Concerns in the Maritime Insurance Industry.2012

Information about Concerns in the Maritime Insurance Industry.2012

Published on July 16, 2014

Author: yturzaeta

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PHILIPPINE MARITIME LAW ANNUAL CONFERENCE 2012 Manila Diamond Hotel October 16, 2012: PHILIPPINE MARITIME LAW ANNUAL CONFERENCE 2012 Manila Diamond Hotel October 16, 2012 CONCERNS IN THE MARITIME INSURANCE INDUSTRY Presented by: Carlos H. Yturzaeta Member , Tech. Sub Committee on Marine-PIRA Chairman , Marine Underwriters Assoc. of the Philippines (MUAP) Email : [email protected] CONCERNS IN THE MARITIME INSURANCE INDUSTRY: CONCERNS IN THE MARITIME INSURANCE INDUSTRY 1. Marina Circular MC-2009-22 Rules Governing the Mandatory Marine Insurance 2. Marina Circular MC-2009-24 Adopting a single National Classification Society 3. Establishing an Admiralty Court to handle Marine Cases 4. Issue on the substitution for recovery cases. 5. Upgrading the Shipping Industry 6. Issues on the Bill of Lading 7. Issue on undervaluation of goods reducing the chances of recovery. 8. The ship-owner as one of the salvage buyers. DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad Note: MC 2009-22 was approved by the MARINA Board on October 19, 2009 to be effective on February 20, 2010 MC 2009-24 was approved by the MARINA Board to be effective Dec 31, 2012 MARINA CIRCULAR NO. 2009-22: MARINA CIRCULAR NO. 2009-22 Rules Governing the Mandatory Marine Insurance Covering “LIABILITIES arising from POLLUTION and WRECK REMOVAL” DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad Note: MC 2009-22 was approved by the MARINA Board on October 19, 2009 to be effective on February 20, 2010 1 st MAJOR OBJECTIVE: DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad MAJOR OBJECTIVE that all domestic shipowners/operators and all other shipowners/operators …… operating ships in the domestic trade …… will be able to meet their financial responsibility ……. for any liability arising from pollution and wreck removal . WHO ARE COVERED?: WHO ARE COVERED? A ll persons, corporations, partnerships, cooperatives and entities …operating any type of ships of 500 GRT and above using persistent oil and, …2,000 GRT using non-persistent oil, …for hire or compensation in the domestic trade. DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad COVERAGE: COVERAGE Liabilities Arising from Pollution - refers to liabilities, losses, damages, costs and expenses caused by or consequent on the escape or discharge or threatened escape or discharge of oil or any other substance from a Ship: P5M to P50M Liabilities Arising from Wreck Removal - refers to costs and expenses of or attempted raising, removal, destruction, lighting or marking of the wreck of a Ship, including any part thereof, or cargo, equipment or other property carried on the Ship : P5M-P20M DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad SOME ISSUES IN FINALIZING THE DRAFT POLICY: SOME ISSUES IN FINALIZING THE DRAFT POLICY On the Local INSURERS’ part… No ready facility to cover Pollution and Wreck Removal of Vessel No Policy Forms/Wordings approved by the Insurance Commission. P olicy wordings must be acceptable in the international market. Pricing/Premiums DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad Proposed Solutions by PIRA: Proposed Solutions by PIRA Policy Wordings PIRA as part of the technical working group will draft the policy wordings for its members’ comments and approval before submitting the same with the MARINA. Capacity Building PIRA will recommend to the MARINA for GSIS to take the lead in providing the insurance cover since what is at stake is the interest of the public. - members of PIRA will have a choice to accept a share or not. Pooling Arrangement - Small vessels can have a pool amongst themselves to provide for the needed cover and such fund may be managed by a Secretariat like that of the IOPC