HISTORY, BACKGROUND AND STRUCTURE OF P&I CLUBS

HISTORY, BACKGROUND AND STRUCTURE OF P&I CLUBS

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 2

SHIPOWNERS INSURANCE REQUIREMENTS Hull and Machinery (H&M) Protecting and Indemnity (P&I) Freight, Demurrage & Defence (FD&D) War Risks Strike Insurance 3

SHIPOWNERS INSURANCE REQUIREMENTS 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 4

HISTORY OF P&I INSURANCE 5

HISTORY OF P&I INSURANCE 1000BC - Phoenicians accredited with rudimentary marine insurance practices 1680 - Edward Lloyd opened first coffee house in London 1719 - Act of Parliament restricted marine insurance to two companies until 1825. 6

HISTORY OF P&I INSURANCE - 1836 SHIPS Hull policies did not cover damage to other vessel Other vessel collision liability - limited to 3/4 Running Down Clause (RDC) Remaining 1/4 would be picked up by Mutuals De Vaux Versus Salvador 7

HISTORY OF P&I INSURANCE - 1846 PEOPLE Act of parliament Lord Cambell s Act 1846 Allowed relatives of people killed by wrongdoing of others to recover damages Crew and passengers carried by ships

HISTORY OF P&I INSURANCE - 1855 1855 - First protecting club formed 9

HISTORY OF P&I INSURANCE - 1860 North of England P&I Association established Newcastle Greece Hong Kong Singapore Japan 10

HISTORY OF P&I INSURANCE - 1860 Global fleet of 4,000 ships 400 member groups Providing P&I insurance to 12% of the world s owned shipping tonnage 11

HISTORY OF P&I INSURANCE - 1870 CARGO Common law Freedom of contract Few cargo claims Port C Westerhope incident 1870 Deviation Port B 12

HISTORY OF P&I INSURANCE Increase in overseas trade and changes in the Law Workmen's Compensation Act Factory Acts and Industrial Injuries Act Merchant Shipping Acts Hague Rules 13

HISTORY OF P&I INSURANCE Ships Cargo People 14

P&I CLUBS 15

P&I CLUBS An Association of Shipowners Providing third party liability insurance cover On a mutual basis (sharing of risks) Non-profit making 16 16

P&I CLUBS 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 17 17

P&I CLUBS Managed Clubs Thomas R. Miller manage UK P&I Club Mutually Owned Club North of England P&I Association 18 18

P&I CLUBS A Member may be a: Shipowner Ship manager Ship operator Charterer 19 19

P&I CLUBS P&I policy is a TIME policy: From Noon GMT on 20 February To Noon GMT on following 20 February 20 20

P&I DEPARTMENTS AND CORRESPONDENTS 21

P&I DEPARTMENTS AND CORRESPONDENTS 22

P&I DEPARTMENTS AND CORRESPONDENTS North of England Ship Owner Directors North Insurance Management Ltd P&I Claims Department Underwriting Department Loss Prevention & Survey Finance, Accounts, IT & Administration FD&D Department

P&I DEPARTMENTS AND CORRESPONDENTS North of England Ship Owner Directors North Insurance Management Ltd P&I Claims Department Underwriting Department Loss Prevention & Survey Finance, Accounts, IT & Administration FD&D Department P&I Correspondents

P&I DEPARTMENTS AND CORRESPONDENTS Correspondents Representatives - not agents When to call a correspondent? Clubs eyes and ears Report to claims handler Protect the shipowners position Commercial Correspondents *Legal Correspondents 25

P&I DEPARTMENTS AND CORRESPONDENTS 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

INTERNATIONAL GROUP OF P&I CLUBS 27

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 28 28

INTERNATIONAL GROUP OF P&I CLUBS (IG) North of England American Gard (Gjensidig) Skuld (Gjensidig) Britannia Japan London Shipowners Mutual Standard Steamship Mutual Swedish Club UK Club West of England 29

