Offshore P&I and Additional Covers

24 May 2018

Offshore support vessels Drilling rig

Offshore prospect

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The Beginning … …3

1st Rig

attached in

MOU P&I in

July 1973

1st Offshore guard

& support vessel

attached in Mutual

P&I March 1973

Gard Offshore and EnergyOrganisation

Energy Offshore

Fixed Installations Mobile Offshore Units Offshore vessels

• P&I

• H&M

• LOH

• Package

• PD

• BI

• Liability

• Well control

• S&P

• Re-drilling

• P&I (Offshore)

• PD (Energy)

• BI (Energy)

Drilling, production,

accommodation PSV, AHT, DSV,

Construction,

Seismic, PipeOil and gas fields

Gard’s key selling points

❖ Reputation

❖ Strong financial standing

❖ Vast experience and expertise

❖ Diversified range of products

❖ Prompt, proactive and pragmatic claims

handling

❖ Free contract review from P&I perspective

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Loss PreventionOffshore and Energy

• Gard Updates

• Client training • Contingency exercise

• Officers and crew seminars

• Benchmark

International Group of P&I Clubs

Comprises 13 mutual P&I Insurance Associations (Clubs)

Provides cover to approx. 90% of the world’s ocean-going

tonnage

Provides third party liability cover relating to the

use and operation of ships

Claims pooling and reinsurance – claim-sharing

agreement underpinned by an extensive market reinsurance program

Exchange of information – explore and develop

solutions for shipowners’ insurance needs and requirements

Representation - provides an effective voice to speak

collectively on important industry issues7

What?

Why?

Who?

Commercial trading vessels

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Offshore oil field - Drilling, Production, … …

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Key differences (Non-exhaustive list)

Commercial Vessels Offshore/ specialist

vessels

Nature of work Transportation of goods/

passengers

Production/ exploration of oil

& gas, and supporting work

Contractual Terms Limited liability on

negligence based indemnity

- International Transport

Conventions e.g. Hague/

Hague Visby, Athens, etc.

Knock-for-knock or onerous

contractual liabilities

imposed in bespoke contract

Operating area Trading from port to port or

point to point

Dedicated oil & gas field or

designated project field

General P&I

claims trend

Combination of frequency &

high severity losses

Low frequency, but high

severity losses

Mutual P&I - Eligible Offshore & specialist vessels

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Mutual P&I and CGL Cover for Offshore Support vessels

What is P&I Cover?

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• P&I cover is a third party liability insurance designed to cover the

owner’s liabilities arising out of the operation of the

insured vessel/ unit

• P&I cover is provided on a Named Perils basis (i.e. scope of

cover as stipulated in Gard Rules)

Mutual P&I Cover

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Injury, illness or death of crew or 3rd

party on board

Loss of or damage to 3rd party property

Contact damages e.g. collision, loss or damage to fixed or floating

objects

Pollution emanating from the vessel & its equipment onboard including

clean up costs

Wreck Removal liabilities resulting from an accident

Key Exclusions but not limited to following … …

Specialist Operations15

Onerous Contract

Drilling, production &

accommodation ships

Loss of or damage to

Contract Work

Rule 55 Terms of contract – Onerous terms

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Contractual terms Not eligible for pooling (Appendix V in Pooling

Agreement):

• Contract of Carriage: Contractual terms less favourable than

Hague or Hague Visby Rules;

• Charter party and other service agreements:

Contractual terms on more onerous terms than;

❖ Knock-for-Knock e.g. carve-out for gross negligence or wilful

misconduct, loss or damage to Contract Work (Absolute

Exclusion), etc.

❖ Strict Liability i.e. the Member is liable for any loss arising out of

the contract, regardless of fault

❖ Waiver of limitation rights

Rule 59 Specialist Operation

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Key consideration: nature of operation, not by type of vessel

Rule 59c – Loss or Damage to Contract Work

Exclusion

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Rule 59c – Loss or Damage to Contract Work

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Rule 60 – Drilling, production &

accommodation vessels

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Intention of this exclusion:

• Segregation of risks from liabilities that fall outside normal usage

of conventional trading vessels

• What is Eligible Ship in Rule 1.1?

a ship or other floating structure entered in the Association (other

than a mobile offshore unit entered in accordance with Part III of

these Rules).

