P & I Presentation for Pandiman - Jan 2013


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P & I Presentation for Pandiman - Jan 2013

  1. 1. Pandiman – 10 January 2013Protection & Indemnity Insurance
  2. 2. Marine Industry – the wider picture? Global population – 7,058,019,224 (07/01/2013) 96 % of all we need spends part of its time transported by sea Food, raw materials, energy supplies, manufactured products – almost everything we need in modern life Our marine industry is a small but critical part of a huge industrialised global industry that supports 7 billion people on the planet today Without an effective marine industry most would perish and the lights would go out?
  3. 3. The Marine Industry What type of industry are we? What is our role? The importance of local help and expertise The front line – Local Correspondents, Surveyors, Medical Staff, Lawyers
  4. 4. P & I History – 1850’s - Industrial Revolution
  5. 5. P & I History – Trade and Social Change Industrialisation – massive increases in demand for raw materials, manufacturing, global colonisation, global trading Generated an exponential increase in demand for shipping Commercial and social change – increased third party liabilities for ship owners Appalling loses - 2 out of 3 ships leaving the UK never returned Shipping became commercially uninsurable
  6. 6. 1855 – The birth of P & I Insurance In desperation some London ship owners turned to two lawyer friends for advice Self insure and mutually insure each other on a “non profit basis” Formed a “ship owners insurance club” which the two lawyers managed for them Timber, iron ore and coal trades with the Baltic States Traditionally trade commenced when the ice broke – 20 February 20/02 - Ships entered in the club and insured for the year
  7. 7. 1855 – The first P&I ClubLONDON, MARCH 1ST, 1866Notice is hereby given thatthe Committee have thisday made a Call of 10/6per cent., being the firstsince the Society wasestablished in 1855,PETER TINDALL, RILEY & CO., Managers
  8. 8. 1871 – Britannia P & I ClubNearly 70 Steamers are nowmutually insured in it forabout £90,000.PETER TINDALL, RILEY &Co.,ManagersLONDON, 1ST SEPTEMBER1871.
  9. 9. What is P & I Insurance Mutual Insurance, - ship owners share their risks liabilities and claims in a “Club” The “Club” is managed on owners behalf, - non profit making organisations Covers ship owners third party liabilities “Pay to be paid” principle, - ship owner pays a claim and is then reimbursed by the P & I Club (one exception!) Club services: claims handling, risk management, loss prevention, legal advice, technical advice and expertise Support and promote ship owners interests
  10. 10. International Group & Reinsurance 13 Clubs in the International Group Each Club pays the first £8 million of a claim From £8 million to £50 million - claim shared across IG Clubs in proportion to their size / tonnage Above £50 million the IG Group / Clubs part self insure and then buy commercial reinsurance to provide levels of cover from £50 million to approximately £4.2 billion International Group represents all clubs and ship owners in various trade and international forums Centre of maritime expertise, - sub committees, etc.
  11. 11. P & I Cover - “Heads of Claim” Cargo Claims – loss and damage Collision – damage to other vessels and liabilities arising from a collision (pollution, injury, cargo etc.) Allision – damage to fixed and floating objects Pollution – Incidents of accidental pollution Personal Injury – crew, stevedores, passengers Salvage and General Average Wreck Removal Stowaways - repatriation
  12. 12. Cargo – Liabilities to cargo owners
  13. 13. Cargo – Liabilities to cargo owners
  14. 14. Cargo – Liabilities to cargo owners
  15. 15. Cargo - Liabilities to cargo owners
  16. 16. Cargo - Liabilities to cargo owners
  17. 17. Cargo – Liabilities to cargo owners
  18. 18. Collision - Liability to other ship
  19. 19. Collision - Liability to other ship
  20. 20. Collision - Liability to other ship
  21. 21. Allision - Docks, piers, jetties etc.
  22. 22. Allision - Docks, piers, jetties etc.
  23. 23. Allision - Docks, piers, jetties etc.
  24. 24. Pollution - Accidental
  25. 25. Pollution - Accidental
  26. 26. Pollution - Accidental
  27. 27. Pollution – Intentional?
