Brokers' Notes
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Marine Practice PROTECTION AND INDEMNITY (P&I) BROKERS’ NOTES LAST UPDATED SEPTEMBER 2011 INDEX INSURANCE SuMMARIES .......................................................................1 Protection & Indemnity (P&I) ...........................................................................................................................2 Freight, Demurrage and Defence (FD&D) cover ..............................................................................................5 Charterers .......................................................................................................................................................7 Non-poolable covers .......................................................................................................................................9 War P&I .........................................................................................................................................................10 CONVENTIONS AND LEGISLATION ..................................................... 11 INTERNATIONAL ............................................................................................................12 Limitation Conventions ............................................................................................................. 12 1976 Limitation Convention – Limitation of Liability for Maritime Claims (LLMC) ...........................................12 Athens Convention – relating to the Carriage of Passengers and their Luggage by Sea (PAL), 1974 ...............14 Pollution Conventions ............................................................................................................... 15 Civil Liability Convention (CLC) 1969 .............................................................................................................15 STOPIA and TOPIA 2006 ................................................................................................................................16 Oil Pollution Act (OPA) 1990 ..........................................................................................................................16 International Convention On Civil Liability For Bunker Oil Pollution Damage, 2001 .......................................18 The International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 2010 (HNS 2010) .......................................19 UNITED STATES .............................................................................................................21 Voyage Surcharges........................................................................................................................................ 21 Certificates of Financial Responsibility (COFR) ..............................................................................................22 Individual State Requirements ......................................................................................................................23 Comprehensive Environmental Response Compensation Liability Act (CERCLA) 1980 .................................23 International Carrier Bonds (ICB) and Cargo, Crew and Passenger Manifests ................................................24 Personal Injury Statutes .................................................................................................................................25 Terrorism Risk Insurance Act (TRIA)2002 .......................................................................................................26 MisCELLANEOus ..........................................................................................................27 Nairobi International Convention On The Removal Of Wrecks, 2007 .............................................................27 Salvage and SCOPIC .....................................................................................................................................27 ISPS – International Ship and Port Facility Security Code (international, but not US)......................................28 b • Folio Left Page Document Title International Group of P&I Clubs .............................................. 29 Reinsurance Structure ...................................................................................................................................30 Sub-committees ............................................................................................................................................33 Standard & Poor’s ratings .............................................................................................................................34 General Increase History ...............................................................................................................................35 Supplementary Call history ..........................................................................................................................36 Release Calls .................................................................................................................................................37 Abatement Levels ..........................................................................................................................................38 Average Expense Ratios Year .........................................................................................................................38 Persistent Oils ...............................................................................................................................................39 INDIVIDUAL Club STATISTICS ............................................................. 40 CONTACT us .................................................................................................................54 c • Folio Left Page Document Title INSURANCE SuMMARIES 1 •P&I Brokers’ Notes PROTECTION & INDEMNITY (P&I) Protection & Indemnity insurance is a third party liability insurance for liabilities arising out of the operation and management of a vessel. P&I Clubs first came into being some 150 years ago when shipowners formed into mutual associations to share the cost of claims which their hull underwriters would not cover. These thirteen mutual associations are now known as the International Group of P&I Clubs. There are other smaller providers of P&I (see Fixed Premium P&I Clubs section) but the focus of this document will be the International Group Clubs. As mutual insurance associations these Clubs operate on a non-profit basis, meaning that they underwrite only to meet those liabilities and expenses they are expecting to meet in the future. The Clubs are made up of shipowner members and governed by a Board of Directors made up from a representative spread of the Club’s membership, although the day-to-day running of the Club is delegated to a separate management company. As these Clubs represent the vast majority of ocean going vessels, their ability to share claims and their combined purchasing power has allowed them to provide relatively inexpensive insurance to their members for high limits of liability. The structure of the insurances purchased is detailed elsewhere in this document (see International Group Insurance Structure section). INsuRED RisKS P&I Clubs are not only liability insurers; they also provide their members with claims handling and casualty response The Clubs cover liabilities arising out of the ownership and services, and legal advice. The Clubs maintain a network of management of a vessel entered with them. The risks correspondents in every major (and many minor) port(s) all covered include: over the world allowing them to provide quick on-the-spot assistance to members in difficulty. • Death/personal injury of seamen, passengers and third parties WHO CAN BE INsuRED? • Liabilities arising from collisions with other vessels (where not covered by Hull & Machinery insurance) As stated above, P&I insurance covers liabilities arising out of the operation and management of vessels entered in the Liabilities arising from collisions with Fixed or Floating • Clubs. Although there will be one designated principal Objects (FFO) member there are many other parties who can be named • Liabilities arising from pollution from the vessel and protected by a P&I policy. • Liabilities arising from wreck removal of the vessel Terminology varies between the clubs, where the named party can be referred to as either Joint Owner, Joint En trant, • Liability to cargo Joint Member, Additional Assured or Co-Assured. • Fines (with certain criminal exceptions) • Legal costs arising from such liabilities 2 • P&I Brokers’ Notes EVIDENCE OF COVER Other entities can be added, at the LETTERS OF UNDERTAKING club’s discretion, under the MDA AND LOss PAYABLE CLAusES All P&I Clubs produce a Certificate of clause. Entry which will evidence the terms Most financial institutions granting a and conditions of the member’s P&I Examples of entities eligible for full mortgage on a vessel require P&I policy. The details will include a list of cover: insurers to provide evidence of cover assureds, deductibles, mortgage and usually to provide a Letter of interests and extra covers. • subsidiaries and affiliates of the Undertaking; the latter is provided by principal member the club upon receipt of a signed Notice of Assignment. COVER AVAILABLE • technical manager The cover available to the Joint, Group Clubs issue Letters of • commercial manager Additional or Co-Assured fits into one Undertaking