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A. Protection and Indemnity (P&I) Structure

“The origin of the P&I Clubs can be traced to the mutual hull clubs, which came into being in England in the mid-eighteenth century. The Bubble Act of 1720 prohibited marine insurance business from being underwritten by any company other than the two corporations that it created for this purpose, the Royal Exchange Assurance and the London Assurance. While the Act permitted and indeed stimulated insurance transacted by individual underwriters in the market at Lloyd’s, shipowners nevertheless perceived that there was insufficient competition to prevent unwarranted increases in premium and inflexibility in accepting risks.” (Anderson and de la Rue, 2011)

“The abolition of the Bubble Act in 1824 opened the way for new insurance companies to compete in the market. By this time the hull clubs were experiencing some of the difficulties that growth brings to mutual insurance, including concerns among the owners of the better ships that they were being required to subsidize the claims of club members whose ships were older or less well maintained.” (Anderson and de la Rue, 2011)

“The hull clubs nevertheless provided shipowners with a readymade model when, in the mid-nineteenth century, they found once again that the traditional insurance market was unable to meet their needs—this time the need for adequate cover against the growing range and size of liabilities that they were facing in a period of great industrial growth. The hull clubs were already prevented by law from insuring their liabilities for more than their vessels were worth, but then came a decision of the courts that the normal form of hull policy did not even provide any cover at all against liabilities caused by collision.” (Anderson and de la Rue, 2011)

“The market reacted by introducing new cover to include this risk, but this was limited to three-fourths of the assured’s collision liability, up to a maximum equivalent to the value of the ship. Cover against collision risks was already provided by the hull clubs, but these also left the owner exposed to the increasingly problematic risk of “excess” liabilities beyond the value of the vessel, together with the growing risk of liabilities for death and personal injury. It was in these circumstances that shipowners started to club together in a new form of association to provide each other with mutual “protection” against these risks.” (Anderson and de la Rue, 2011)

“Then liabilities to cargo interests became more common: increasingly the courts were taking a restrictive approach to exclusion clauses in contracts of carriage, particularly in cases involving deviation or unseaworthiness. This created a demand for a new class of “indemnity” cover against these risks and contributed to the development of the “protection and indemnity” associations, or “P&I Clubs,” in the form in which we know them today. Nowadays, the traditional liability risks remain the core of P&I cover, but over the years it has been extended to embrace a variety of further risks which have become more significant in modern times. Of these, liability for pollution is the most striking example.” (Anderson and de la Rue, 2011)

“Nowadays, P&I Clubs are invariably incorporated entities, with the power to sue and be sued in their own names. Relations between a Club and its members are normally governed by Articles of Association, with decisions of greatest importance reserved to the members in general meeting. These include any amendments to be agreed to the Club rules, which set out most of the terms on which members’ vessels are insured.” (Anderson and de la Rue, 2011)

B. The International Group

            “The thirteen P&I Clubs which comprise the International Group (the “Group”) between them provide marine liability cover (protection and indemnity) for approximately 90% of the world's ocean-going tonnage” (IGP&I, 2019a). The “mutual tonnage in the Group Clubs now exceeds 1.209 billion GT” (IGP&I, 2019b).

“Each Group Club is an independent, not-for-profit mutual insurance association, providing cover for its shipowner and charterer members against third party liabilities arising out of the use and operation of ships. Each Club is owned by its shipowner and charterer members, and its operations and activities are overseen by a board of directors, or committee, elected from the membership. The day-to-day operations of the Clubs are handled by professional managers, either "in-house" or external, who are appointed by and report to their Club board/committee.” (IGP&I, 2019a)

“The Clubs cover a wide range of liabilities, including loss of life and personal injury to crew, passengers and others on board, cargo loss and damage, pollution by oil and other hazardous substances, wreck removal, collision and damage to property. The Clubs also provide a wide range of services to their members including claims handling, advice on legal issues and loss prevention, and they regularly play a leading role in coordinating the response to, and management of, maritime casualties.” (IGP&I, 2019a)

