Wreck Removal & Role of Protection & Indemnity Club

 

Wreck Removal & Role of Protection & Indemnity Club

When does a ship become a wreck

• A ship becomes a wreck for insurance purposes when, following a casualty, it becomes an actual total loss (atl), or a constructive total loss (ctl).
• Constructive total loss refers to damage to property that is calculated to be greater than the insurance limit when reviewing restoration or repair as options. it might even be assessed that the cost of restoration or repair can exceed the value of the property.
• An actual total loss refers to complete destruction of insured property to the point where it is completely ruined, has irreparable damages, cannot be recovered, or the owner cannot access it in any way. this type of loss would usually be claimed for the maximum coverage.  
  
  
  
• Under the norwegian marine insurance plan a vessel is considered a ctl when the cost of repair exceeds 80 per cent of the insurable value, or 80 per cent of the value of the ship after repairs if the latter is higher than the insurable value.
• Before the hull insurer accepts that the vessel is a total loss and abandons her to the owner, she is not a wreck for purposes of p&i insurance and any removal order is the concern of the hull underwriter rather than the owner (and his p&i club).

What is ‘’Blue Cards’’

 

• International P&I Clubs issuing “Blue Cards” as proof of the necessary financial security required by other maritime conventions dealing with liability and compensation (i.e. International Convention on Civil Liability for Oil Pollution Damage the “CLC,” and International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, or the “Bunkers Convention”).
• All International Group P&I Clubs are able to issue "blue cards" which will enable members to obtain the Wreck Removal Convention Certificates which must be carried on board in order to comply with compulsory insurance requirements of the Convention. The Certificates must be issued by a State which is party to the Convention.

P&I / IG P&I club V/S Wreck Removal

• In P&I Club a member is covered for costs and expenses in raising, removal and demolition, lighting and marking of the wreck of the entered ship provided the owners are legally liable to do so.
  
  
  
• The International Group of P&I Clubs shares claims that exceed USD 5 million under what is known as a “pooling agreement”. 

 

LOSS OR DAMAGE TO CARGO & P&I CLUB

 

LOSS OR DAMAGE TO CARGO & P&I CLUB

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·         One of the major functions of Protection and Indemnity insurance is to cover a ship owner, or the charterer of a ship, for liability for loss of, or damage to, cargo if there has been a breach of the contract of carriage. This breach of contract usually means that something has happened to the cargo while it was on board the ship or 5 being loaded or discharged, and for which the owner or charterer can be held responsible, i.e. shortage or damage to the cargo.

·         An important function of the Bill of Lading (B/L) is to describe the condition and quantity of the cargo as received on board. If the cargo is discharged in a different condition, or in lesser quantity than that entered on the B/L, the ship owner may be held liable for the damage or shortage.

·         usually the cargo insurers (or underwriters) will pay the person or company who owns the cargo ( the receiver) for the costs of loss or damage to that cargo when the cargo has an accident.

·         The cargo underwriters will then seek to recover their losses from the ship owner or charterer.

·         The P&I club will usually take over the handling of such claims on behalf of the assured.

·         This is one of the reasons why evidence in the form of documentation, copies of the log book, surveys of damaged cargo, copies of tally books, dated photos of loading in the rain etc are very important in establishing the exact reason for the damage.

 

Seafarer’s Medical & Role of P&I Club

 

Seafarer’s Medical & Role of P&I Club

INTRODUCTION

• Seafarer medical cases represent the largest single category of people claims handled by the P&I Clubs. 
• As any type of medical event could potentially occur at sea, P&I Clubs must be responding to emergent events on board and be ready to work with medical service providers who take the lead in treatment, medevac when necessary (and possible) or disembarkation to the nearest hospital or clinic when the vessel reaches port.
• Medical treatment of seafarer’s on board the world’s ocean-going vessels, and ashore if they require additional medical care, often involves a class of specialized insurance firms, Protection and Indemnity (“P&I”) Clubs, especially if the costs are likely to be high.
• P&I Clubs are mutual associations that provide insurance to ship owners, operators and charterers facing third party liability claims from a number of diverse parties, including seafarers, passengers, stevedores, nautical pilots and others.

