Transcript P&I Insurance Coverage
CURRENT CHALLENGES IN PROVIDING INSURANCE COVERAGE IN MAJOR ENVIRONMENTAL DISASTERS – OVERVIEW OF AVAILABLE/RELEVANT COVERAGE By Stirling Leech Clyde&Co – Brazil
Maritime Law Association of the US IberoAmerican Institute of Maritime Law October 2013
Introduction
Offshore and Onshore Shipping Sector P&I Insurance Coverage Pool cover Extra or fixed premium cover Offshore packages Oil & Gas Sector Oil & Gas Insurance Coverage Operator’s cover Contractor’s cover
Introduction cont/d
Oil & Gas Insurance Coverage – cont/d Insurance on Mobile Offshore Drilling Units (MODUs) Control of Well insurance Offshore construction insurance Operating insurance Business interruption, delay and start-up and loss of life Offshore liability risks Pollution insurance Onshore/downstream insurance coverage Sufficiency/adequacy of insurance coverage to meet major environmental disasters
The Underlying General Shipping Sector
Transportation of crude, other fuel oils and gas Bunker spills Hazardous and noxious substances Wreck removal Salvage “Costa Concordia” Debate Spiralling costs Who bears them?
The offshore shipping sector Specialised vessels
P&I Insurance Coverage
Regular Cover P&I Pool pollution limits. Contracted liability and “knock for knock” agreements Exclusion from poolable cover and fixed premium/limit contracted extension cover Offshore packages Skuld, Gard & Standard P&I Clubs Oil and gas drilling and production operations Tug and supply vessels, construction vessels, pipe and cable laying vessels, dredgers, pile driving vessels Limits – lower FPSOs and FPUs etc Other fixed premium cover
The Oil and Gas Sectors
Buyers of insurance basically: Oil companies Contractors Their roles The oil companies The JVA • Specifies insurance required • Typically, Operator to arrange insurance programme • But each company may purchase insurance The Contractors Specialist companies Responsible for insuring their own vesels and equipment Responsibilities and liabilities defined in service contract Risk allocation
Non P&I Offshore Insurance Coverage
(a) • Mobile Offshore Drilling Units (MODUs) American Institute Time Clauses, the Norwegian Plan, LMOMUF • • Limited amount of liabity coverage Role of P&I Clubs (b) • • • Control of Well insurance Blow-outs Operator procures insurance EED and LSW wordings
Non P&I Offshore Insurance Coverage
(b) • • • Offshore Construction • Design Engineering, FEED contract, construction and installation • Allocation of risk Indemnities irrespective of fault Exceptions for gross negligence or wilful misconduct • Responsibility for providing CAR insurance Contractor or Operator?
- Contractor possibly if one EPC contract • • • - Operator controlled approach more likely LOGIC P&I risks to be insured by Contractor • • WELCAR policy form 2001 Pollution coverage WELCAR 2012
Non P&I Offshore Insurance Coverage cont/d
(d) Operating Insurance • • • Package Policy LSPF stand alone form Institute Time Clauses Hulls – Port Risks (e) Business Interruption, Delay and Start-Up, Loss of Hire • Not all companies purchase • “P-36” platform loss (f) Offshore Liability Risks • • • Myriad of exposures Complex area Package policies traditionally with exclusions and buy-backs
Non P&I Offshore Insurance Coverage cont/d
(f) Offshore Liability Risks – cont/d • Stand alone wordings • LSW 244 and 245 • London ‘Claims Made’ wording (JL 2003/007) • ‘Occurrence’ form (JL 2003/006) • London CGL wording LPO 418(B) • Exclusions
Non P&I Offshore Insurance Coverage cont/d
(g) Pollution insurance • Operators generally accept responsibility for pollution risk from their fixed and floating facilities etc • Contractor accepts liability for bunker spills and leaks of fuel from MODU and construction vessels • Normally provided under control of well policies and under CAR or umbrella liability policies • • Stand alone wordings for e.g. OPA/OPOL OIL and WQIS
Non P&I Offshore Insurance Coverage cont/d
Onshore/downstream insurance Encompasses: All aspects of oil, gas and petrochemical operations such as refining of crude, cracking of hydrocarbons into petrochemicals, transportation and storage Catastrophe, liability/pollution and business interruption cover OIL and other market players
Conclusions and Sufficiency/Ad equacy of Coverage
Coverages developed significantly recently, especially with increased number of specialized vessels and FPSOs and general offshore activity Sufficiency/adequacy of coverage?
Dovetailing contractual wordings/extra contractual liability risks against coverage Sufficiency of different insurance wordings? Too many wordings but not enough dovetailing together?
Increasingly higher exposures Pollution Fines Criminal Wreck removal FPSOs and FSUs covered by CLC/Fund Conventions?
Thank you
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