Published 14 February 2002
Circular No. 10/2001 February 2002
ASSURANCEFORENINGEN GARD -gjensidig-
Dear Sirs,
REINSURANCE ARRANGEMENTS FOR THE 2002 POLICY YEAR OBO’s RATED AS DRY AND TANKERS RATED AS CLEAN UNITED STATES OIL POLLUTION COVER
We refer to Circular No. 6/2001 relating to premium ratings for the 2002 policy year. At the time of writing the circular it was too early to report on reinsurance arrangements for the 2002 policy year. The purpose of this circular is to update Members with regard to reinsurance arrangements and the placing of additional insurances.
REINSURANCE ARRANGEMENTS FOR THE 2002 POLICY YEAR
Owners’ Entries
The structure of the reinsurance programme for owners’ entries is the same as for the current year. The Group’s General Excess Loss Contract is limited to USD 2 billion. The Clubs will assume a vertical share of 10 per cent of the first USD 500 million tranche of the reinsurance for non-pollution claims and 10 per cent of USD 500 million for oil pollution claims.
The reinsurance structure for the 2002 policy year will be as follows:
Club retention USD 5 million
Pool USD 25 million¹ (in excess of USD 5 million)
General Excess Loss cover² USD 2 billion (in excess of USD 30 million)
Oil pollution3 USD 1 billion
¹ In the case of the 15 per cent vertical share placed through a separate broker the Pool is extended to USD 95 million (in excess of USD 5 million)
² Cover above USD 1,500 million is on the basis of one reinstatement.
3) The limit applies to the aggregate of owners’ and demise charterers’ liability. (For further details, see Rule 53.1 and Appendix III of the Rules for Ships).
Charterers’ Entries - Traditional Charterers’ Cover
The reinsurance structure for charterers’ entries reinsured through the Pool is identical to that of last year and will be as follows:
Club retention USD 5 million
Pool USD 25 million (in excess of USD 5 million)
General Excess Loss cover¹ USD 300 million (in excess of USD30 million)
Oil pollution² USD 100 million
¹ The cover, with the exception of cover for oil pollution, afforded to those insured under a charterer’s entry and to charterers’ co-assured under an owner’s entry as described in Rule 78.4 of the Rules for Ships, will be whichever is the lesser of USD 50 million in excess of the owner’s relevant limitation figure and USD 300 million each entry any one occurrence or, in the case of cargo claims, any one cargo voyage. (For further details, see the Rules for Ships, Appendix II.)
² With regard to oil pollution cover for any vessel, the limit is whichever is the lesser of USD 100 million and USD 50 million in excess of the owner’s relevant limitation figure each entry any one occurrence subject to an aggregate limit of USD 300 million any one occurrence any one vessel in the event the vessel being covered by more than three charterers in one or more associations participating in the reinsurance arrangements of the International Group of P&I Clubs. If there are more than three charterers in a chain with aggregate liabilities in excess of USD 300 million an average formula will be used to apply the limit of USD 300 million any one occurrence each vessel. (For further details, see the Rules for Ships, Appendix III.)
Charterers’ Entries - Comprehensive Charterers’ Liability Cover
For the 2002 policy year the upper limit of the Comprehensive Charterers’ Liability insurance is optional with a maximum limit of USD 500 million per event. Members are reminded that the Notice of Cancellation of War Risks Cover given by our circular of 17 October 2001, is still in force although the maximum War Risk Limit of USD 100 million has now been deleted. There are some minor changes in the conditions.
Extended Cargo Liability Insurance, Deviation Liability Insurance, Comprehensive Carrier’s Liability Insurance, Tour Operator Passenger Liability Cover and Extended Crew Cover
These covers are still available with limits as agreed with the individual Member. The War Risks Notices of cancellation given in September 2001, is still in force and additional premiums may apply for trade in “conditional areas”.
OBO’s RATED AS DRY AND TANKERS RATED AS CLEAN
Also for the 2002 policy year, it has been decided to assess OBO’s and clean tankers on a quarterly rather than annual basis. If at any time during any quarter the ship trades with dirty products, then the full dirty tanker reinsurance cost applies for that quarter. The applicable quarters are 20 February to 20 May, 20 May to 20 August, 20 August to 20 November and 20 November to 20 February.