 “The Group has three "core" functions, firstly the operation of the claims sharing ("pooling") arrangements and the collective reinsurance of these arrangements, secondly it operates as a forum for collecting and exchanging views between the Clubs and their ship-owner members on matters relating to ship-owners’ liabilities, and insurance of such liabilities, and thirdly it provides a collective industry voice for the purposes of engaging with external stakeholders including intergovernmental maritime organisations, national governments, marine authorities around the world and the shipping and marine insurance/reinsurance industries.” (IGP&I, 2019a)

The International Group defines its collective missions as:

·  “Meet the P&I insurance needs of global shipping through delivering robust pooling and reinsurance facilities;

· Provide the best available compensation for people, communities and the environment;

· Promote the insurance related interests of shipping companies through a unified and collective voice.” (IGP&I, 2019c)

C. The Framework within the International Group

C.1. The Reinsurance Structure

 “The Pool is structured in three layers from US $10 million to US $100 million. Excess of US $30 million, the Pool is reinsured by the Group captive reinsurance vehicle, Hydra Insurance Company Limited. Hydra is a Bermuda incorporated Segregated Accounts company in which each of the 13 Group Clubs has its own segregated account (or “cell”) ring fencing its assets and liabilities from those of the company or any of the other Club cells. Hydra reinsures each Club in respect of that Club's liabilities within the Pool and reinsurance layers in which it participates. Through the participation of Hydra, the Group Clubs can retain, within their Hydra cells, premium which would otherwise have been paid to the commercial reinsurance markets.” (IGP&I, 2019d)

“The annual Group General Excess of Loss (“GXL”) reinsurance programme attaches at the Pool ceiling of US $100 million, and provides up to US $2 billion of reinsurance cover in a three-layer structure (Layer 1 - US $650 million excess of US $100 million, Layer 2 - US $750 million in excess of US $750 million, and Layer 3 - US $600 million excess of US $1.5 billion). Hydra retains a US $100 million AAD (Annual Aggregate Deductible) within the 80% Market Share in Layer 1, and there are three multi-year private placements, one of 10% within layer 1, and two of 5% each within Layers 1 and 2. A further US $1 billion of reinsurance cover (the “Collective Overspill”) is purchased annually by the Group to provide protection in respect of claims exceeding the upper GXL cover limit of US $2.1 billion.” (IGP&I, 2019d)

Figure 1: Owned Entries Reinsurance Rates

  

Source: IGP&I (2019d)

Figure 2: Chartered Entries Reinsurance Rates

Source: IGP&I (2019d)

“The Pool, the first and second layers of the GXL and the private placement participation structures for the separate oil pollution cover mirrors the main (P&I) placement up to the Oil Pollution cover limit (US $1 billion), as depicted above. For chartered entries, there is a single combined P&I and oil pollution cover limit of US$350 million. The Pool and Reinsurance layers structures for chartered entries are identical to those in place for owned entries up to the cover limit.” (IGP&I, 2019d)

C.2. The International Group Market Reinsurance Rates

The International Group designates common market reinsurnace rates as such:

Table 1: Reinsurance Rates by Ship Types

Insurance Rates

2017   (Per Gt)

2018   (Per Gt)

Difference To Previous Year

Dirty Tankers

$0.5955

$0.5845

%-1.85

-$0.0110

Clean Tankers

$0.2675

$0.2626

%-1.83

-$0.0049

Dry Cargo Vessels

$0.4114

$0.4038

%-1.85

-$0.0076

Passenger Vessels

$3.3319

$3.2707

%-1.84

-$0.0612

Source: Omni (2018)

 

C.3. The International Group Pool Shares

The International Group common pool is provided by the P&I clubs in different proportions and has been subject to change after loss ratio (L/R) adjustments made within the group where commitments of the clubs may change reflecting their entire incurred losses (Omni, 2016).