Secretariat. This will be initiative of local shipping companies. DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad Proposed Solutions by PIRA…cont.: Proposed Solutions by PIRA…cont. ACTIVE ROLE OF DOTC, DFA & DOF Since the Philippines was a signatory to the 1992 Civil Liability Convention and the 1992 Fund Convention, DOTC can take this up with Dept of Foreign Affairs & Dept of Finance and layout a policy and procedures for the Philippines to participate actively in the deliberations Assembly. CONTRIBUTION TO THE IOPC FUNDS As a signatory to the 1992 CLC & 1992 Fund Convention, the Philippine Government may develop a central mechanism that will ensure the regular accurate reporting of persistent oils and the remittance of the contributions to such funds. CASE STUDY The sinking of Solar 1 in 2006 carrying fuel oil owned by Petron Corp may be used as a case study to carry out the proper response in case of a future oil spill or threat. DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad : DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad MC 2009 – 24-Single Classification Society Classification Societies are non stock, non profit. Every country has its own Classification Society It exist to assist government in promoting of safety of life and property at sea. If there will be a number of Marina accredited Classification Societies, there will be cut-throat competition rather than honest-to-goodness surveys. 2 nd ESTABLISHMENT OF ADMIRALTY COURT: ESTABLISHMENT OF ADMIRALTY COURT A dedicated admiralty court has to be established. Such court will hear cases related to martime industry, maritime insurance, subrogation, recoveries, salvage, general average and issues on shipping documents. 3rd SUBSTITUTION FOR RECOVERY CASES: SUBSTITUTION FOR RECOVERY CASES Some courts do not allow the insurance company to substitute the insured after payment of claim and waiver for purposes of subrogation claim. 4th UPGRADE THE SHIPPING INDUSTRY: UPGRADE THE SHIPPING INDUSTRY In terms of: Management, crewing, safety management systems and; day-to-day operations. 5th ISSUES ON THE BILL OF LADING: ISSUES ON THE BILL OF LADING No uniform wording is being used in the local shipping industry which could lead to different court rulings for the purpose of recovery. Limitation of liability is normally stated in the BL but several court decision has been rendered that this is not compatible with the Phil. Civil Code. Some BL do not have any written conditions at all or simply copied from foreign BL, which laws are not applicable in the Philippines. Time limitation or period of filing of claim cannot be ascertained since the Phils has not yet ratified the Hague Rules/Visby Rule of 1968, and since no enabling law, therefore, not enforceable in the Phils. 6th UNDER VALUATION OF GOODS: UNDER VALUATION OF GOODS This reduces or hampers the extent of recovery of insurance companies from the shipping companies and owners. Disputes arising between the Invoice value and the Shipment Declaration value may result to legal suits. This falls under the Principle of Utmost Good Faith on the part of the Cargo Owners. 7th SHIPOWNER AS SALVAGE BUYER: SHIPOWNER AS SALVAGE BUYER As soon as the Insurance Company has paid off the vessel owner/ship owner for the total loss of a vessel, it has acquired the right to sell the vessel in order to recover a portion of the insurance proceeds thereby lessening the loss to the insurer. Shipowner participating as salvage buyer of his own refloated/salvaged vessel decreases the ability of the Insurance Company to recover a reasonable amount to lessen its loss. 8th : DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad ACKNOWLEDGEMENTS Materials from Atty. Lito Lampa, Chairman of the Tech. Sub Committee of PIRA on Marine Insurance Materials from Annual Report 2007 of Internation Oil Pollution Compensation Funds Info from Ms. Arlene Garcia of UCPB Gen and Mr. Kent Cotoco