UNITED STATES OIL POLLUTION COVER Exclusion and Reinstatement of Cover
The exclusion from cover under Rule 53.2 of oil pollution liabilities arising out of an incident to which the US Oil Pollution Act of 1990 (“OPA 90”) is applicable in respect of ships capable of carrying oil in bulk as cargo will continue for the 2002 year. However, cover can be reinstated if the Member agrees to make declarations in the manner set out in Appendix III paragraph 4 - US Oil Pollution Cover - to the Rules for Ships. The declaration procedure for the 2002 policy year is identical to the procedure which applied for the 2001 policy year. The Association will assume that those Members who agreed to the declaration procedure for the 2001 policy year also agree to the declaration procedure for the 2002 policy year. Thus the cover will be automatically reinstated unless by 20 February 2002 the Association has been notified to the contrary. Members who did not agree to the declaration procedure for the 2001 policy year but who wish to reinstate the cover for the 2002 policy year must agree to the declaration procedure prior to 20 February 2002.
Voyage Cap and Surcharge
The voyage surcharge system for tankers is designed to contribute to the costs of the General Excess Loss Reinsurers in relation to the additional cost of the clean up of spills anticipated in US waters. For 2002, the International Group has decided that the surcharge per gross ton per voyage will be US cents 9 for Marpol tankers and US cents 10.2 for those that are not . To qualify for the Marpol tanker category, a tanker must be equipped with segregated ballast tanks in accordance with the requirements of Regulation 13 of Annex 1 to Marpol 73/78. The limit of the number of voyages which will attract the surcharge will be 20 as in the current year.
Owners of ships of 1,000 GT or less may opt to pay either a fixed rate of USD 2,040 per annum or USD 102 per voyage and USD 1,800 or USD 90 respectively for Marpol tankers. These owners will be charged on a per voyage basis unless a request is made to the Association, prior to 20 February 2002, to be charged on a fixed rate basis. No lay-up returns will be allowed.
Parcel Tankers
Owners of parcel tankers carrying 5,000 tons or less of persistent oil cargoes will pay the rate applicable to ships of 3,000 GT as in the current year. This means either USD 306 per voyage or a fixed rate of USD 6,120 per annum for non-Marpol tankers and USD 270 per voyage or a fixed rate of USD 5,400 per annum for Marpol tankers. However, where parcel tankers are carrying between 5,001 and 10,000 tons of persistent oil cargoes the owner will pay the rate applicable to ships of 7,500 GT. This means either USD 765 per voyage or a fixed rate of USD 15,300 per annum for non-Marpol tankers and USD 675 per voyage or a fixed rate of USD 13,500 per annum for Marpol tankers. As is the case for owners of ships of 1,000 GT or less, owners of parcel tankers on voyages carrying 10,000 tons or less of persistent oil cargoes can opt to be charged on a per voyage or fixed rate basis. No lay-up returns will be allowed. Owners of parcel tankers carrying more than 10,000 tons of persistent oil cargoes will pay the voyage premium based on the ship’s full tonnage. A parcel tanker is a ship constructed or adapted primarily to carry cargoes of noxious liquid substances in bulk, and capable of carrying at least 10 grades simultaneously, having been issued with an international certificate of fitness for the carriage of dangerous chemicals in bulk. Ships qualifying as parcel tankers will still be required to declare their US voyages and in addition to state the quantity of persistent oil cargoes which has been carried on each voyage.
General
As was the case for the 2001 policy year, the Association reserves the right to determine whether loading or discharging or transferring cargo at several ports or places constitutes a single voyage or more than one voyage. For the purpose of payment of premium a Member will be charged half the rate specified above if loading or discharging takes place solely at Louisiana Offshore Oil Port (LOOP) or solely at a place, other than a port, approved by the US Coast Guard within the US exclusive economic zone.
Yours faithfully, GARD SERVICES AS As agent only for Assuranceforeningen Gard - gjensidig
Claes Isacson Chief Executive Officer
Gard is a member of
