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The Nordic Marine Insurance Plan 2013 Why, how and what does the assured get?

The Nordic Marine Insurance Plan 2013 Why, how and what does the assured get?. Professor Trine-Lise Wilhelmsen Scandinavian Institute of Maritime Law. Why?. Background: The international picture Several attempts at harmonization No success Why: Fundamental differences in

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The Nordic Marine Insurance Plan 2013 Why, how and what does the assured get?

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  1. The Nordic Marine Insurance Plan 2013 Why, how and what does the assured get? Professor Trine-Lise Wilhelmsen Scandinavian Institute of Maritime Law

  2. Why? • Background: The international picture • Several attempts at harmonization • No success • Why: • Fundamental differences in • Legal framework • Material contractual solutions • Contractual tradition • National contracts competitive advantage

  3. Why? • Nordic harmonization possible due to • Common Insurance Contract Act 1930 • Common contractual traditions • National hull conditions, but based on the Norwegian Marine Insurance Plan • 1964 • 1996 • Competitive advantage limited • Maintenance of 4 national conditions costly

  4. How? • The Nordic Plan Agreement • Basis NMIP 1996, version 2010 • Follows the procedures from the Norwegian Plan system: • Agreed document • Secretariat Scandinavian Institute • Broad Commentaries • Systematic maintenance program

  5. Advantages of the agreed approach: Flexibility

  6. Foreseeability

  7. Reasonableness

  8. What does the assured get • A comprehensive and total product • Jurisdiction/choice of law • Scope of cover • Duties of disclosure and due care • The settlement • But: May be departed from

  9. A comprehensive and total product

  10. Hull I Freight I 17 Coastal vessels 18 Offshore units 19 Builders Risks xx Tailor made H & M LOH Common provisions War

  11. Part I Chapters 1- 9: Common Provisions Part IIChapters 10 -13: Hull 14 Hull and Freight Interest (TLO) 15 War Package 16 Loss of Hire Part III Chapters 17 – 19 17 Coastal vessel 18 Offshore units 19 Builders Risks PlusAdditional & tailor made covers

  12. Jurisdiction/choice of law

  13. Jurisdiction/choice of law • Nordic claims leader, 1-4 (1) • Legal proceedings before the courts in the venue where the claims leader is located • Based on the law of this venue • Non Nordic claims leader, 1-4 (2) • No regulation of jurisdiction • ”agreed that Norwegian law shall apply” • The coinsurers may be sued at the venue of the claims leader, 1-4 (3)

  14. Scope of cover

  15. Perils insured against • Perils insured, the main distinction: • NP Cl 2-8: all risks • ITCH/IHC: named perils • The difference • New perils • Burden of proof • The result: More foreseeability for the assured in case of unknown risk

  16. Incidence of loss • The problem • NP Cl. 2-11 • Starting point: Peril has struck (1) • But: • Unknown defect (2) • Unknown damage (3) • Known defect/damage (4)

  17. Causation • The problem • The alternatives • NP Cl. 2-13: General rule, Apportionment • Why: • Fair division of risk • Considerations of deterrence • Cl. 2-14; combination of war/marine peril

  18. Losses covered, hull • Starting point: Cl. 12-1; Cost of repair • But: Some additional cover for loss of time • Relevant for NP Clauses • 12-7 Temporary repair • 12-8 Costs to expediting repairs • 12-11 Invitation to tender • 12-12 Choice of repair yard

  19. Why cover for loss of time? The shipowner wants: To minimize loss of time in order to get the ship back in employment The insurer wants: Cheapest possible repair which often takes more time Compromise: The insurer is required to consider the assured’s interest in averting loss of time by paying up to 20 % of insurable value pa calculated for the time suffered or averted.

  20. Losses covered, hull • Lack of maintenance, wear and tear etc • NP Cl. 12-3: • The part not in proper condition is excluded • Any consequential damage covered • Full cover for total loss/liability • The reason: Consequential damage similar to a casualty • Unpredictable • Cover secure foreseeability

  21. Losses covered, hull • Error in material and design, 12-4 • Consequential damage covered • But not the cost of rectifying the error • Coverage for primary damage if the part is classed • Why: • Similar to a casualty • Cover provides foreseeability

  22. Duty of disclosure • NP 3-1: All material facts shall be disclosed • NP 3-2/3-3:Fraud/negligence: void/no liability • Breach without fault, 3-4: • Covered, • but insurer may cancel • Why: Seems reasonable

  23. Duty of due care, introduction • Main goal: To obtain safety at sea and avoid casualties • Legal techniques • Warranties • Alteration of risk • Safety regulations • Common: Warranty of classification • NP: Alteration of risk/safety regulation

  24. Alteration of risk • The regulation • The concept, NP Cl. 3-8 (1) • The sanctions, Cl. 3-9 to 3-11 • In particular applied to change of • State of registration • manager/ technical/maritime operator • Classification society • UK: Warranties

  25. Safety regulations

  26. Safety regulations, concept • NP Cl. 3-22: A safety regulation is a rule • concerning measures for the prevention of loss • given by • Public authorities • The Classification society • The insurer • And is automatically included in the insurance contract

  27. Safety regulations, breach • 3-25: The insurer is freed from liability in case the assured breaches a safety regulation if • The assured has acted with negligence • There is causation between breach and casualty • The assured has the burden of proving no negligence

  28. The settlement • NP ch. 5 comprehensive regulation on • Information, 5-1 • Claims adjustment, 5-2 • Interest on compensation, 5-4 • Due date, 5-6 • Subrogation, 5-13 • Time limit and limitation, 5-23/5-24. • Etc

  29. Settlement: Interest on compensation

  30. Interest on compensation • NP 5-4 (1) • On claims: starting to run 1 month after notification sent to insurer • On expenses: from the date of the disbursement • Loss of time: 1 month after expiry of the insured period • Why: cover assured’s loss of profit while waiting for payment

  31. Interest on compensation • NP 5-4 (2): Delay caused by the assured: no interest • NP 5-4 (3): CIBOR/NIBOR/STIBOR+ 2 % • NP 5-4 (4): • After due date interest extended with 2 %. • Due date = 6 weeks after the date when the claim adjustment is or should have been issued.

  32. Claims leader (hovedassurandør) • NP chapter 9 • The Norwegian concept ”claims leader” • Wide authority to act on behalf of the co insurers: • Approve lay up plan, 9-3 • Notifications, 9-4 • Salvage measures, 9-5 • Removal and repairs, 9-6

  33. Thank you for your attention!

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