  28. 28. Personal Injury
  29. 29. Personal Injury
  30. 30. Personal Injury
  31. 31. Grounding, Salvage and Wreck Removal New Carissa at Coos Bay
  32. 32. Grounding, Salvage and Wreck Removal Pasha Bulker at Newcastle
  33. 33. Grounding, Salvage and Wreck Removal Giant Step at Kashima
  34. 34. Grounding, Salvage and Wreck Removal
  35. 35. Stowaways – Care and Repatriation
  36. 36. Members (Ship Owners) Obligations“…nothing should relieve the Member of his obligation to keep his entered ships at all times in a proper condition.” (Rule 28 (11))
  37. 37. Members Obligations Warrants that the entered ship must be maintained in Class (Rule 28 (1)) Must comply with requirements of ship’s Flag State relating to the construction, adaptation, condition, fitment, equipment, manning (and management) of the entered vessel (Rule 28 (4) (i)) Must maintain the validity of all statutory certification (Rule 28 (4) (ii))
  38. 38. P & I Club Obligations Pay bona fide claims Minimise / mitigate owners losses / exposure Ensure maintenance of management and ship board standards across the club membership Prudent underwriting Maintain financial strength and stability Provide high levels of cover at affordable rates Provide legal and technical support and advice
  39. 39. P & I Club Activities Run risk management & loss prevention programmes and publications Ship condition surveys Auditing ship owners management / offices Auditing manning agencies Auditing maritime training centres Hosting “in house” training seminars for owners Provide global seminars for Members seafarers Source advice and appoint experts Publish bulletins and circulars
  40. 40. P & I Claims Handling Successful claims handling, to mitigate the owners loss, is achieved through successful negotiation and mediation Negotiating position is heavily dependent upon the quality of evidence and content of reports received from ship staff, ship owners, lawyers, correspondents and attending surveyors Timely communications, incident investigation, collection of evidence and comprehensive detailed reports are crucial to successfully defending an owners interests
  41. 41. Famous Quote:“P & I Clubs, as non profit making organisations, can only compete with each other in terms of the quality of service they can provide to their respective ship owner membersThat quality of service is heavily dependent upon the competence, experience, knowledge, expertise, advice and professionalism of their service providersThese include, but are not limited to: Correspondents, Marine Surveyors, Lawyers, Naval Architects, Fire Experts, Chemical Experts, Cargo Experts, etc.” John F Kingdom 1998
  42. 42. The Famous P & I Statistic: + 80% of P & I claims arise from “human error” Human error in this context includes activities of crew, management, pilots, stevedores, ship agents, - in fact any and all personnel who may have an involvement in the operation of a ship It is for this reason that P & I Clubs have a particular interest in seafarers and what they can do to minimise risks / claims and protect their owners interests
  43. 43. P & I Focus has changed During the 1980’s there was a “claims explosion” both in numbers of claims and their costs 20 years ago P & I resources were very focussed on “ship condition” with some justification (an example follows) Today the number of claims submitted annually has been stable for some time, however over the last two years costs have increased sharply P & I Clubs are now equally interested in a ships management and crew standards, - their knowledge, training, experience, and competence
  44. 44. Ships Condition today Whilst the overall condition of ships has improved there has been virtually no change in the type and distribution of major defects over the last 20 years. Port State Control, Ship Vetting and P & I club surveys all highlight the persistent levels of some defects High on the list are defects affecting:  Hatch covers, holds and tanks  Fire fighting and lifesaving equipment  Charts and nautical publications
  45. 45. Summary of Major DefectsAs % of AllMajor Defects 20 15 10 5 0 Type of Defect
  46. 46. Claims Types over 10 yrs - Numbers Penalties Spillage Third Party Wreck Removal Passenger liabilities 695 1,429 59 Total loss 1,116 262 25 Breakdown Other 5,436 Breakdown Cargo 130 Non-contact damage Collision 188 Crew Fire/Explosion Damage to Property 69Grounding Fire/Explosion 260 GroundingDamage to Non-contact damage Property 2,949 Other Passenger liabilities Crew 15,699 Penalties Spillage Third Party Collision Cargo 1,179 57,696 Total loss Wreck Removal Total: 87,192
  47. 47. Claims Types over 10 yrs – Costs USD S pillage Third Party Total loss Wreck Removal Breakdown 37,682,454 36,920,105 22,327,080 6,859,810 Breakdown Cargo Penalties 6,155,405 12,584,761 CollisionPassenger liabilities Crew 1,565,093 Damage to Property Other 26,150,385 Fire/Explosion Non-contact damage Grounding 4,551,286 Cargo 456,511,375 Non-contact damage Grounding 41,721,951 Other Fire/Explosion Passenger liabilities 27,990,456 Penalties Damage to Spillage Property113,117,804 Third Party Total loss Crew Wreck Removal 207,480,243 Collision 112,699,986 Total: USD 1114 million