Table 2: Common Pool Commitments of IGP&I Members

No

Club

Before Loss Ratio Adjustments

After Loss Ratio Adjustments

1

American Club

2.1

2.3

2

Britannia

8.4

8.2

3

Gard

17.2

17.3

4

Japan Club

7.8

8.1

5

London Club

4.0

3.8

6

North of England

9.4

9.9

7

Shipowners

4.1

6.1

8

Skuld

6.2

4.4

9

Standard Club

9.6

11.7

10

Steamship Mutual

8.1

8.0

11

Swedish Club

5.0

7.2

12

UK Club

11.1

7.9

13

West of England

6.9

6.4

Source: Omni (2016)

 

Figure 3: Commitment Percentages Before and After Loss Ratio (L/R) Adjustments

Source: Omni (2016)

 

D. P&I Liability Limitations

The International Group member summary tables regarding tonnage and ratings have been collected from JLT Specialty who have published their “P&I Market Review 2018” are given below.                       Table 3: S&P Credit Ratings of IGP&I Members

Year

2015

2016

2017

2018

American

BBB-

BBB-

BBB-

BBB-

Britannia

A

A

A

A

Gard

A+

A+

A+

A+

Japan

BBB+

BBB+

BBB+

BBB+

London

BBB

BBB

BBB

BBB

North of England

A

A

A

A

Shipowners

A-

A

A

A

Skuld

A

A

A

A

Standard

A

A

A

A

Steamship

A-

A

A

A

Swedish

BBB+

BBB+

BBB+

BBB+

United Kingdom

A

A

A

A

West of England

BBB+

A-

A-

A-

Source: JLT Specialty (2018)

Table 4: Total Entered Tonnage of IGP&I Members

Policy Year

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Percentage Change From 2009- 10 to 2018-19

American

13.80

14.20

16.00

17.20

15.40

15.80

16.00

16.09

16.50

16.60

20.3%

Britannia

134.80

137.90

136.00

140.00

130.50

131.00

135.50

141.40

115.40

125.90

(6.6%)

Gard

180.20

184.90

195.60

220.00

231.90

244.20

265.10

305.20

306.30

308.90

71.4%

Japan

89.90

91.55

89.03

89.86

91.95

91.84

93.40

92.20

91.50

93.70

4.2%

London

41.00

42.90

43.50

45.50

44.80

46.00

51.00

52.00

54.00

58.00

41.5%

North of England

97.50

110.00

150.00

163.00

170.00

180.00

170.00

185.00

190.00

195.00

100.0%

Shipowners

15.86

16.30

17.70

19.70

21.90

23.60

23.50

24.60

25.40

25.50

60.8%

Skuld

44.90

53.50

59.70

66.70

74.20

80.30

80.20

84.70

96.80

96.60

115.1%

Standard

83.00

110.00

123.00

124.00

135.00

131.00

135.00

138.00

150.00

159.00

91.6%

Steamship

74.90

83.00

92.00

92.60

102.30

113.70

120.30

129.00

151.30

158.60

111.7%

Swedish

38.20

39.30

47.00

50.00

51.00

55.00

62.00

67.00

71.00

83.00

117.3%

United Kingdom

151.00

172.00

185.00

192.00

197.80

204.00

225.00

235.00

239.00

239.00

58.3%

West of England

66.70

73.80

69.00

65.90

70.70

72.70

93.00

100.00

110.00

120.00

79.9%

Source: JLT Specialty (2018)

The International Group members have specified the same amounts for overall P&I liabilities. Gard which is both the largest P&I club by tonnage representing more than 300 million tonnage since 2016 and the only club that has an A+ rating from Standard’s and Poor will be used in the summary table given below filled out utilizing their 2019 rulebook. The club rulebook is also preferred due to the relatively convenient manner in which they display their rules online which allows any who may be interested to directly access the relevant articles.                                                                                             

