Published 11 February 2004
Circular No. 6/2003 February 2004
TO THE MEMBERS OF ASSURANCEFORENINGEN GARD -gjensidig-
Dear Sirs
Reinsurance arrangements for the 2004 policy yearUnited States oil pollution coverSpecial war risks cover
Reinsurance arrangements for the 2004 policy year
Owner’s Entries
There is a change in the structure of the reinsurances for the 2004 year compared to the 2003 year in that the upper limit of the Pool has been increased from USD 30 million to USD 50 million. The club's retention will remain at USD 5 million and the Group continues to retain 25 per cent of the first layer of reinsurance for claims in excess of USD 50 million. This retention will be protected by a specific reinsurance protection.
The reinsurance structure for the 2004 policy year will be as follows:
In addition 25 per cent of the first USD 200 million of a claim or claims in the aggregate excess of USD 50 million any one vessel any one event.2 Cover above USD 1,550 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.)
Charterer’s Entries - Traditional Charterer’s Cover
The reinsurance structure for charterer’s entries reinsured through the Pool is also changed compared to last year and will be as follows:
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.)
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.)
Charterer’s Entries - Comprehensive Charterer’s Liability Cover
For the 2004 policy year the upper limit of the Comprehensive Charterer’s Liability insurance is optional with a maximum limit of USD 750 million. A separate Circular regarding War Risks and the implementation of the Biochem Clause 370 will be sent to Members who have taken out this cover.
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. A separate Circular regarding War Risks and the implantation of the Biochem Clause 370 will been sent to Members who have taken out any of these covers.
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 2004 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 2004 policy year is identical to the procedure which applied for the 2003 policy year.
The Association will assume that those Members who agreed to the declaration procedure for the 2003 policy year also agree to the declaration procedure for the 2004 policy year. Thus the cover will be automatically reinstated unless by 20 February 2004 the Association has been notified to the contrary. Members who did not agree to the declaration procedure for the 2003 policy year, but who wish to reinstate the cover for the 2004 policy year, must notify the Association that they agree to the declaration procedure prior to 20 February 2004.
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 2004, the International Group has decided that the surcharge per gross ton per voyage will be US cents 11,9 for Marpol tankers and US cents 13,6 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 2,719 per annum or USD 136 per voyage and USD 2,399 or USD 120 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 2004, to be charged on a fixed rate basis. No lay-up returns will be allowed.
Parcel Tankers
Owners of parcel tankers carrying less than 5,000 tons of persistent oil cargoes will pay a rate of USD 407 per voyage or a fixed rate of USD 8.140 per annum for non-Marpol tankers and USD 359 per voyage or a fixed rate of USD 7.180 per annum for Marpol tankers. However, where parcel tankers are carrying between 5,000 and 9.999 tons of persistent oil cargoes the owner will pay a rate of USD 1,023 per voyage or a fixed rate of USD 20.460 per annum for non-Marpol tankers and USD 895 per voyage or a fixed rate of USD 17.900 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 9.999 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 9.999 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 2003 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.
Special War risks cover
The terms of the special war risks P&I cover are similar to those applying for the 2003 policy year with a limit of USD 400 million. In its meeting on 5 February 2004 the Executive Committee resolved that this cover shall continue to include liabilities arising from acts of terrorism as defined in the US Terrorism Risk Insurance Act 2002. A premium of US cents 0,25 per entered ton is deemed to be attributable to the US risks in accordance with the terms of the Act. It also continues to include an exclusion in respect of chemical, biochemical and electromagnetic weapons.
The terms and conditions of the special war risks P&I cover for the 2004 policy year can be summerised as follows:
Subject to the Association’s Statutes and Rules and the Institute Notice of Cancellation, Automatic Termination of Cover and War and Nuclear Exclusion Clause - Hulls
The cover afforded is subject to Assuranceforeningen Gard’s Statutes and Rules for ships for the 2004 policy year (save that the war risks exclusion in Rule 58 in the Rules for ships shall not apply) and the attached Institute Notice of Cancellation, Automatic Termination of Cover and War and Nuclear Exclusion Clause – Hulls. This means that the cover can be terminated upon the Association giving 7 - seven - days’ notice of its intention to do so. In certain circumstances the cover will terminate automatically.
Scope of cover
The special war risk P&I insurance will cover P&I risks set out in Part II, chapter 1, of the Rules for ships caused by war risks as described in Rule 58 of the Rules for ships, but subject always to special terms of entry agreed between the Association and the individual Member attached to the relevant vessel’s certificate of entry.