  48. 48. Claims Types over 10 yrs – Percentage Cost Breakdown Spillage Third Party Total loss Wreck Removal Cargo Penalties 3% 1% 3% 2% 1% Breakdown Collision 1% Other Crew 2%Non-contact damage Damage to Property 0% Fire/ExplosionGrounding Grounding Cargo 4%Fire/Explosion 41% Non-contact damage 3% Other Passenger liabilities Damage to Property Penalties 10% Spillage Third Party Total loss Crew Wreck Removal 19% Collision 10%
  49. 49. P & I Clubs – Claims Concerns Tankers: Cargo contaminations  Tank preparations / line washing – procedures and records  Sampling: Manifold, First foots, load port / discharge port samples, water dips - records  Segregation valve integrity  Tank coating maintenance SW ingress – Main deck water tight openings
  50. 50. P & I Clubs – Claims Concerns Container Vessels:  Overloaded containers and stack weights  Collapsing containers  Securing arrangements and containers lost overboard  Miss declared or undeclared dangerous goods  Ship design and parametric rolling  Speeds in poor visibility and heavy weather  Ship size – cargo values and salvage issues
  51. 51. P & I Clubs – Claims Concerns Bulk carriers: Cargo Damage  Wet Damage: Hatch maintenance / weather tight integrity, bearing pad wear, gaskets, drain valves, compression bars  Wet damage: Ballast tank, pipeline and vent pipe leaks  Heat Damage: Grain, - bunker heating & transfer operations  IMSBC Code – Cargo liquefaction & DRI
  52. 52. P & I Clubs – Claims Concerns All Ships:  Pollution, - OWS MARPOL violations, - Bunker spills - procedures and controls  Pilotage incidents – BRM, collisions, groundings, dock damages, crane damages  Groundings – incidents at anchorages – weather / Masters judgement  Machinery space fires – inadequate maintenance and poor housekeeping
  53. 53. P & I Clubs – Claims Concerns  Enclosed space entry – fatalities & injuries  Lifeboat accidents – OLR failures, fatalities & injuries  Mooring incidents – fatalities, injuries and damages  Personal Injuries – health and fitness issues, medical costs – repatriation  Stowaways – Security, - care & repatriation
  54. 54. The importance of Pandiman You are only one of hundreds of Club Correspondents around the world A typical “claims team” of 4 persons will have about 200 open files current at any one time Britannia personal injury team of 4 persons has about 800 open files current at any one time Philippines provides seafarers to 26% of the world fleet 50% of Britannia Members are in Asia / Pacific region More Filipinos on Britannia vessels than other Clubs?
  55. 55. The importance of Pandiman Ship owners are suffering a prolonged recession – looking to cut costs everywhere, - for some their survival is at stake P & I Clubs are under real pressure to cut back / reduce overheads and claims costs More claims in terms of numbers and cost are settled via Pandiman than any other Correspondents Pandiman is a focus of attention by both P & I Clubs and the International Group regarding performance and cost
  56. 56. Correspondents - What can YOU do? Communicate Prioritise tasks Inform Investigate Collect and retain evidence Advise Provide factual and objective reports
  57. 57. What YOU should do Keep the P & I Club, Owners / Managers and where appropriate, Manning Agents fully informed of your actions / progress Acknowledge / confirm receipt of all incoming communications (as soon as possible) Arrange to investigate any accident or incident promptly Collect all relating evidence and documentation Ensure there is a record of the sequence of events Ask all witnesses to write down what happened Take photographs / video
  58. 58. What you should NOT do Allow anyone onboard until positively identified Allow opposing surveyors or lawyers onboard, unless accompanied by a surveyor or lawyer acting for the owner Give written material or physical evidence to opponents lawyers or surveyors Give a subjective opinion or admit liability, verbally or in writing Sign any document which contains incorrect information
  59. 59. What you should NOT do Make any false statements to the Authorities Instruct the crew to be economical with the truth Attempt to influence or persuade witnesses to alter their evidence Alter, erase, fabricate or tamper with evidence Fail to preserve evidence (e.g. VDR recordings, data loggers, course recorders, etc.) Attempt to hide or destroy communications or evidence (remember exchanges may become discoverable)
  60. 60. Collection of Evidence Evidence relating to the incident will be needed by the Club to settle claims received from injured persons, the cargo/property owners, or from a terminal operator. Evidence is also needed by the Club to defend the Ship Owner against spurious, unwarranted or exaggerated claims Masters, Correspondents, Surveyors and Lawyers all have an important role in the collection of evidence to help the Club evaluate the damage and establish liability. The Mariner’s Role in Collecting Evidence, published by the Nautical Institute, is recommended reading.