INTERNATIONAL GROUP OF P&I CLUBS (IG) Limit of financial liability All claims (except for oil pollution) Approximately US $6,900 million for a single claim Oil Pollution US $1,000 million for a single claim Passenger claim US $2,000 million Passenger and crew claim US $3,000 million 30 30

INTERNATIONAL GROUP OF P&I CLUBS (IG) Standing Committees Bills of Lading Personal Injury Maritime Security Claims Co-Operation Pilotage Ad hoc Committees Asbestosis New York Produce Exchange Charterparty 31

OTHER INSURANCE FACILITIES 32

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 33 33

SUMMARY 34

SUMMARY Shipowners insurance requirements History of P&I insurance P&I clubs P&I departments and correspondents The International Group of P&I clubs Other insurance facilities 35

SUMMARY P&I Clubs are: Owned by their shipowner members Controlled by their shipowner members Exist solely for the benefit of their members Non-profit making A service provider as well as providing insurance 36

THANK YOU 37

OUTLINE OF RISKS COVERED

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

SCOPE OF COVER 4 0

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.

RISKS COVERED People Ships Cargo Others

PEOPLE Total cost of claims Value of Claims - 2002 to 2008 2.6% 21.5% People 38.3% 37.6% People Cargo Ships Others 22%

PEOPLE Seamen Supernumeraries Passengers Third Parties

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

PEOPLE People Claims Value - 2002 to 2008 Total cost of people claims 13.5% Crew 81% 0.8% 0.8% 4.0% 30.7% 50.3% Crew - injury Crew - illness Crew - other Supernumerary Passenger Third party 46

STOWAWAYS

PERSONS IN DISTRESS

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

SHIPS Total cost of claims Value of Claims - 2002 to 2008 2.6% 21.5% Ships 38.3% 37.6% People Cargo Ships Others 38% 50

COLLISIONS

COLLISIONS Clause 8 Institute time clauses hulls 1/10/83 3/4 Collision Liability - Running down clause (RDC) 3/4 Hull and machinery 1/4 P&I 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

COLLISIONS Clause 8 Institute time clauses hulls 1/10/83 3/4 Hull and machinery 4/4 P&I EXCLUSIONS 3/4 Collision Liability - Running down clause (RDC) Wreck removal Property not on the OTHER ship Cargo on own ship Loss of life, personal injury or illness Pollution

NON-CONTACT DAMAGE TO SHIPS

DAMAGE TO PROPERTY

POLLUTION

WRECK REMOVAL

DURING TOWAGE

CARGO Total cost of claims Value of Claims - 2002 to 2008 2.6% 21.5% Cargo 38.3% 37.6% People Cargo Ships Others 38% 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

CARGO Additional costs Discharging or disposing Damaged cargo Worthless cargo

OTHERS Total cost of claims Value of Claims - 2002 to 2008 2.6% 21.5% Others 3% 38.3% 37.6% People Cargo Ships Others 62

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

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

LEGAL COSTS

RISKS INCIDENTAL TO SHIPOWNING The Omnibus Rule??

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

DEDUCTIBLES The first part of each claim paid by the Member Effect on premium Claims below deductible See Rule 21

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

RISKS NOT COVERED

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

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

RISKS SPECIFICALLY EXCLUDED Charterparties Bad Debts Demurrage Towage Members other interests

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

UNDERLYING PRINCIPLES OF MARINE INSURANCE

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

THE MARINE INSURANCE ACT 1906 All contracts of insurance made by the Association are subject to the Marine Insurance Act, 1906. P&I Rule 6

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 See Rule 26(4)

PAYMENT FIRST BY THE MEMBER Condition precedent No direct action P&I Rule 20

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

SECURITY

SECURITY Discretionary Club Letters of Undertaking (CLU) Bank Guarantees No cash deposits (unless Directors authorise) Rule 34(5) Bail

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

ANY QUESTIONS?