Owner’s P&I- additional covers

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Owner’s P&I

Compre-hensivecarriers’ cover CGL cover for

offshore vessels

Container cover

Defence cover

Divers’ P&I cover

Extended crew cover

Extended loss of hire

cover

Ship manager

liability cover

Tour operators’

cover

CGL coverScope of cover

• Exclusions under the P&I insurance bought back under CGL cover

o Specialist operations (Rule 59)

o Operation of sub-sea equipment and divers (Rule 61)

o Contractual liabilities (Rule 55)

o Towage liabilities (Rule 43)

o Salvage operations (Rule 63.1.f)

o Carriage of radioactive equipment (Rule 73)

• Summary of the CGL cover

o Seamless additional cover to P&I insurance for offshore vessels and other offshore ancillary craft

o Limit of cover ranging from USD 10 to USD 500 million

o Standard deductible USD 5,000 per event

o Premium and claims integrated in P&I premium and record

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CGL cover for offshore vesselsExclusions

• Damage to or loss of contract works

• Failure to perform

• Injury to, illness or death of divers

• Liability in respect of property in the care, custody or control of

the assured. (If no indemnification has been obtained cover may

be reinstated subject to additional premium.)

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P&I and CGL Cover for Mobile Offshore Units

• Gard introduced a fixed P&I

insurance for MOUs in 1973

• Gard is a global market leader in this

segment

• P&I insurance for mobile offshore units

(MOUs)

• Based on the IG P&I Rules for Ships

• Limit of cover from USD 5 million to

USD 750 million (+)

• Deductible minimum USD 10,000 per

event

• Fixed premium

• War and terrorist risks included

P&I cover for mobile offshore units

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• Drilling Operations - Drilling

units and work-over units

• Production Operations -

FPSOs, FPUs, FPSs, FPOs

• Accommodation -

Accommodation Units,

Floatels

• Specialist Operations, Sub-

sea activities

• Terms of Contract

Mobile Offshore Units require specialist P&I

cover.

Excluded from Mutual P&I cover for ships :

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Accommodation unit attached

to operating rigFPSO

Drillship

MOU P&I – Eligible vessels

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Offshore fish farm

Wider definition for vessel – Rule 1 MOU P&I

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Vessel

any offshore unit, any other

ship or vessel or mobile or

temporarily fixed craft,

including the risers, flowlines,

umbilicals, floating hoses,

buoyancy floats or tanks and

mooring systems, or any other

item or equipment used as an

integral part of the unit's

operations, or any part

thereof as accepted by and

entered in the Association

under these Rules or any

other description of unit

noted in the Certificate of

Entry.

• Does not exclude drilling,

production etc.

• Extends to certain shore

based activities

• Terms of contract

• Flexible definition of “Vessel”

• War and Terrorist Risks

included up to policy limit

• Fixed premium

• Limit of cover at choice

• Protective Co-insurance of

charterers etc

MOU P&I Cover – Similar covers to Mutual

P&I and wider covers … …

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• Pollution from well

• Property damage caused by

blow-out

• Loss of hole, well or reservoir

• Clean-up costs (debris / lost

objects)

• Damage to the Contract

Work (Construction &

Installation)

• Certain terms of contract

• US owned, managed or

operated vessels

Important Exclusions and Restrictions

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MOU P&I – additional covers

MOU P&I

CGL for MOUs

Defence cover

Divers’ P&I cover

Extended crew cover

CGL cover for mobile offshore unitsSummary of the CGL cover

• Comprehensive general liability (CGL) cover for MOUs

• Available to members with P&I insurance for MOUs

• Seamless additional cover to P&I insurance for MOUs

• Limit of cover offered is USD 10 million or USD 25 million

- Sublimit for pollution from well is USD 5 or USD 10 million

• Deductible is the higher of USD 25,000 or the P&I deductible. Only one

deductible will apply for a combined P&I and CGL event

• Fixed premium

• Premium and claims become part of member’s P&I record

• War and terrorist risks included

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CGL cover for mobile offshore unitsScope of cover

• Liabilities not in direct connection with the operation of the entered

vessel or at a supply base (i.e. personnel)

• Pollution from the well being drilled or serviced (often up to deductible

of client’s other covers)

• Damage to operator’s property caused by blow-out etc.

• Seepage and pollution upstream from the production facilities

associated with the entered vessel

• Terms of contract not covered by P&I for MOUs

• Contractual liability for loss of or damage to property in the member’s

care, custody or control

• Liability as charterer of supply vessels and ancillary craft

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• COVERAGE:

Liability incurred by chartered ships or watercrafts

Subject to knock-for-knock (K-F-K) contract, CGL cover

extends to include liabilities arising form chartered

vessels but excluding Damage to Hull Liabilities as such

risks are absolved under K-F-K.

CGL COVER FOR MOBILE OFFSHORE UNITS

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• COVERAGE:

Liability arising from pollution caused by blowout etc.

CGL COVER FOR MOBILE OFFSHORE UNITS

Thank you for listening

For any query, please contact eilanda.lui@gard.no 36