  61. 61. Collection of evidence “Courts depend upon evidence. Contemporary evidence is of the utmost importance. It is vital to make a note or report of any incident immediately, if possible while it is still in progress. Photographic or video evidence is of particular assistance to the judge or arbitrator in trying to establish the true facts.” The Right Honourable Sir Anthony Clarke. Master of the Rolls, The Royal Courts of Justice, London.(2006)
  62. 62. Contemporary evidence – an example
  63. 63. Collection of evidence – selected examples Collection of Evidence with respect to some selected P&I risks, namely:  Cargo damage in heavy weather  Collision  Personal injury
  64. 64. Cargo damage – heavy weather To defend a claim for cargo damage, loss or shortage, the carrier must be able to demonstrate it has fulfilled its obligations under the contracts of carriage, the cargo was carried in a seaworthy ship and the cargo was cared for properly The obligation to care for the cargo embraces loading and discharging operations as well as during the voyage All cargo handling operations need to be accurately recorded and fully documented Available to the carrier as evidence to defend a claim
  65. 65. Cargo damage – heavy weather Masters are aware heavy weather may provide the Owner with a defence to cargo claims arising from cargo damage. Such defence requires evidence not only of severity and duration of the weather but also extent to which it was predicted or should have been predicted P & I Clubs will often employ weather experts to collect and collate evidence Ship’s log book entries for weather must be accurate or are looked upon with some scepticism - useful if photos/video taken of conditions
  66. 66. Cargo damage – heavy weather Duty on the carrier and the Master to properly load, stow and carry cargo can encompass correct navigation Failure to alter course or slow engine speed to reduce the ship’s motion may be failing to ‘care for the cargo’ Navigation of the vessel has to be evidenced Accurate and full log book entries that are clearly legible are crucial
  67. 67. Cargo damage – heavy weather Provide the best evidence of the hatch covers and W/T fittings condition before the incident occurred Ultrasonic testing / hose testing – surveyors reports Recent Class and Flag State survey reports Surveyors photographs or ship photographs with date / time recorded Hydrostatic tests IG pressure records Collect and retain any photos and / or video of heavy weather conditions experienced
  68. 68. Collision First priority will be safety of lives, the ship and the environment Important there is a contemporaneous record of events backed up by photos and video A multitude of people will attempt to gain access to the vessel as soon as possible: Correspondents, ship owners lawyers and surveyors, those acting for the other side, Class surveyor, other surveyors, Port State Control, Flag State Administration, etc. Master needs Correspondent to help manage workload
  69. 69. CollisionWhat type and scale of damage has occurred? Local P & I Correspondent to attend as soon as possible Record ship damages, pollution, deaths or personal injuries, and cargoes for both for own vessel and, as best as possible, in relation to other vessel Each of these types of damages will possibly require a different expert or lawyer to attend on board to take evidence, and subsequently defend the Owners
  70. 70. Collision Personal injuries and / or deaths, whether on board own vessel or colliding vessel are relevant to liability cover. P & I Clubs can immediately assist with locating relevant medical assistance, possible hospital and any Medivac services Extent of pollution and type of oil/product is also important
  71. 71. Collision Seaworthiness of vessel, limitation of liability Possible investigation by coastal states and flag state ISM implications - Compliance with mandatory rules and regulations - Resources and personnel -Development of plans for shipboard operations - Emergency preparedness
  72. 72. CollisionEvidence prior to a collision Records of the daily routine of the vessel will be crucial Evidence of good passage planning, speed and ‘look out’ Copies of rough log, official log, deck log and engine log Soundings record Working charts and movement books Surprising how often the circumstances of working charts and radar are erased before they can be taken as evidence
  73. 73. CollisionAfter a collision Master, crew and Correspondent should collect, record and preserve as much detail of the collision as they can immediately after an incident Vessel’s position and exact time at point of collision An estimate of the angle of blow with the other vessel An estimate of the speed of each vessel at time of collision Any alterations of course and speed prior to a collision
  74. 74. CollisionAfter a collision: Take witness statements from crew on bridge and any other witnesses Third party evidence should be sought - pilots, local port authority VTS systems Contact ships in the vicinity by VHF and obtain details of ship names and duty officers Keep all scraps of paper Master to collect all relevant evidence and bundle it together for storage in his office immediately after the incident, for collection by the Correspondent Make photocopies prior to and at arrival at the next port
  75. 75. Collision Growing availability of electronically computerised data stored in bridge systems. Master and Officers must be familiar and able to preserve this data However, in practice Masters and crew are often unfamiliar with use of VDR equipment and data saving In the event of an incident, data must be ‘backed up’ as soon as possible, otherwise data will be lost If required, a shore technician should be appointed to ensure that VDR data is extracted and preserved
  76. 76. Personnel accident, injury or deathAccident form Accident date / time / location and conditions Activity being undertaken Employee details Injury location / Brief details of injury Description of accident Work permits and P.P.E. employed Witness statements Photograph / video evidence Immediate cause of accident Underlying cause of incident
  77. 77. In Summary: Prioritise and Communicate Acknowledge all incoming communications Keep P & I Club, Owners / Managers / Manning agents informed of your actions, events and progress as soon as possible Recommend / appoint suitable experts Investigate and record the incident Obtain witness statements Collect and retain all appropriate evidence Forward detailed reports that are factual and objective, with supporting evidence
  78. 78. Questions?