HULL AND MACHINERY INSURANCE

INTRODUCTION Standard clauses Insured perils Partial losses Total losses Owner's obligations 86

STANDARD CLAUSES 87

STANDARD CLAUSES Markets: London Scandinavia Europe USA Others 88

STANDARD CLAUSES LONDON MARKET Institute of London Underwriters (ILU) Institute Time Clauses (ITC) - Hulls 1983 1995 International Underwriting Association of London (IUA) International Hull Clauses (IHC) 2002 2003 89

INSURED PERILS 90

INSURED PERILS Traditional perils Inchmaree perils 91

TRADITIONAL PERILS 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 ITC Hulls Clause 6.1-1 October 1983 92

TRADITIONAL PERILS Loss or damage caused by: 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 ITC Hulls Clause 6.1-1 October 1983 93

INCHMAREE PERILS 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 ITC Hulls Clause 6.2-1 October 1983 94

INCHMAREE PERILS Loss or damage caused by: Negligence of repairers or charterers, provided such repairers are not an Assured hereunder Barratry of Master, Officers, or Crew ITC Hulls Clause 6.2 95

PARTIAL LOSS 96

PARTIAL LOSS Partial loss (particular average) Loss other than a total loss Damage caused by a peril 97

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

OTHER PARTIAL LOSSES 99

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 2004 10 0

GENERAL AVERAGE Contributing parties: The ship H&M underwriters The cargo Cargo underwriters The bunkers Time charterers 10 1

COLLISION LIABILITIES 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 10 2

COLLISION LIABILITIES Third party liabilities not covered under standard collision (RDC) clause: Loss of life or personal injury Pollution Wreck removal 10 3

TOTAL LOSS 10 4

TOTAL LOSS Shipowner permanently deprived of use of ship Actual total loss or constructive total loss 10 5

ACTUAL TOTAL LOSS Ship is lost and cannot be salvaged 10 6

CONSTRUCTIVE TOTAL LOSS Recovery and repair would exceed the ships insured value Recovery is unlikely 10 7

OWNERS OBLIGATIONS 10 8

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 2003 10 9

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 1995 11 0

SUMMARY 11 1

SUMMARY Standard clauses Insured perils Partial losses Total losses Owner's obligations 11 2

SUMMARY Standard clauses Total and partial losses Insured perils Owner s obligations 11 3

THANK YOU 11 4

INTRODUCTION Introduction Underwriter s role Premiums Loss ratio Reinsurance

WHAT WE DO? P&I FD&D Extended and ancillary covers Offshore oil and gas exploration and production cover War Newbuilding cover

GT (Millions) TONNAGE DEVELOPMENT 200 180 160 140 39 43 49 43 54 50 120 45 100 80 60 40 105 123 127 131 127 131 140 20 0 2011 2012 2013 2014 2015 2016 2017 Year Ending 20 February

GT (Millions) IG CLUB TONNAGE COMPARISON AT 20 FEBRUARY 2017 250 200 200 150 142 139 100 108 101 91 88 85 81 50 47 43 18 16 0

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

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

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

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

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

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

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

LOSS RATIO

P&I LOSS RATIO POLICY YEAR NET PREMIUM IG RI COSTS¹ POOL COSTS² ABATEMEN T COSTS³ NET NET PREMIUM ⁴ CLAIMS PAID CLAIMS OUTSTANDIN G CLAIMS TOTAL CLAIMS NET OF ABATEMENT⁵ LOSS RATIO % PRO RATA GT View Claims USD USD USD USD USD USD USD USD USD 2012 620,595 104,811 56,432 85,055 374,297 10,636 0 10,636 10,636 2.8 294,415 2013 1,335,412 397,181 158,076 161,296 618,859 324,072 16,501 340,573 340,573 55.0 804,012 2014 1,460,046 443,064 86,544 227,566 702,872 31,472 10,000 41,472 41,472 5.9 852,048 2015 1,289,630 416,651 99,851 89,328 683,800 6,668 2 6,670 6,670 1.0 852,046 2016 1,044,418 386,829 41,981 233,791 381,817 0 27,002 27,002 27,002 7.1 852,048 Total 9,101,145 2,152,45 4 662,115 1,131,443 5,155,133 726,922 53,505 780,427 780,426 15.1 2017 987,351 350,191 108,428 152,020 376,712 0 35,000 35,000 35,000 9.3 852,046