SEAFARERS V/S P&I CLUB

• It is important to remember that there is no direct insurance relationship between the people who may require medical attention and the Club. The Club simply ensures the liability on behalf of Member (that is the ship owner or operator, ) when illness, injury or death occurs on or near the vessel.
• The Club becomes involved with medical care issues because it will certainly pay for them when the Member submits its reimbursement claim.
• It is important to remember that there is no direct insurance relationship between the people who may require medical attention and the Club. The Club simply insures the liability on behalf of  Member (that is the ship owner or operator, ) when illness, injury or death occurs on or near the vessel.
• The Club becomes involved with medical care issues because it will certainly pay for them when the Member submits its reimbursement claim.

WHY P&I CLUB

• The ship owner often does not have the staff or expertise to deal with an unfolding medical event in real time, so the Club is brought in to handle the matter as it unfolds and to follow up with medevac companies, tele medical providers, clinics and hospitals, as necessary.
• Each Club has a world-wide network of correspondents working in ports around the world who act locally on their behalf.
• The IG Clubs have staff who specialize in handling medical issues on board vessels and who work with medical providers when incidents occur.

PERSON COVERED UNDER P&I CLUB

• The insurance cover extends beyond crew and passengers to other persons who board merchant ships world-wide. For instance, there is P&I liability cover for stevedores, pilots, inspectors, security guards and the many other third parties who board working vessels.
• It even extends to stowaways on vessels who may be injured, become sick, or die while on board.

WORKING OF P&I CLUB IN MEDICAL EMERGENCY

• The hospital or clinic receiving the patient will, on most occasions, work directly with the local correspondent rather than  with the P&I Club itself.
• However, for Clubs to become directly involved with medical providers if and when necessary and depending on the part of the world where the incident is unfolding.

MEDEVAC (MEDICAL EVACUATION)

• P&I Clubs and ship operators have access to medevac providers world-wide both private and public.
• How the event will be handled depends on the seriousness of the medical incident, the need to launch a helicopter or fast sea-launch and the location of the vessel at the time of the incident.
• The costs associated with a medical evacuation vary greatly. Many Coast Guard authorities do not charge for their services, while others may charge ‘full rates’.
• When charges are billed to the ship owner, the liability is covered by the P&I Club.

TREATMENT IN OVERSEAS PORT

·         Medical treatment facility where it is given should be certified.

·         P&I Insurance cover is available for the costs of the level of medical treatment and maintenance which is necessary to ensure that the crew will receive proper treatment and care bearing in mind the following.

 

1. The type of illness and injury.
2. The location of the vessel when the need for medical treatment  arose.
3. The urgency with which immediate treatment must be given.
4. The standard of treatment available in the country where the crew is domiciled.

REPATRIATION

·         Many physicians who are unfamiliar with the standard of care in foreign countries are sometimes reluctant to release a patient who has suffered serious injuries or is being treated for a significant illness to their homeland for continued care. In response, the P&I Club can appoint a local healthcare professional to act on the Club’s behalf and who can be in direct communication with the treating physician.

·         Working as a team, the parties arrange in advance for the receiving hospital to be ready for the repatriated seafarer when he or she arrives and so that treatment can begin immediately.

BENEFITS FOR DISABILITY AND DEATH

·         After the immediate medical concerns are addressed and the seafarer is repatriated home, P&I Clubs remain involved with follow up care and the assessment of disability.

·         most employment contracts contain disability compensation clauses which pay out a US dollar amount to the seafarer depending on the extent of the disability and whether it is temporary or permanent.

·         Often there is a difference of opinion on the disability rating provided by the treating physician and the ship owner or employer.

·         In this situation, the case may end up in arbitration or the local court system depending on the jurisdiction involved.

·         When a ship owner or employer is forced to defend a legal claim from a seafarer, the costs and expenses associated with the defense are covered under the P&I cover.

SICK WAGES TO SEAFARERS

 

·         Seafarers are also entitled to the payment of sick wages for a contractually defined period of time following the medical incident.

·         Once repatriated, the payment of sick wages is based upon confirmation from the treating physician/clinic that the patient remains sick or injured, i.e. not fit for duty.

·         P&I Clubs (through their network of local correspondents) therefore also work in close cooperation with these medical providers to ensure that the seafarer is reporting to the clinic and that wages are being paid by the local manning agent.