Table 5: International Group Liability Limits From Gard Rulebook 2019

a.      Owners’ Limits

Issue in Which the Club is Liable

The Club Liability Limit

Oil Pollution

1 billion USD per incident

Passengers

2 billion USD per event

Passengers and Seamen

3 billion USD per event

War-Risks  

500 million USD per event

(The minimum excess is the proper value of the Ship determined in accordance with Rule 71.1(a) of the Rules for Ships or USD 100 million, whichever is the lesser)

Bio-Chemical Risks (under Excess War Risks)

30 million USD per ship

b.      Others’ Limits

Issue in Which the Club is Liable

The Club Liability Limit

Charterers’ Aggregate Liability

350 million USD per incident

Consortium Claims

350 million USD per incident

 

 

 

 

 

 

 

 

Source: Gard (2019)

Appendix II article 5 paragraph 2 defines Consortium Claims with the given conditions:

·         “It arises under a P&I entry of a Ship; and

·         It arises out of the carriage of cargo on a Consortium Vessel; and

·         That the Member and the operator of the Consortium Vessel are parties to a Consortium Agreement; and

·         At the time cover pursuant to the special provisions in this section 5 initially attaches, the Member employs a Ship pursuant to that Consortium Agreement.” (Gard, 2019)

Although, it should be understood that the P&I clubs within The International Group, have taken precautionary measures such as relatively easy to explain clauses stating that the Club might not be liable if the responsible individual and/or company fails to be prudent or engages in fraud. Furthermore, the relevant articles continuously state that a further limitation might occur in the case where a member is accepted to the club with limitations below club set level.

 

E. Rules That P&I Companies Should Obey

The Standard and Poors’ issues a credit rating for all member of the International club, of which the details can be reached here, which is significant as the Ministry of Transportation and Infrastructure of the Republic of Turkey has published the instructions, Law No. 45168, enacted on 30.05.2017, that is about the P&I clubs and companies that can be accepted as party for the flag state applications and administrative procedures.

The second part of this instruction gives the requirements that P&I clubs have to have and do. In Article 6, there are two different groups that the clubs can enter into. For the first group institutions, letter of invention, the existence of an authorized person or firm and permission to check the validity of its P&I commercial papers as online are the requirements to be accepted. For the second group, in addition to the first group’s requirements, the companies have to indicate that it has A(-) and above or equivalent international credit rating that is confirmed by international credit rating agencies, which are A.M. Best, Fitch Ratings, Standard and Poor’s, Moody’s Investors Service, and also the rating is available to be checked online. Additionally, companies must provide commitment regarding reporting vessels that are cancelled the insurance in ten days. Companies’ reinsurance agreements have to cover limits of stipulated liability in international conventions where Turkey is a party and shows the total guarantee amount is not less than 500 million USD manner approved by the reinsurer or reinsurers and companies must present financial reports and compensation payments that are approved by independent auditors for P&I insurance for the last three years.

The Ministry of Treasury and Finance of the Republic of Turkey has two relevant departments regarding the preparation and application of new P&I regulations which are respectively the Insurance Supervision Board and the General Directorate of Insurance. For convenience, the operations of the Ministry regarding the entire “Insurance Sector and Private Pension System” as well as the 2 aforementioned departments’ functions have been acquired from the official website, given numbers and can be accessed here.

 

Table 6: The P&I Clubs recognized by Ministry of Transportation and Infrastructure

Accepted according to the article 11/1

1

TURK P&I

Accepted according to the article 6/1

2

American Steamship Owners Mutual Protection and Indemnity Association, Inc.

3

The Britannia Steam Ship Insurance Association Ltd.

4-a

Assuranceforeningen Gard (Gjensidig)

4-b

Gard P&I (Bermuda) Ltd.

5

The Japan Ship Owners’ Mutual Protection & Indemnity Association

6

The London Steam-Ship Owners’ Mutual Insurance Association Ltd.