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 View Claims USD USD USD USD USD USD USD USD USD 2015 72,593 8,157 3,473 3,107 57,856 30,660 0 30,660 30,660 53.0 16,681 2016 386,493 40,220 8,824 49,139 288,310 166,228 9,622,987 9,789,215 3,002,679 1041.5 88,592 Total 459,086 48,377 12,297 52,246 346,166 196,888 9,622,987 9,819,875 3,033,339 876.3 2017 421,336 36,411 25,307 35,488 324,130 0 46,501 46,501 46,501 14.3 88,591

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 View Claims USD USD USD USD USD USD USD USD USD 2013 745,123 79,951 65,704 67,043 532,425 443,895 351,000 794,895 794,895 149.3 246,003 2014 896,310 92,710 38,858 102,176 662,566 836,038 129,700 965,738 965,738 145.8 271,082 2015 1,079,882 96,974 55,832 49,948 877,128 50,220 141,501 191,721 191,721 21.9 308,834 2016 1,221,619 107,167 30,669 170,791 912,992 1,472,147 827,175 2,299,322 2,299,322 251.8 373,886 Total 4,952,917 496,657 266,094 506,161 3,684,005 3,480,262 1,626,716 5,106,978 5,106,978 138.6 2017 1,272,026 98,034 83,831 117,553 972,608 42,447 2,079,379 2,121,826 2,121,826 218.2 364,916

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

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

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

IG REINSURANCE STRUCTURE

IG REINSURANCE COST USD Category 2016/17 2017/18 Difference % % Difference Dry Cargo 0.454 0.411 0.043-9.5 Dirty Tanker 0.657 0.596 0.061-9.3 Other Tanker 0.282 0.268 0.014-5.0 Passenger 3.507 3.332 0.175-5.0

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

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$45 million Reinsured by Hydra

IG REINSURANCE UPPER POOL Reinsured by Hydra Upper Pool Claims from US$45m to US$80m 7.5% Back to individual club responsible for claim

IG REINSURANCE HYDRA LAYER Reinsured by Hydra Claims from US$80m to US$100m

IG REINSURANCE EXCESS OF LOSS REINSURANCE The General Excess of Loss Contract Multi-Year Fixed Contract First GXL Layer (US$100m to US$600m) 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

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

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

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).

SUMMARY Introduction Underwriter s Role Premiums Loss Ratio Reinsurance

THANK YOU

LOSS PREVENTION & SURVEY

INTRODUCTION North of England s loss prevention strategy Provision of information General Targeted Bespoke Risk based assessment Condition survey 14 9

PUBLICATIONS http://www.nepia.com/publications/loss-prevention-publications/

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. http://www.nepia.com/media/277812/north-loss-prevention- Publications.pdf

INDUSTRY NEWS Up-to-date information about topical issues is provided by the Industry News service. http://www.nepia.com/news/industry-news/

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 http://www.nepia.com/maritime-alerts/

INFORMATION Bespoke loss prevention Enquiries 2,500+ in 2016 Training for Members staff at North Seminars at Members offices Residential courses UK Singapore Dubai 15 4

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 2016 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 2016 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 4.4 15 5

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. 156

CONDITION SURVEYS Responsibility for the condition of a ship? Owners and managers Responsibility for monitoring condition? Flag State Recognised Organisation Port State Classification society 1

CONDITION SURVEYS Role of the P&I Club Third party liability insurer Assess the risk posed by the ships condition for insurance purposes 1

