the nordic marine insurance plan 2013 why, how and what does the assured get? professor trine-lise...
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The Nordic Marine Insurance Plan 2013
Why, how and what does the assured get?
Professor Trine-Lise Wilhelmsen
Scandinavian Institute of Maritime Law
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Why?
o Background: The international pictureo Several attempts at harmonization o No successo Why:
oFundamental differences ino Legal frameworko Material contractual solutions o Contractual tradition
oNational contracts competitive advantage3
Why?
o Nordic harmonization possible due too Common Insurance Contract Act 1930o Common contractual traditionso National hull conditions, but based on the
Norwegian Marine Insurance Plano1964o1996
o Competitive advantage limited o Maintenance of 4 national conditions
costly 4
How?
o The Nordic Plan Agreemento Basis NMIP 1996, version 2010 o Follows the procedures from the
Norwegian Plan system:o Agreed document o Secretariat Scandinavian Institute o Broad Commentarieso Systematic maintenance program
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Advantages of the agreed approach: Flexibility
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Foreseeability
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Reasonableness
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What does the assured get
o A comprehensive and total producto Jurisdiction/choice of lawo Scope of covero Duties of disclosure and due careo The settlemento But: May be departed from
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A comprehensive and total product
Common provisions
H & M
War
LOH
Hull IFreight I
17 Coastal vessels18 Offshore units19 Builders Risks xx Tailor made
Part I Chapters 1- 9: Common ProvisionsPart II Chapters 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
Plus Additional & tailor made covers
Jurisdiction/choice of law
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Jurisdiction/choice of law
o Nordic claims leader, 1-4 (1) o Legal proceedings before the courts in the
venue where the claims leader is locatedo Based on the law of this venue
o Non Nordic claims leader, 1-4 (2) o No regulation of jurisdictiono ”agreed that Norwegian law shall apply”
o The coinsurers may be sued at the venue of the claims leader, 1-4 (3)
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Scope of cover
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Perils insured against
o Perils insured, the main distinction:o NP Cl 2-8: all riskso ITCH/IHC: named perils
o The differenceo New perilso Burden of proof
o The result: More foreseeability for the assured in case of unknown risk
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Incidence of loss
o The problemo NP Cl. 2-11o Starting point: Peril has struck (1) o But:
o Unknown defect (2)o Unknown damage (3) o Known defect/damage (4)
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Causation
o The problemo The alternatives o NP Cl. 2-13: General rule,
Apportionment o Why:
o Fair division of risko Considerations of deterrence
o Cl. 2-14; combination of war/marine peril
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Losses covered, hull
o Starting point: Cl. 12-1; Cost of repairo But: Some additional cover for loss of
timeo Relevant for NP Clauses
o 12-7 Temporary repairo 12-8 Costs to expediting repairso 12-11 Invitation to tender o 12-12 Choice of repair yard
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Why cover for loss of time?
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The insurer wants:Cheapest possible repair which often takes more time
The shipowner wants:To minimize loss of time in order to get the ship back in employment
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.
Losses covered, hull
o Lack of maintenance, wear and tear etco NP Cl. 12-3:
oThe part not in proper condition is excludedoAny consequential damage coveredoFull cover for total loss/liability
o The reason: Consequential damage similar to a casualty oUnpredictableoCover secure foreseeability
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Losses covered, hull
o Error in material and design, 12-4 o Consequential damage covered o But not the cost of rectifying the erroro Coverage for primary damage if the
part is classedo Why:
o Similar to a casualtyo Cover provides foreseeability
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Duty of disclosure
o NP 3-1: All material facts shall be disclosed
o NP 3-2/3-3:Fraud/negligence: void/no liability
o Breach without fault, 3-4: o Covered, o but insurer may cancelo Why: Seems reasonable
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Duty of due care, introduction
o Main goal: To obtain safety at sea and avoid casualties
o Legal techniqueso Warranties o Alteration of risko Safety regulations
o Common: Warranty of classification o NP: Alteration of risk/safety regulation
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Alteration of risk
o The regulationo The concept, NP Cl. 3-8 (1) o The sanctions, Cl. 3-9 to 3-11
o In particular applied to change of o State of registration o manager/ technical/maritime operatoro Classification society
o UK: Warranties
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Safety regulations
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Safety regulations, concept
o NP Cl. 3-22: A safety regulation is a rule o concerning measures for the prevention of
losso given by
oPublic authoritiesoThe Classification societyoThe insurer
o And is automatically included in the insurance contract
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Safety regulations, breach
o 3-25: The insurer is freed from liability in case the assured breaches a safety regulation ifo The assured has acted with negligenceo There is causation between breach and
casualtyo The assured has the burden of proving
no negligence
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The settlement
o NP ch. 5 comprehensive regulation on o Information, 5-1o Claims adjustment, 5-2o Interest on compensation, 5-4 o Due date, 5-6 o Subrogation, 5-13 o Time limit and limitation, 5-23/5-24.o Etc
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Settlement: Interest on compensation
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Interest on compensation
o NP 5-4 (1) o On claims: starting to run 1 month after
notification sent to insurero On expenses: from the date of the
disbursement o Loss of time: 1 month after expiry of the
insured period
o Why: cover assured’s loss of profit while waiting for payment
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Interest on compensation
o NP 5-4 (2): Delay caused by the assured: no interest o NP 5-4 (3): CIBOR/NIBOR/STIBOR+ 2 %o NP 5-4 (4):
oAfter due date interest extended with 2 %. oDue date = 6 weeks after the date when the
claim adjustment is or should have been issued.
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Claims leader (hovedassurandør)
o NP chapter 9 o The Norwegian concept ”claims
leader”o Wide authority to act on behalf of the
co insurers: o Approve lay up plan, 9-3o Notifications, 9-4 o Salvage measures, 9-5 o Removal and repairs, 9-6
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Thank you for your attention!
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