7

The North of England Protecting & Indemnity Association

8

The Shipowners’ Mutual Protection & Indemnity Association (Luxembourg)

9

Assuranceforeningen Skuld (Gjensidig)

10-a

The Standard Club Ireland Designated Activity Company

10-b

The Standard Club UK Ltd.

10-c

The Standard Club Asia Ltd.

11-a

The Steamship Mutual Underwriting Association Limited

11-b

The Steamship Mutual Underwriting Association (Bermuda) Ltd.

12

Sveriges Angfartygs Assurans Forening - The Swedish Club

13-a

United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Ltd.

13-b

United Kingdom Mutual Steam Ship Assurance Association (Europe) Ltd.

14

The West of England Ship Owners Mutual Insurance Association (Luxembourg)

Accepted according to the article 6/2

15

Navigators International P&I

16

Navigators P&I

17

Hanseatic P&I

18

MS Amlin Marine N.V.

19

Lodestar Marine Limited

20

Noord Nederlandsche P&I Club

21

Carina P&I

22

Thomas Miller Specialty

23

British Marine

Source: Ministry of Transportation and Infrastructure (2019)

F. Comparison between the Oil Pollution Act (OPA) and the Civil Liability Convention (CLC)

“In recent years, almost all continents have suffered severe damage as a result of oil spills. The most known ones probably occurred in Europe. The names Torrey Canyon, Amoco Cadiz etc. still come to mind as major incidents that occurred in the 1960s and 70s. The international legislator reacted soon after the Torrey Canyon incident with an International Convention on the Civil Liability for Oil Pollution Damage of 1969 and with an additional Fund Convention. The goals of these legal arrangements were to guarantee some compensation to victims of oil pollution incidents. A strict liability rule was imposed on the tanker owner and the liability was channeled to him, but strict limits on the liability applied. The new incident with Amoco Cadiz made clear that the then existing limits did not suffice to compensate the victims and additional institutional arrangements were proposed (in the form of amendments and protocols).” (Faure & Hui, 2006)

“Meanwhile in 1989, the US was also severely hit by the Exxon Valdez incident that led to severe damage in the State of Alaska. The US, that had not joined the international oil pollution conventions, then instituted its own Oil Pollution Act in 1990. After that, other new incidents again hit the coasts of Europe, more particularly with the Erika (along the coast of Brittany-France) in 1999 and the Prestige (along the coast of Galicia-Spain) in 2002. Again, new changes to the conventions took place in order to increase the amounts available for compensation of victims. Most recently in 2003, a Supplementary Fund was established to provide third-tier compensation in addition to the Liability Convention and the existing Fund.” (Faure & Hui, 2006)

Turkey within the rules specified in the International Maritime Organization (IMO) may make beneficial adjustments suited for its emerging needs. Certain procedures may be added to the Bosphorus transaction such as the limitation of broader ships, which is already in place but could be heightened, or extra liabilities imposed on ships carrying crude oil if the international community can be made aware of the evidently large Istanbul population and the tremendous potential of damage these ships bring upon. Additionally, a revision in insurance transactions might be useful in eliminating certain dangers associated with subrogation such as the formation of an internationally recognized third-party within the IMO operating with the purpose of filling the cracks within the already approved legislation for special cases including the Turkish Straits.

To illustrate what Turkey as a contracting party to the Civil Liability Convention (CLC) can accomplish within its waters compared to the United States which has passed the Oil Pollution Act (OPA), tables from a UK P&I report written by Dr. Chao Wu are given.