PASSENGERS

·         A majority of the world’s ocean-going ferry, passenger and cruise vessels are insured by the IG Clubs.

·         Responding to passenger incidents can be quite different from seafarers on merchant cargo vessels because many passenger ships have doctors and nurses on board who attend to the matter on an immediate basis.

·         Resulting medical malpractice lawsuits against medical staff almost always include the vessel owners as a defendant.

·         Clubs therefore work closely with medical professionals and other expert witnesses when defending cases in court.

GROUPS OF PERSON AS PER P&I CLUB

·         There are numerous other people who work or attend on board merchant vessels and who thereby expose themselves to risk while doing so. Most P&I Clubs divide these groups into three:

·         Those carried on board.(Navigational pilots are a good example of persons carried on board.)

·         Not carried on board(When the ship is tied up at berth all third parties who board are not carried on board.)

·         Saved at sea.

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The main distinction between the first two groups is whether the vessel is moving or not. If moving, then such persons are ‘carried on board’. If not, then such persons are ‘not carried on board’.

 

‘’SAVED AT SEA’’

 

·         Ocean going vessels are required by law to alter course and attempt to save life at sea when they are near a marine casualty or other marine incident.

·         It could also involve an injured or seriously ill person aboard a nearby vessel which does not have the ability to land a medevac helicopter or steam quickly enough to the nearest port in order to save the person .

·         In these types of cases, the vessel may make direct contact with its P&I Club. Many of the costs and expenses associated with saving lives at sea are covered by the P&I insurance policy, so it is natural for the Club to be closely involved from the outset.

STOWAWAYS, REFUGEES AND MIGRANTS

·         It is not uncommon for stowaways to be seriously injured or killed on board, for instance when hiding in enclosed spaces with limited air supply or being crushed by heavy equipment or anchor chains.

·         Refugees and migrants often take unsafe pathways due to large numbers of people setting out to cross the sea in overcrowded and unseaworthy vessels. Many who survive need medical treatment for injuries or conditions which have arisen during the transportation, such as hypothermia and intestinal illnesses.

·         In these types of cases, the vessel may make direct contact with its P&I Club.

COMPENSATION FOR LOSS OF PERSONAL EFFECTS OF CREW MEMBERS / PASSENGERS

 

·         Since the Ship is the temporary home of Crew members during their periods of service it is important that they be allowed to take on board personal belongings that can support their welfare.

·         However, such personal effects can be lost or damaged during the period of service and most contracts of employment oblige the employer to reimburse Crew members for such loss or damage regardless of whether it has been caused by the fault or negligence of the Member.

·         Some employment contracts oblige the employer to reimburse the Crew member only if the effects are lost or damaged as a result of a total or constructive loss of the Ship, or as a result of a major casualty.

·         whilst other contracts oblige the employer to reimburse the Crew member for all accidental loss or damage that may arise during the course of the Crew member’s service on board the Ship. 

·         However, most contracts also impose a limit on the employer’s liability for such loss or damage (commonly in the range of USD 2,000-4,000 per Crew member) and require the Crew member to submit written details of the items lost or damaged and of their value together with supporting documentation. 

·         Similar liability for loss of or damage to personal effects may also arise under international convention, statute or the common law.

·         P&I club may also have an obligation to pay compensation for loss of personal effects of crew members / passengers.

·         Liability to pay compensation for loss of or damage to personal effects belonging to a member of the crew is based on crew agreement and contracts.

·         Liability of payments to crew is excluding valuables, cash, negotiable instruments and objects of a rare or precious nature.

MODE OF OPERATION ( P&I )

·         A P&I club is a mutual insurance association that provides risk pooling, information and representation for its members.

·         Unlike a marine insurance company, which reports to its shareholders, a P&I club reports only to its members.

·         Originally, P&I club members were typically ship owners, ship operators or demise charterers, but more recently freight forwarders and warehouse operators have been able to join.

·         Whereas the assured pays a premium to an underwriter for cover which lasts for a particular time (say, a year, or a voyage), a P&I club member instead pays a "call". This is a sum of money that is put into the club's pool, a kind of "kitty".

·         If, at the end of the year, there are still funds in the pool, each member will pay a reduced call the following year; but if the club has made a major payout (say, after an oil spillage) club members will immediately have to pay a further call to replenish the pool.

