys 12 year old or more on entry HFO tankers Non-routine Defects surveys PSC surveys following detention Follow-up surveys 160

161 CONDITION SURVEYS 161

162 CONDITION SURVEYS 162

163 CONDITION SURVEYS 163

164 CONDITION SURVEYS 164

165 CONDITION SURVEYS 165

166 SUMMARY North of England s loss prevention strategy Provision of information General Targeted Bespoke Risk based assessment Condition survey 166

167 THANK YOU

168 NORTH RESIDENTIAL TRAINING COURSE 2018 Outline of FD&D insurance

169 WHAT IS FD&D COVER? Optional insurance to cover legal costs/expenses relating to: the operation, ownership or management of/interest in an entered vessel which are not covered by other forms of insurances (rule 23(1)). Does not cover substantive liabilities/the underlying claim compare with P&I/H&M.

170 KEY FEATURE The business of this class is the enforcement of all proper claims and the defence of all claims improperly brought - Rule 19

171 KEY FEATURES Discretionary cover: Whose discretion? Prudent uninsured Reviewed throughout claim Common to all FD&D classes of P&I Clubs and the independent Defence Clubs Quantum only e.g. early redelivery Proportionality

172 FEATURES Duty to notify the Club: Rule 25(4) claims to be notified within 3 months after Member becomes aware of the existence of claim Rule 26(2) - No legal steps to be taken / lawyers appointed without approval

173 KEY FEATURES Security: For claims For costs

174 KEY FEATURES Standard Deductible 2017/ % of costs on all claims, subject to: Minimum deductible $10,000 Maximum deductible $150,000 No costs if no external parties appointed

175 DEDUCTIBLE

176 SCOPE Very wide in scope Majority of claims are Charterparty Disputes Also deal with sale and purchase, new building contracts, repair and other disputes. Liaison with P&I/H&M

177 SCOPE Types of disputes - May 2017-May 2018

178 SCOPE Example Charterparty Disputes: Hire, freight and deadfreight Withdrawal Short loading Delivery/redelivery Validity of orders Vessel description clauses e.g. speed and performance Laytime and demurrage Unsafe port/berth cases Stevedore damage Bunker disputes Operational costs responsibility etc.

179 SCOPE Disputes with underwriters (H&M/war risk/loss of hire) Crew/ITF disputes only where action by crew/itf wrongful/improper - Rule 19(2) Disputes with suppliers (of bunkers/equipment/port agents) Rule 19(1) (v) Disputes with mortgagees/managers/ operators Rule 19(5) Bill of lading disputes (Not cargo loss or damage) Disputes with other ship owners e.g. following collision

180 LIMITATIONS Rule 22 - Classification society and Statutory requirements With some notable exceptions, the cover is unlimited in amount but is subject to discretion of Members Board. No cover for disputes between joint Members (Rule 9(3))

181 WHAT WE DO IN PRACTICE Provide legal opinions/advice Appoint arbitrators/surveyors/correspondents/ experts Advise on and assist with gathering evidence Draft arbitration submissions, witness statements etc Instruct external lawyers (including counsel directly) where necessary/appropriate Manage legal costs, including negotiation of fees Draft messages for Members to send to opponents Correspond with opponents, their Clubs and/or their lawyers Investigate opponents assets Pursue security for underlying claim Deal with requests of security for claim/costs Conduct negotiations, mediations and other alternative dispute resolution Draft settlement/escrow/novation etc agreements

182 ADDITIONAL SERVICES Check before fixing International Maritime Bureau (IMB) Baltic and International Maritime Council (BIMCO) Internal enquiries Sanctions dedicated team Regular updates on North website Drafting charterparty/other contract clauses Reviewing contracts General enquiries Training Global Legal Navigator

183 FD&D DEPARTMENT As of 20 February 2018 About 3,300 Owned and Chartered vessels 140 million (Combined) GT

184 FD&D DEPARTMENT In-house team of 34 dedicated lawyers. Specialists in handling disputes falling within the scope of FD&D cover. Majority of North s inhouse team are English solicitors.

185 FD&D DEPARTMENT AS AT MAY 2018 UK Office 24 lawyers including a US Attorney Singapore Office 6 lawyers including 3 Singaporean solicitors Greek Office: 4 lawyers including a US Attorney

186 FD&D DEPARTMENT FD&D Guide Online FD&D Class

187

188 ANY QUESTIONS?