Chemical, Bio-Chemical, Electromagnetic Weapons and Computer Virus Exclusion ClauseAll perils included in this special war risks P&I cover shall be subject to the following clause:
This clause shall be paramount and shall override anything contained in this contract of insurance inconsistent therewith
In no case shall this contract of insurance cover loss damage liability or expense directly or indirectly caused by or contributed to by or arising from
any chemical, bio-chemical or electromagnetic weapon.1.2 the use or operation, as means for inflicting harm, of any computer virus.
Special limit for owners
For the 2004 policy year the special war risks P&I cover for owners is limited to USD 400 million each incident or occurrence each vessel in excess of the proper value of the entered ship or any amounts recoverable under any other P&I war risks cover which the Member has arranged, whichever is greater. The proper value of the ship is determined in accordance with Rule 71.1(a) of the Rules for ships, although for the purpose of this special war risks P&I cover this is deemed not to exceed USD 100 million. The cover is subject to a deductible of USD 50,000 per ship per event.
Where the Member and another party or other parties interested in the operation of the ship are insured under more than one owner’s and/or charterer’s entry with the Association or with the Association and any other association(s) which participates in the Pooling Agreement and the General Excess Loss Reinsurance Contract, the aggregate of claims brought against the Association and such other association(s) in respect of losses, liabilities, costs and expenses covered under this special war risk P&I cover for owners and/or charterers, shall be limited to USD 400 million any one incident or occurrence each vessel. If such claims exceed this limit, the liability of the Association in respect of each certificate of entry shall be limited to that proportion of that limit that claims recoverable from the Association under that certificate of entry bear to the aggregate of the said claims recoverable from the Association and from such other association(s), if any.
It ought to be emphasised that the special war risks P&I cover is an excess cover only as far as owner’s entries are concerned. It is not intended to be a substitute for the Member’s primary P&I war risks cover, whether arranged with his hull and machinery insurer or with another insurer, which the Member should effect with a minimum limit of the proper value of the ship. If the Member has effected P&I war risks cover in excess of the proper value of the ship, either by opting for a higher limit on his primary cover or by purchasing additional cover, the special war risks P&I cover will still apply only in excess of the amounts recoverable under all of the other P&I war risks covers.
Special limit for charterers
As far as charterer’s entries reinsured under the Pooling Agreement and the Group’s Excess Loss Reinsurance Contract are concerned, the special war risks P&I cover functions as a primary cover. The limit is USD 400 million each incident or occurrence each vessel, provided always that where a ship is separately insured under more than one charterer’s and/or owner’s entry with the Association or with the Association and any other association(s) which participates in the Pooling Agreement and the General Excess Loss Reinsurance Contract, the aggregate of claims brought against the Association and such other association(s) in respect of losses, liabilities, costs and expenses covered under this special war risk P&I cover for charterers and/or owners, shall be limited to USD 400 million any one incident or occurrence each vessel. If such claims exceed this limit, the liability of the Association in respect of each certificate of entry shall be limited to that proportion of that limit that claims recoverable from the Association under that certificate of entry bear to the aggregate of the said claims recoverable from the Association and from such other association(s), if any. The cover is subject to a deductible of USD 50,000 per ship per event.
If you have any questions, please contact the P&I underwriting department in Gard Services.
Yours faithfully, Gard Services AS As agent only for Assuranceforeningen Gard - gjensidig
Claes Isacson Chief Executive Officer
Appendix to Circular No. 6/2003Institute notice of cancellation, automatic termination of cover and war and nuclear exclusions clause - hulls
This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith
Cover hereunder in respect of the risks of war, etc. may be cancelled by either the Underwriters or the Assured giving 7 days notice (such cancellation becoming effective on the expiry of 7 days from midnight of the day on which notice of cancellation is issued by or to the Underwriters). The Underwriters agree however to reinstate cover subject to agreement between the Underwriters and the Assured prior to the expiry of such notice of cancellation as to new rate of premium and/or conditions and/warranties.
Automatic Termination of Cover
Whether or not such notice of cancellation has been given cover hereunder in respect of the risks of war, etc, shall TERMINATE AUTOMATICALLY
Five Powers War and Nuclear Exclusions
This insurance excludes:
United Kingdom, United States of America, France, the Russian Federation, the People’s Republic of China;
arising from
Law and Practice
This clause is subject to English law and practice.
Gard is a member of
