P&I insurance may be the most important marine insurance a ship owner purchases.
Hull and Machinery insurance (H&M), Loss of Hire (LOH) or other marine insurances provide key coverages for marine assets.
However, it remains the case that a vessel can trade if it doesn’t have H&M insurance and Loss of Hire in place whereas the absence of P&I cover will make this virtually impossible as a vessel will be unable to satisfy its International Convention obligations with a P&I insurer Blue Card to enable the ship owner to obtain State Certificates demonstrating compliance with (as appropriate) CLC, the Bunker Convention, the Nairobi and Athens Convention.
P&I is considered an owners ‘ticket to trade’ that enables a vessel to earn income and confer a commercial benefit on an owner beyond the ability to asset play.
However, P&I is more than a ’ticket to trade’. It is more than an insurance safety net protecting an owner’s bottom line against third party liability.
It is a key relationship where the P&I insurer is viewed as the de-facto extension of a ship owner’s office in a way no other marine insurer is.
This unique positioning is heightened by the commercial importance commercial partners, including state owned shippers, oil majo
It is not an altruist interest but one that goes to protection of their reputation since, how a ship owner
handles a maritime casualty, impacts others in the commercial chain and how they are viewed when innocent third parties suffer loss or an ecological/environmental disaster happens.
To lose a ship is a loss for a ship owner and one the general public give little thought to. When a beach is polluted and wildlife is killed, bad publicity always follows.
It is important, therefore, that a ship owner has a responsive P&I provider, with a cultural ethos that matches the ship owner’s individual needs.
Today’s P&I environment extenuates this requirement when the financial volatility of past years is absent, as witnessed through strengthened International Group Clubs’ free reserves, and where leading fixed premium providers are backed by, or writing on behalf of, S&P A rated security.
With the absence of financial volatility affecting P&I Club finances, service capability allied with flexibility of approach are one of, if not the, most important differentiator between P&I insurers.
How can you ensure that your P&I provider, whilst providing appropriate cover, also meets your service needs?
It is the very challenge we are familiar with: aligning P&I cover with risk appetite and service requirements whilst reinforcing your relationship with your P&I provider, its claims team, underwriters and senior management.
We actively manage relationships so that should we be required to intercede over a difficult cover issue, we are able to diffuse a situation before it becomes a problem.
These are important promises but ones we already deliver on for existing clients.
How?
• We know the P&I market inside out, working with all International Group Clubs and major fixed premium providers
• We have regular meetings with the senior management, claims teams and underwriters of all major P&I markets
• We have probably the most ‘skilled up’ team in the market, with diverse experience gained outside broking, which complements our broking and risk management capability, making us better equipped to service your needs
Our team includes:
• Former P&I Club senior managers for International Group Clubs
• Former underwriters, including those with a leading Professional Indemnity Insurer
• Lawyers
• Shipbroker experience
• Commodity trading experience
• Industry advisers
• Unparalleled in-house expertise handling offshore risks and contractual issues
These expertise enables us to regularly advise on:
• Blue water (wet & dry) charter parties and offshore contracts including O&M Agreements
• COA
• MOA/shipyard and repair contracts
• Terminal contracts including LNG COUs
• Reviewing and drafting indemnities/LOIs
• OSRO issues and the inter-relationship with P&I cover
• Bill of lading (BSL) issues including blending/ commingling and substitute/switch bs/l
• GA including oil major related clauses
• Club cover issues and questions of ‘poolability’ of exposure under the International Group Pooling Agreement
Our Capabilities
Amongst our capabilities we specifically highlight the following areas in which we provide
added value to our clients:
Risk Placement; An operator may require insurance to cover a range of exposures
including liability, property, business interruption, berth blockage and terrorism.
Many of these exposures can be covered by accessing one of the insurers in the London
Market who specialize in Ports and Terminals exposures.
The alternative is a structured placement using a combination of policies and insurers
in London and local markets.
For major operations, with significant property values, a structured placement may be more cost effective than a “one stop shop” placement strategy.
Global Programs; The consolidation of terminal services means that an operator may have 20 or more operations around the world each one facing a unique combination of asset, liability and financial risk exposures and legal environments.
We have substantial experience structuring global programs that cater to the particular insurance requirements and risk profile of each operation, within a cohesive framework of coverage, limits and deductibles to enhance the operator’s buying capacity and leverage without compromising on coverage or flexibility for the individual location.
Ancillary Insurances; An operator will invariably require other insurance coverage such as Employer’s
Liability, Motor, and Directors and Officers.
Our Ports and Terminals team has the experience advising on and arranging these ancillary insurances on behalf of our clients, and can call upon our specialist teams in London and our global network of offices to provide cost effective solutions.
Analysis of Lenders’ Requirements; The cost of building or upgrading a port or terminal with new generation equipment capable of handling post panamax vessels is significant.