Table 7: Legislative Differences in the US’ and Turkish Approach to Oil Pollution

 

Oil Pollution Act 1990 for the USA

Civil Liability Convention 1992 for Turkey

Liable parties

Owner, operator, bareboat charterer, or a third party whose sole action causing pollution damage

Registered owner (operator, manager, charterer are protected from being sued under the CLC or domestic law unless pollution damage was caused by his willful misconduct – so-called channeling cause)

Complete defense

act of war (must be the sole cause of the spill)

act of God (must be the sole cause of the spill)

act of war (no requirement on “sole cause”)

act of God (no requirement on “sole cause”)

Conditional defense

Act of a third party, only if RP exercised due care and took precautions against foreseeable act of third party.

act of a third party (must be the sole cause of the spill)

government negligence (must be the sole cause of the spill)

Loss of defense

RP loses defense if he fails to 1)report a spill 2)cooperate in response 3)follow USCG orders

No

Limits of liability

3,500/gt for single hull tankers (minimum $25.845 million for tankers over 3,000 tons and $7.048 million for small tankers and barges under 3,000 tons)

2,200/gt for non single hull tankers (minimum $18.796 million for tankers over 3,000 tons and $4.699 million for small tankers and barges under 3,000 tons)

1,100/gt for nontank vessels (minimum $939,800)

See details in Table 8

Test for breaking limitation

- Gross negligence or willful misconduct;

- Violation of a federal safety, construction, operation regulation; or

- Failure to 1) report, 2) cooperate; 3) follow USCG Order

“personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result” (commonly considered as a “willful misconduct)

Scope of application

Apply to spills or thereats of spills occurring within EEZ by all types of vessel, all types of oils

Spills or threat of spills occurring within EEZ of a contracting State from a tanker constructed for carrying persistent oil in bulk as cargo

Damages recoverable

- Cleanup costs

- Property damage

- Economic loss consequential on property damage

- Pure economic loss (eg. From hotel owner etc)

- Natural resources damages

- Natural resources damages assessment costs

- Loss of subsistence use of natural resources

- Cleanup costs

- Property damage

- Economic loss consequential on property damage

- Pure economic loss (eg. From hotel owner etc)

- Reasonable costs of restoring the damaged environment

Relationship with other law

No preemption over State law (see chart on States laws for details on liability levels)

CLC preempts other law: no claim for compensation for pollution damage may be made against the owner otherwise than in accordance with the CLC. No claim for compensation for pollution damage under this Convention or otherwise may be made against operator, manager, charterer (including bareboat charterer) etc. (Art.III.4)

Source: UK P&I (2018)

 

Table 8: Legally Expressed Maximum Amounts of Compensation for Oil Pollution                      

(Expressed in US$ Millions, an exchange rate of July 2018:1 SDR=US$1.408USD)

 

Tanker’s Gross Tonnage

1969 CLC

1971 Fund)

1992 CLC

1992 Fund

11/2003

CLC

11/2003 Fund

OPA

5,000

0.93

84.5

4.2

190.08

6.35

285.82

18.79

25,000

4.68

84.5

16.05

190.08

24.11

285.82

55

50,000

9.36

84.5

30.8

190.08

46.33

285.82

110

100,000

18.7

84.5

56.1

190.08

90.75

285.82

220

140,000

19.7

84.5

84.05

190.08

126.39

285.82

308

200,000

19.7

84.5

84.05

190.08

126.39

285.82

440

Source: UK P&I (2018)

G. Reported Incidents

            Two ship crashes will be examined in this section to illustrate clear systematic failures where the retrieval of costs and/or ships should have been better handled. It should be noted that these events occurred before proper legislation could be implemented highlighting the reactive approach of Turkish authorities lacking arguably obvious precautionary measures.

 

G.1. The Hera Ship Crash

            In 2004 a Bulgarian dry cargo ship carrying a Cambodian flag named “Hera” had sunk at the Black Sea exit of the Bosphorus (Hürriyet,2004). Out of the 20 member crew, only five of their bodies were found while the remaining 15 are still considered lost. The Coastal Guard Safety officials said that they tried their best trying to save the 2 Ukranian and 18 Bulgarian nationals.