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 1

CONDITION SURVEYS 16 0

CONDITION SURVEYS 16 1

CONDITION SURVEYS 16 2

CONDITION SURVEYS 16 3

CONDITION SURVEYS 16 4

SUMMARY North of England s loss prevention strategy Provision of information General Targeted Bespoke Risk based assessment Condition survey 16 5

THANK YOU

OUTLINE OF FD&D INSURANCE

INTRODUCTION Introduction What is FD&D Cover? Features of FD&D Scope of cover Limitations to cover North of England FD&D Department

INTRODUCTION WHAT IS FD&D COVER?

INTRODUCTION - WHAT IS FD&D COVER? A form of optional mutual insurance for legal costs in relation to enforcing or defending certain types of shipowning risks

INTRODUCTION - WHAT IS FD&D COVER? Additional Class of optional insurance Legal costs insurance To cover legal costs outside P&I and H&M Does NOT cover substantive liabilities

FEATURES OF FD&D

FEATURES The business of this class is the enforcement of all proper claims and the defence of all claims improperly brought

FEATURES Discretionary cover: Prudent uninsured Reviewed throughout claim Members Board have absolute discretion with regard to support

FEATURES Double insurance: Rule 23 No cover for costs / expenses recoverable under other insurances Claim not covered by P&I or H&M P&I and H&M liabilities not covered

FEATURES Security: For claims For costs

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

FEATURES Deductible 2016/2017 25% deductible Minimum deductible $10,000 Maximum deductible $150,000 No costs if no external parties appointed

SCOPE OF COVER

SCOPE OF COVER Types of disputes - May 2016-May 2017 DISPUTES WITH OTHERS 3% DISPUTES WITH SUPPLIERS 1% OTHERS 2% C/P DISPUTES 94%

SCOPE OF COVER HIRE/FREIGHT/DEADFREIGHT Lawful deduction? No right of set off against freight Off-hire? Withdrawal for non-payment of hire Lien for non-payment of hire/freight

SCOPE OF COVER UNSAFE PORT CASES where she may safely lie,..

SCOPE OF COVER UNSAFE PORT CASES,always afloat.

SCOPE OF COVER BUNKER DISPUTES Bunker quality/quantity Quantities on delivery/redelivery

SCOPE OF COVER STEVEDORE DAMAGE Stevedore damage Liaise with H&M underwriters

SCOPE OF COVER NEWBUILD/MOA Newbuilding disputes Sale and purchase disputes (MOA) Review of contracts Limit on cover US$250,000

SCOPE OF COVER OTHER Disputes with underwriters (H&M/war risk/loss of hire) Disputes with suppliers (bunker suppliers/port agents) Disputes with mortgagees / managers / operators Note: No cover for disputes between Insured Parties Rule 9(3)(G) Bill of lading disputes Note: Not cargo loss or damage

SCOPE OF COVER Check before fixing International Maritime Bureau (IMB) Baltic and International Maritime Council (BIMCO) Internal Enquiries

LIMITATIONS TO COVER

LIMITATIONS ON COVER Classification society requirements Statutory requirements Rule 22

NORTH OF ENGLAND FD&D DEPARTMENT

FD&D DEPARTMENT As of 20 February 2017 About 3,300 Owned and Chartered vessels About 200 Members 122 million GT

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 in-house team are English solicitors or barristers. A large number of FD&D Class disputes arise under charterparties or other contracts containing London arbitration clauses. Routinely handle London arbitrations in-house

FD&D DEPARTMENT UK Office 24 lawyers including a US Attorney Singapore Office 6 lawyers including 3 Singaporean solicitors and 2 Hong Kong solicitors Greek Office: 4 lawyers

FD&D DEPARTMENT FD&D Guide Online www.nepia.com FD&D Class

SUMMARY Introduction What is FD&D Cover? Features of FD&D Scope of cover Limitations to cover North of England FD&D Department

THANK YOU