As a result, many operators have secured project financing to meet these costs. Lenders protect their investments by prescribing the levels and terms of insurance purchased by the operator.
We are experienced in analyzing and structuring insurance solutions that comply with lenders' insurance requirements.
We also provide advice to banks on the nature and level of insurances that an operator should purchase.
Comparison of terms and policy wordings; A policy wording from one insurer, whilst broadly suitable, may contain exclusions or limitations that make it inappropriate for a particular operator given the nature of the cargoes they handle, their location or the legal framework in which they operate.
We compare wordings for our clients to ensure that the coverage meets their specific needs and those of their bankers, as well as assist in choosing between competing markets.
Captive Risk Transfer; We have been instrumental in designing, constructing and managing Captive programs for port and terminal operators including detailed feasibility studies, pricing and re-insurance
structure.
Risk Management; We understand that risk management and loss prevention is an integral part of a complete insurance solution.
Working closely with specialist insurers and their in house survey and loss prevention teams we are able to provide guidance in the latest developments in risk management specific to the ports and terminals sector.
Claims Management; Our detailed knowledge of port and terminal operations and market conditions allows us to achieve optimum outcomes and to provide pertinent advice to our clients when incidents occur.
Charterers’ Liability Insurance
As a charterer you face many diverse exposures which require careful thought in order to properly align your liability cover with your risk appetite.
For those advising you, it requires a knowledge and understanding of your business dynamic; an appreciation of how the legislative and economic environment impacts that exposure; an awareness of potential risks linked to the credit worthiness of your trading partners; an understanding of jurisdictional peculiarities connected with your trades, including any custom of the trade; and an appreciation of the bargaining parity between you and your commercial counterparts that impact the ability to achieve a balanced contractual allocations of risk.
Our team, with its experience in placing and servicing charterers’ risks globally across wet and dry trades, including offshore, combined with our understanding of the products available, is a guarantee that you will have Appropriate cover, aligned to risk appetite, at the most competitive price backed up by a respected service team capable of providing full claims advice and contractual support.
Typical examples of Charterers’ Risks
• Liability for Loss of or Damage to Cargo
• Damage to Hull Liabilities
• Liability for Death and Personal Injury
• Oil Pollution Liabilities
• Wreck Removal Liabilities
• Fines
• Legal Disputes (FD&D)
• Loss of bunkers
Liability for Loss or Damage to Cargo (i.e. P&I type risks)
• Depends upon the terms of the Charter party.
• Time or Voyage Charterers may incur liability for loss or damage to cargo caused by stevedores who are deemed to be the servants of the charterer.
• The NYPE Charter party form will normally contain Inter Club Agreement prescribe apportionment of cargo liability.
• Voyage Charters “FIOS” (free in / out stowed) or “FIOST” (free in/out trimmed) may result in charterer being found liable for loss or damage to cargo during cargo handling operations.
Damage to Hull Liabilities(i.e. DTH risks)
• Caused during the loading or discharging of cargo by stevedores and the like.
• Caused as a result of cargo shifting during voyage due to inadequate or incorrect stowage by stevedores employed by the charterer.
• Due to unsafe port or berth.
• Damage to engines if caused by poor quality bunkers supplied by the charterer.
Examples of Charterers’ FD&D Risks
Covering legal costs and expenses for disputes in connection with:
• Charter party, bill of lading, contract of affreightment, disputes in relation to hire, offshore, set off freight, dead freight, laytime, demurrage, despatch, speed performance, description of vessel and/or damages for detention
• General and/or particular average contributions
• Charges, disbursements and the like from agents, stevedores etc. Typical examples of risks that are not automatically covered under a Standard Charterers’ Liability Policy
• Physical loss of Charterers’ Bunkers.
• Charterers’ liability for pollution in his capacity as cargo owner.
• Freight at Risk.
• Charterers’ P&I liability and DTH liability caused by War Risks.
• Trade Disruption due to delay.
• Liability arising from breach of or deviation under the Contract of Carriage such as cargo carried on deck against under deck BOL’s.
Typical examples of delay (or TDI) issues that are not covered under a standard Charterers’ Liability policy
• Strike, lock-out, stoppage or restraint of labour.
• Rebellion, riots, civil commotions, political protests,action by environmental objectors.
• Fire, explosion or mechanical breakdown on land
• Earthquake, volcanic eruption, heave, landslide or subsidence.
• Loss or damage to vehicles, vessels or aircraft carrying or transhipping cargo or spare parts to or from an insured vessel.
• Closure of a port, berth or sea lane as a result of an order made by an authority.
• Physical obstructions in any port, berth, sea lane or navigable waterway for any abnormal reasons.
• Imposition of quarantine upon an insured ship.
• Stowaways.
• Storm, tempest, flood, sandstorm, snow, ice, fog or lightning.