of Oriental Assurance Co. Inc. Data from Atty. Vergel De Dios of Phil. Register of Shipping (PRS) Info from Messrs. Cristino C. Rivera, Tony Sy of Petron Corporation on the Solar I pollution case. : Thank You ...Have a nice day DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad PHILIPPINE MARITIME LAW ANNUAL CONFERENCE MANILA DIAMOND HOTEL October 16, 2012 CARLOS H. YTURZAETA Member , Tech. Sub Committee PIRA Chairman , Marine Underwriters Assoc of the Philippines Email Address: [email protected] Mobile Phone Nos. 0917 536 0937 Case Study: The SOLAR 1 : Case Study: The SOLAR 1 998 GT Laden with 2,081 tons of IFO Sank on Aug 11, 2006 at Guimaras Straits Owner: Sunshine Maritime Dev. Corporation Shipowners Mutual Protection and Indemnity Association of Luxemburg ( Shipowners Club) Covered under 1992 Civil Liability Convention- ships under 5,000 GRT up to maximum of US$7M limit of liability for oil pollution. The 1 st to file a claim under the Small Tanker Oil Pollution Indemnification Agreement (STOPIA 2006). INCIDENTS OF POLLUTION: INCIDENTS OF POLLUTION DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad 1991 March 7 Vistabella 1992 Dec 3 Aegean Sea 1993 Oct 9 Iliad 1997 Feb 28 Nissos Amorgos 1997 Oct 15 Evoikos 1997 May 27 Plate Princess 1999 Dec 12 Erika 2000 Jan 24 Al Jaziah 1 2002 Nov. 13 Prestige 2005 Nov. 24 N*7 Kwang Min 2006 Aug 11 Solar 1 - Philippines 2007 Nov 11 Volgoneft 139 2007 Dec 07 Hebei Spirit 2007 Dec 26 Incident in Argentina 2008 Sep 27 King Darwin INTERNATIONAL REGIME: INTERNATIONAL REGIME Three Intergovernmental Organizations The 1992 Fund – US$310.6 M per incident The Supplementary Fund – US$1.147B per incident The 1971 Fund Note: Established for the purpose of providing compensation for victims of oil pollution damage resulting from the spills of persistent oil. DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad DEFINE: The Background IC Approvals for Facultative Placements Abroad THE LEGAL FRAMEWORK: THE LEGAL FRAMEWORK The 1992 Civil Liability Convention - it provides a 1 st tier of compensation which is paid by the owner of a ship which causes pollution damage. The 1992 Fund Convention - it provides a 2 nd tier of compensation which is financed by receivers of oil in States Parties to the convention after sea transport. NOTE : These two International Conventions were adopted under the auspices of the International Maritime Organization (IMO) TYPES OF DAMAGES UNDER IOPC FUNDS: TYPES OF DAMAGES UNDER IOPC FUNDS Property Damage Cost of Clean-up operations at sea & on shore Economic losses by fishermen or those engaged in mariculture Economic losses in the tourism sector Costs for reinstatement of the environment NOTE : A claims office is established in the country where the oil spill occurred. IOPC also uses experts in different fields to assist in their assessments. CLAIMS ON SOLAR 1 OIL SPILL - AUG 11, 2006: CLAIMS ON SOLAR 1 OIL SPILL - AUG 11, 2006 CATEGORY NO. OF CLAIMS AMOUNT PHP PERCENT CLEAN UP & PREVENTIVE MEASURES 15 775,594,885 78.7 CAPTURE FISHERY 25,940 190,392,018 19.3 MISCELLANEOUS 11 6,852,074 0 .7 TOURISM 75 5,381.627 0.5 PROPERTY DAMAGE 631 5,117,154 0.5 MARICULTURE 198 3,308,273 0.3 TOTAL 26,870 986,646,031 100% ( 10.8 Million Pounds Sterling ) NOTE: Some claims are still pending with courts and some are still under assessment by IOPC. PETRON – AS CARGO OWNER: PETRON – AS CARGO OWNER Responded actively in the clean up cost and oil containment measures using its in house capability—resources, equipment, supplies Spent close to about P250 million for clean up costs and preventive measurers including damages to 3 rd parties. Was able to reimburse from the IOPC funds about 75% of its expenses. Petron is an annual contributor to IOPC fund based on its report of oil receipts . PowerPoint Presentation: Cargo Ship – RENA, off Tauranga, North New Zealand. Oct. 5, 2011

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