 

BE SAFE 

WORKING STRUCTURE OF PROTECTION & INDEMNITY (P&I) CLUB

 

WORKING STRUCTURE OF   PROTECTION & INDEMNITY CLUB

The working structure of P&I (Protection and Indemnity) clubs typically involves several key elements:

1. Membership: P&I clubs are membership-based organizations. Ship owners, charterers, and operators become members by joining the club and contributing to a common pool of funds. Members typically pay annual premiums based on factors such as the size, type, and trading activities of their vessels.

 2. Mutual Insurance: P&I clubs operate on a mutual basis, meaning that they are owned and governed by their members. The mutual structure involves members sharing risks and liabilities within the club. When a member incurs a claim or loss, it is typically covered by the club's funds.

3. Claims Handling: P&I clubs have specialized claims handling departments that handle and manage claims on behalf of their members. These departments consist of lawyers, claims handlers, and experts who assess and negotiate claims with third parties such as cargo owners, injured crew members, or pollution authorities. The club's claims handlers work to protect the interests of their members and mitigate financial and legal risks. 

4. Loss Prevention and Risk Management: P&I clubs prioritize loss prevention and risk management to minimize claims and improve safety in the shipping industry. They provide guidance, education, and information to their members on best practices, regulations, and industry standards. Loss prevention initiatives can include safety training programs, publications on maritime risks, and inspection programs to identify potential hazards aboard ships.

5. Reinsurance: P&I clubs typically reinsure a portion of their liabilities with external reinsurance companies. Reinsurance helps spread the financial risks across multiple parties, ensuring that the club can meet its obligations in the event of major claims or catastrophes.

 6. Legal Support: P&I clubs often provide legal assistance and representation to their members. They have in-house or retained legal experts who handle legal disputes, arbitration cases, or litigation related to incidents or claims involving their members' vessels.

7. Additional Services: P&I clubs may offer additional services beyond insurance coverage. These can include advice on contractual issues, regulatory compliance, pollution prevention, crew welfare, and emergency response.

 Some clubs also have dedicated teams to handle emergency situations, providing immediate support and coordination to members in case of incidents like collisions or grounding.

Overall, the working structure of P&I clubs revolves around providing insurance coverage, claims handling, loss prevention, and risk management services to their members, with the goal of protecting their interests and minimizing risks associated with the operation of commercial vessels.

OFFICE STRUCTURE OF P&I CLUB

The office structure of a P&I club typically consists of several departments and roles to handle various aspects of their operations. While the specific structure may vary between clubs, here are some common departments.

1.  Underwriting Department: This department assesses the risks associated with insuring ships and determines the terms and conditions of coverage.

2.  Claims Department: Responsible for handling and processing claims made by ship owners or operators for liabilities incurred, such as damage to third-party property, injury, pollution, or cargo loss.

3.  Legal Department: Provides legal expertise and advice to the club, including legal analysis of claims, contract review, and handling disputes.

4.  Loss Prevention Department: Focuses on risk management and provides guidance and assistance to members in preventing accidents, incidents, and claims through safety initiatives, inspections, and training programs.

5.  Marketing and Business Development Department: Responsible for promoting the club's services, acquiring new members, and building relationships with existing members and industry stake holders.

These departments work together to provide comprehensive P&I insurance coverage and support to their members.

 

P&I Club in shipping - Role, Responsibilities & Function

P&I Club in shipping - Role, Responsibilities & Function 

What is a P&I?

1. P&I Insurance is used for the third-party claims towards the ship owners.
2. Ship owners provide a service of carrying the cargo of the shipper. While providing this service, a ship owner may be subjected to a number of claims from third parties.
3. These claims could be damage to the jetty, pollution from the ship or even the fines to the ship from authorities.
4. Ship owners need to insure for all these third-party claims. P&I clubs provide insurance to the shipowners for all these claims, insure their third-party risks.
5. Also known as Protection and Indemnity Club.
6. P&I Club is a non-governmental, non-for-profit mutual insurance association providing marine insurance to its members.
7. These members include shipowners, operators, charterers, and seafarers under the member companies. Protection covers safe working of seafarers while indemnity covers any loss compensation.
8. Under these ‘clubs’, like-minded shipowners pool their resources to insure their third-party risks,

What are the functions of P & I Clubs?

