GIA-SMF Maritime Knowledge Shipping Session:-

GIA-SMF Maritime Knowledge Shipping Session:-Introduction to Transport Operators, Terminal Operators and Marine

Professional Indemnity Cover

17 October 2018

Agenda

Marine Liability Product Lines

1. Port & Terminal Operators Liability

2. Transport Operators Liability

3. Professional Indemnity (Errors & Omissions)

Transport Operators Liability

Who and What are Freight Forwarders?

Type of Services Provided by a Freight

Forwarder

➢ Sea & Air Freight Forwarding

➢ Road Haulage

➢ Non Vessel Operating Common Carrier (NVOCC)

➢ Non Aircraft Operating Common Carrier (NAOCC)

➢ Customs Agent

➢ Warehousemen

➢ Packing and Consolidation

29 October 2018 4Marine Insurance Seminar

Multi-

Model/Intermodal

Transport Operators

Cargo Liability

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• Physical loss/damage of Cargo

• Consequential losses – Foreseeable

and Tangible/Quantifiable

Errors and Omission

Legal Liability incurred by the Assured as a result of a failure to exercise reasonable

care and skill in the normal course of their operational services

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Common Scenario 1:

Wrongful release of cargo without an

Original Bill of Lading

Errors and Omission

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Common Scenario 2: Failure

to follow instructions

Third Party Liability

1. Physical Losses/Damage to Third Party Property

2. For Death, Injury or Illness of any Third Party

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▪ Import/Export and carriage of cargo,

conveyances or equipment

▪ Immigration

▪ Safety at work

▪ Security/Anti-Terrorism

▪ Pollution – sudden and accidental

Fines and Duties

29 October 2018 9Transport Operators Liability

Cost

29 October 2018 10Transport Operators Liability

Cost

29 October 2018 11Transport Operators Liability

Quarantine, Fumigation & Disinfection

Cost

Other instances which may give rise to cost:-

1. Misdirection

2. General Average and Salvage Cost - Unrecoverable contribution from Cargo Owner

3. Uncollected Cargo – Cost of disposing the cargo

4. Completion of Carriage

5. Demurrage

29 October 2018 12Transport Operators Liability

What are the Common Exclusions?

➢ Mysterious Disappearance- Unexplained Loss/Shortage

➢ Dishonest Employees

➢ Death, Injury, Illness to Own Employees

➢ War & Terrorism

➢ Illegality

➢ Assured’s Owned/Leased Equipment

➢ Liquidated/Punitive Damages

29 October 2018 13Transport Operators Liability

Port & Terminal Operators Liability

➢ Container

➢ Oil & Gas

➢ Chemical

➢ Mines; Ores, Coals, Aggregates

➢ Grain, Soya and other Foodstuffs

➢ Cruise & Ferry

➢ Bulk and Break-Bulk

➢ Fishing

➢ Jetties

➢ Wharfs

➢ River

➢ Canal

Types of Ports & Terminals

Image: used under license from shutterstock.com

Potential Risks and Exposures

• Physical Loss or Damage to Customers and

Third Party Property…Wreck and Debris

Removal

• Fire

• Advice & Information

• Fines & Duty

• Infringement of Personal Rights

• Wrongful Delivery of Cargo

General Exclusions

✓ EL/WCA

✓ Occupational Disease

✓ Owned & Hired Property

✓ Wear, Tear & Gradual Deterioration

✓ Release of Cargo Without Bill of Lading

✓ Auto Liability

✓ Aircraft & Vessel Liabilities

✓ Waste Disposal

✓ Fines & Penalties

✓ Failure to Perform

✓ Erection & Dismantling of Equipment

29 October 2018 17Transport Operators Liability

• London Standard Wording LSW 1510 through LSW 1515 and LSW 1524(Wavelength)

• TT Club (Mutual Insurer)

• Navigators (Columbus)

• London Vessel Operations Wording (MW0100)

Commonly Used Wordings

Marine Professional Indemnity

Marine Professional Indemnity

Who is it for?

• Marine Cargo Surveyors

• Loss Adjusters

• Ship’s Agents

• Ship Brokers

• Port Agents

• Insurance and P&I Correspondents

• Offshore / Onshore

• Naval Architects

• New Building Supervisors

Principal Risks

• Negligent performance of a professional duty

• Third Party Liabilities

• Additional Coverage:-

✓ Fraud by an Employee

✓ Libel, Slander or Infringement of Personal

Rights

✓ Unintentional breach of authority

• Legal Defence Costs

Thank you for your attention

Image: used under license from shutterstock.com

Emerging technologies in shipping and P&I cover

Nicholas Mavrias, Senior Claims Executive

October 2018

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Contents

1 Blockchain and smart contracts

2 Unmanned and autonomous vessels

3 Drones

4 Cyber risks

Blockchain and smart contracts1

• a ledger of transactions and data

• storage of data on multiple computers (nodes)

• transactions and changes are only processed after several confirmations of the

network

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Blockchain technology

• self-executing contracts using blockchain technology

• terms of the contractual agreement are digitised and written into lines of code

• once parameters / criteria are triggered contract will automatically respond

• no human intervention

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Smart contracts

• Logistics

• Insurance

INSURWAVE

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Applications

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In the news

• Claims handling

▪ all parties have access to relevant data / documentation

▪ self executing contractual provisions

▪ reducing human errors in reviewing claim documentation

• Underwriting / risk assessment

▪ all parties have access to relevant data / documentation

▪ receive and act upon information instantly – accurate pricing

▪ connect client assets, transactions and payments

▪ capture and validate up-to-date first notification or loss data

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Benefits for the insurance industry

• no official position from IG

• potential issue involving electronic documentation (e-bills of lading)

• cyber risks

• difficult to assess its application to apportionment of liability

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P&I perspective

Unmanned and autonomous vessels

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Autonomous vessels

• self-sailing crewless vessel

• various degrees of autonomy

• Lloyd’s register has defined seven levels of autonomy

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What is an autonomous ship?