The Turkish authorities couldn’t get 1.5 million dollars from Terra Nova Protection & Indemnity Agency which had insured the ship up to 5 million dollars (Haberler.com, 2006). Then the authorities charged higher cost but to no avail. The reason was that Terra Nova was not doing well necessarily. The agency at the time only had £344.976 as total assets at the time and went on to fall further. Terra Nova since 2007 hasn’t engaged significantly increased their volume despite the ever-increasing volume of marine trade (Endole, 2019).  The London based agency was eventually dissolved on 18 October 2016 and has even suspended the usage of its former official website, www.terra-novapandi.com.

The Hera ship crash clearly illustrates the disappointing limitations of the legislative process in Turkey. The authorities not only failed to get the meager 1.5 million dollars from the P&I club, their only follow through to this failure was to increase charges which as expected was also futile. The P&I club in question, Terra Nova P&I agency, was not financially backed sufficiently and probably couldn't pay anyway which is a fact that couldn't have or at least shouldn't have been a mystery.

 

Figure 4: Terranova P&I Agency Corporate Account

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Endole (2016)

 

G.2. The Tallas Ship Crash

                On 1 February 2017, once again a ship carrying a Cambodian flag, this name named Tallas had careened near Zeytinburnu (Virahaber, 2017). The event was reported in Turkish news as the officials from the Directorate of Coastal Safety, after numerous VHF (Very High Frequency) calls, realized that the ship had no personnel onboard.

                In actuality, the ship had a crew who were stranded in the ship years before the aforementioned event happened (Denizhaber, 2015). The crew had no way of escape as the Russia based ship owner had gone bankrupt while they were preparing to pass the Bosphorus. Their situation caught the eyes of local news when GEDDAD (Young Sailors’ Cooperation Foundation) had to extend help to these seamen who for several months relied on rainwater and the fish they hunted for replenishment. The situation got even more interesting as the empty ship once again careened nearly a year after on 4 February 2018 (Sputnik, 2018). The media once again was intrigued by the rotting ghost ship (crewless vessel), which could have hit other ships causing a disaster. Finally on 24 May 2018 Ahmet Arslan, the Minister for the Ministry of Transportation, Maritime and Communication announced that the removal of ghost ships would be fastened and that these ships would be sold off in auctions (Anadolu Agency, 2018). He further stated that the procedures for Tallas had been completed and that the ships’ disassembly would start the next day.

 

H. Qualifications for P&I Insurance

There are several conditions for owners to be eligible for P&I insurance understandably including the insured company’s continued existence. The most significant of these conditions are:

1.      Classification Clause

“The Insured warrants that any Insured Ship is at the time of inception of this policy classed with a Classification Society approved by the Insurer, and shall remain so classed throughout the policy period.” (DUPI Project P&I, 2016)

 

2.      Premium Payment Clause

“The Insured undertakes that premium will be paid in full to the Insurers within” the agreed upon time limit “of inception of this Policy (or, in respect of instalment premiums, when due).”

“In the event of cancellation, premium is due to the Insurers on a pro rata basis for the period that the Insurers are on risk but the full Policy premium shall be payable to the Insurers in the event of a loss damage cost or expense prior to the date of termination which gives rise to a valid claim under this Policy.”

“If premium due is paid in full to the Insurers before the notice period expires, notice of cancellation shall automatically be revoked. If not, the Policy shall automatically terminate at the end of the notice period.” (DUPI Project P&I, 2016)

 

3.      Condition Survey

“In accordance with International Group requirements, the Managers conduct condition surveys of seagoing tankers of 10 years of age or more that have carried heavy fuel oil (HFO) as cargo within the previous policy year, unless:  

·         The vessel has undergone a P&I condition survey during the previous 12 months; or    

·         The vessel has undergone a Classification Society Special Survey during the previous 6 months; or         

·         The vessel is following the requirements of an IACS Classification Society Condition Assessment Programme (CAP) and is rated as either CAP 1 or CAP 2.” (West of England, 2019)

 

References

 

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