1. Ensure ship owners and operators against third-party liabilities not covered by hull and machinery policies obtained.
2. May subject owners vessels to inspection before entry into the club and during membership
3. Produce lists of correspondents and reliable lawyers and surveyors
4. Issue handbooks containing club rules and lists of correspondents, which are very useful to master seeking advice and assistance win in any kind of trouble.

Why P&I?

 

1. While traditional marine insurance companies provide “hull and machinery” cover for ship-owners and cargo cover for cargo owners, a P&I club provides cover for open-ended risks that traditional insurers are reluctant to insure.

When does the P&I Club get involved?

1. Illness, injury and death of crew, passengers and other third parties onboard
2. Stowaways, deserters and refugees
3. Collisions
4. Damage to property
5. Pollution
6. Wreck removal
7. Cargo loss and damage
8. Fines
9. Costs incurred in criminal proceedings
10. General Average
11. Salvage

A. List of International P&I Clubs

With an observer status at the IMO, the London-based International Group of P&I Clubs is comprised by 13 global P&I Clubs that provide marine liability cover for approximately 90% of the world’s ocean-going tonnage.

1. The Swedish Club
2. UK P&I Club
3. Japan P&I Club
4. Gard Club
5. Britannia P&I Club
6. The London P&I Club
7. The American Club
8. Ship-owners Club
9. North Club
10. Steamship Mutual
11. The Standard Club
12. Skuld Club
13. West of England Club

B. International Group of P&I Clubs?

The high limits of cover provided by the IG of P&I Clubs exist due to the unique risk sharing system behind mutual insurance policies in which the combined resources of the world’s major ship owners can be called upon to respond in times of greatest need

C. Premium for an individual owner

Each P&I club sets a premium for an individual owner reflecting:

1. The risks against which he requires cover
2. His fleets gross tonnage
3. His fleet exposure to risk
4. Other factors including the likelihood of significant claims in the coming year

D. A new shipowner entering into the club

The P&I Club will assess all the factors before deciding if it is OK to include this ship owner and this ship into the club. Some of the factors the club would be looking for are

1. Suitability of the cargo spaces for the intended cargo
2. Proficiency of the crew
3. previous track record of the ship owner and/or Ship managers
4. Standards of classification society

 

E. ‘’Certificate Of Entry’’

 

1. Members ships entered may be subjected to random ship inspections concentrating on the management of the vessel. If failed, a more intensive condition survey by independent surveyors may be called by the club’s managers. An owner who fails to keep his vessel in the condition required by the club’s rules may be expelled from the club.
2. Issue each member vessel with the ‘certificate of entry’, which should be kept by the master

 

F. P&I Fund Management?

P&I clubs maintain a fund and ask the ship owners to contribute to this fund.

1. when a new ship owner joins the club or
2. when the fund money goes down because of the claims settles.
3. Annually or as per the rules of the P&I Club.

All these requests to the ship owners for the payment are called “Calls”.

G. Type of ‘’ CALLS’’

1. Advance calls (Paid when a ship owner joins the club or at the beginning of year)
2. Supplementary calls (Paid when the funds have gone down because of claims paid )
3. Release calls (to settle the account of a ship that is sold or scraped or ship owner leaves the P&I club)

H. Deductibles ?

 

1. Deductibles in a claim is a common practice in all kind of insurances.
2. The deductible is the pre-set amount deducted from the insured loss.
3. Let us say that a P&I club has set the deductibles for claims arising from damage to the jetty as USD 5000.
4. Now if the claim towards the ship-owners for one of such incident is USD 30000. Then the P&I club would pay USD 25000 after USD 5000 as deductible from this claim.

I. Income part of the P&I club

 

The income part of the P&I club include

1. The Annual contribution from the members.
2. Contribution of new members or new ships entering the club
3. Interest/Profit earned on the investments of the fund

 

J. Expenditure Part of the P&I club

 

1. Payments made as claims settlements. (The major chunk of which goes in the settlement of claims against its members.)
2. Management costs (Management cost would include the salaries of the employees and rent of the offices etc.).
3. Reinsurance costs (P&I clubs also reinsure some of its risks. The cost of such reinsurance also comes under expenditures.)

 

If a seafarer knows how the P&I club functions and more importantly that they are on our side, dealing with situations becomes easy.