• theoretical economic benefits – reduced operational costs

- fuel consumption

- crew costs

• higher operational efficiencies

- increased use of space in ship design

- extended operational times

• significant investment in modernizing the current infrastructure – ports, terminals, etc.

• increased cost in conducting technical maintenance and routine repairs

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Impact on the maritime industry

• overall potential to reduce the number of claims – removing the human error element

• significantly decrease personal injury claims – generally highest volume of claims for any club

• would not fall outside of the definition of ‘eligible vessels’ for pooling purposes

• not distinguished from conventional manned ships for the purposes of risks and liabilities excluded from cover

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P&I perspective

• need to revise current pooling agreement provisions as well as current definitions – e.g. seamen

• potentially greater exposure to piracy / cargo theft

• inability to respond in distress situations

• cyber risks

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P&I perspective (continued)

Drones3

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Drones

• Deliveries

- some companies are currently experimenting with the technology

- drone delivery services for ships at anchorage

- spare parts, mail, stores, documentation, medical equipment

• Surveys

- currently biggest single use of drones in shipping

- some class societies using drones as part of their survey programme

- more comprehensive surveys

- access hard-to-reach areas while reducing risk

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Applications

• inspection of flare stack, tops of cranes and confined spaces. If repair work is necessary, the drone’s findings can be used in writing job specifications and access requirements

• remote inspection of the hull exterior or interior of tanks and other areas where surveyors cannot get to during typical on/off-hire condition surveys or routine inspections

• inspection during repair, conversion and newbuilding of ships or prior to handover

• damage surveys (aerial/tank) after an incident

• inspection prior to reactivation of ships

• inspections of moorings and anchorages

• inspection of tow arrangement from tow lines through to the unmanned towed object

• aerial videography for ship launch, delivery, mobilisation, demobilisation, loading of project cargo

• port authorities testing ships’ emissions as they enter port

• search and rescue.

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Applications continued – examples

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In the news

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In the news

• Discussion in the IG if the use of drones should be excluded from the pool

• Liabilities arising from the operation of a drone is not included within the list of excluded losses under pooling agreement (for the time being)

• However, other provisions within the rules and the pooling agreement must be complied with

- must be considered to be part of the management and operation of the

entered ship

- services being provided by the ship – contractual terms must be on knock-

for-knock or no assumption of liability that the member would not otherwise

have had at law

- services being provided to the ship – to be considered under the principles of best

endeavours

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P&I perspective

• discussions in the IG are on going

• some consider the operation analogous to the operation of an ROV

• operation of an ROV by the member – not poolable, extension cover available

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P&I perspective

Cyber risks4

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What is a cyber risk

• Any risk of accidents, incidents, financial loss, business disruption or damage to the reputation of an organization through the failure of its electronic systems or by the persons using those systems

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What is a cyber risk

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In the news

• Hackers shut down a floating oil rig by

manipulating its ballast water intake and

forcibly listing the rig

• Rig is unseaworthy for nearly 3 weeks as

their systems are riddled with computer

malware

• Hackers infiltrated computers connected to the Belgian port of Antwerp to locate specific containers, make off with smuggled drugs and delete the records

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Fake news?

• Increased dependence upon computers and computer software in shipping

• ECDIS, AIS, GPS – important and integral to ship’s safe navigation

• More dependence = more vulnerabilities to cyber attacks

• vulnerabilities may lead to P&I liabilities – collision, personal injury, property damage, pollution, or wreck removal

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Impact

• other than exclusion relating to paperless trading – no cyber exclusion in the rules, unlike other market insurances

• normal cover will respond to P&I liabilities arising out of a cyber attack *

* provided the attack does not constitute ‘terrorism’, ‘a hostile act by or against a belligerent power’ or another war risk excluded under the Club’s rules

- ‘terrorism’: act aimed to kill, maim or destroy indiscriminately for a public cause. i.e. dependent on motivation

- ‘a hostile act by or against a belligerent power’: act arising in circumstances of war or civil war and to be perpetrated by governments or organized rebels

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P&I perspective

6Conclusions

• innovation > regulation

• shipping industry = slow adopters to new technology

• technology’s potential to change the way we view and assess risk

• cyber risks a recurring theme

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A game changer?

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Publications

• The Standard Club Ltd is regulated by the Bermuda Monetary Authority. The Standard Club Ltd is the holding company of the Standard Club UK Ltd and the Standard Club Asia Ltd. The Standard Club Europe Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The Standard Club Asia Ltd is regulated by the Monetary Authority of Singapore.

• Charles Taylor Services Limited (CTS) is authorised and regulated by the Financial Conduct Authority to carry out general insurance mediation activities for commercial clients. For more details please see www.fsa.gov.uk/register/home.door call the FCA on 0845 606 1234. CTS is a wholly-owned subsidiary of Charles Taylor Holdings Limited. The ultimate parent and controlling company is Charles Taylor plc.

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Regulatory status

@StandardPandI

The Standard P&I Club

www.standard-club.com

@ctaylorplc

Charles Taylor plc

www.ctplc.com