Direct Building Economic Loss - Earthquake Scenario: Cache ...
Energy Loss Scenario based on the Nordic Marine Insurance Plan 2013 London 13 July 2015.
-
Upload
lora-welch -
Category
Documents
-
view
217 -
download
2
Transcript of Energy Loss Scenario based on the Nordic Marine Insurance Plan 2013 London 13 July 2015.
Energy Loss Scenario based on the Nordic Marine Insurance Plan 2013
London 13 July 2015
MARSH
Agenda
Energy Loss Scenario based on the Nordic Marine Insurance Plan 2013
MARSH
Energy Claim Case based on the Nordic Marine Insurance Plan 2013
Introduction to the Loss Scenario
Extract of the Policy Wording
Claim Process – How will a Norwegian Claims Leader approach this case
The Loss Notification phase – Initial Consideration in order to get the situation under control/clause consideration
The claims monitoring phase – Clause Consideration
The final adjustment and settlement phase – Clause Consideration
MARSH
Loss Scenario
Drillship “X2” move from one field to another
Operation Area; North Sea
Move plan issued to Leader. Drillship “X2” moves well excess of safety zone (500m) of the nearby fixed platform. Drillship X2 exposed to unexpected bad weather
Drillship “X2” lose control of their propulsion system
Drillship “X2” collides with a Fixed Platform
MARSH
Loss Scenario
Both units a total loss/ no knock for knock agreement in place between the parties
Drillship “X2” Owner fully responsible
Mitigation/ salvage costs incurred in the amount of USD 600,000,000
Value Fixed Platform: USD 1,800,000,000 Bn.
Value Drillship “X2”: USD 1,400,000,000 Bn.
Split H&M USD 1,120 Bn./ HI USD 280 Mill.
What will be covered under Drillship “X2” Owner`s H&M policy??
What will be Drillship “X2” Owner`s Collision liability towards the fixed platform owner??
How will the adjustment be under ITC??
MARSH
Loss Scenario – Extract of Insurance Cover
Conditions: Nordic Marine Insurance Plan 2013
Policy Period: 01.01.15 – 01.01.16
Insured unit: Drillship – “X2”
Interest: H&M, HI and LOH
Sum Insured: USD 1.4 Bn. - split H&M USD 1.12Bn/ HI USD 280 M. and LOH 60/290/290 – LOH sum insured USD
130,500,000
MARSH
Loss Scenarios – Extract of Insurance Cover - Cont
Trading Area: Worldwide
Classification Society: DNV GL
Claims Leader: Norwegian Claims Leader
Following market: Aspen and other London based markets
General conditions: Including Assured`s liability arising from collision or striking as per clauses 18-35 to 18-38 & 18-39 (b)
Special Conditions: Condemnation – ref. clause 18-10
MARSH
Loss Notification Claim Monitoring Claims Settlement
Review coverage
Notify carriers
Forward loss adjusters’ reports
to all carriers
Liaise with applicable
insurers
Pre-empt loss issue for smooth claims handling
Ensure regular claims
reporting
Deal with payment or account
requirements
Manage claims processing
Collect and distribute funds
Validate payments to loss
payeesAppoint
loss adjuste
r
Appoint loss
adjuster
Assign
Marsh
resource
Prepare
claims
Handling
procedure
The claim process and main clause consideration
MARSH
Prepare claims
handling procedure
Appoint
loss adjuste
r
Appoint loss
adjuster
AssignMarsh
resource
Assign
Marsh
resource
Prepare
claims
Handling
procedure
The Loss Notification phase – Initial Claims Leader Consideration in order to get the situation under control
Emergency Response/ Salvage operations. Bring the situation under control soonest possible. Emergency team will be put into operation
Minimizing potential loss of life, injury, pollution and damage to the environment, damage to the vessel, her cargo and other property
Establishing communication lines
Loss Adjuster on site asap
High Profile Incident/ Media Attention. Protecting Owner's reputation and brand
Legal aspects including but not limited to collisions, salvage, fires, general average, actions against third parties, etc.
Help Assured to safeguard their interest
Total loss consideration
MARSH
Prepare claims
handling procedure
Appoint
loss adjuste
r
Appoint loss
adjuster
AssignMarsh
resource
Assign
Marsh
resource
Prepare
claims
Handling
procedure
Loss Scenario – Situation under control
The situation is brought under control within 12 hours
No loss of life or serious injuries
Mitigation/salvage costs incurred in the amount of USD 600 M.
4 days after the incident the Drillship X2 is declared a total loss.
No knock for knock agreement in place
Drillship Owner fully responsible for the incident
Fixed Platform also declared a total loss
MARSH
Norwegian Law
• If a casualty has occurred, the assured shall do what may be reasonable expected to avert or minimise the loss
• Assured act as a prudent uninsured
Clause 3-30. Duty of the assured to avert and minimise loss
Norwegian Law
MARSH
• Assured shall provide the insurer with information and documents required by the insurer for the purpose of settling the claim.
Clause 5-1. Duty of the assured to provide particulars and documents
MARSH
• Claims Leader is entitled to take steps with binding effect on the co-insurers
• The right of the claims leader to act on behalf of the co-insurers
Clause 9-2. The right of the claims leader to act on behalf of co-insurers
MARSH
•The Plan covers All Risks, subject to a few specific exceptions
•Main exceptions:
a.) War Riskb.) Intervention by state powerc.) Insolvencyd.) RACE II clause (1-5)
Clause 18-1. (b) Perils insured against/ ref. Cl. 2-8 and Cl.2-9
MARSH
The Nordic Marine Insurance Plan
• Assured has the burden of prove that he has suffered a loss covered by insurance
• Insurer has the burden of prove that an exclusion apply
Clause 2-12. Main rule relating to the burden of proof
MARSH
• If the MOU has been damaged without the rules relating to total loss being applicable, the insurer is liable for the cost of repairing the damage in such a manner that the MOU is restored to the condition it was prior to the occurrence of the damage.
Clause 18-17. Main rule concerning liability of the insurer
MARSH
• Wells equipped with BOP
• Separate MOU move plan to be approved by the Claims Leader
Clause 18-1. (e) Safety regulations/ Ref. Cl.3-22 and Cl.3-25
MARSH
Norwegian Law
The Nordic Marine Insurance Plan
Assured’s Special Condition
• Norwegian law and exclusive Norwegian jurisdiction
Clause 1-4. Jurisdiction and choice of law
Norwegian Law
MARSH
The Nordic Marine Insurance Plan
• The area of the operation for the MOU shall be set out in the policy
Clause 18-1. (h) The area of operation/ Ref Chapter 6
MARSH
Norwegian Law
The Nordic Marine Insurance Plan
• Before any damage is repaired, it shall be surveyed by a representative of the assured and a representative of the insurer
• Will submit stage by stage reports
Clause 18-27. Survey of the damage
MARSH
• Time-limit for notification of a casualty
Assured looses right to claim if notice not given within six months from assured, master or chief engineer became aware.
Clause 5-23. Time-limit for notification of a casualty
MARSH
Clause 18-1. (c) Alteration of the risk/ Ref. Cl. 3-8
• Limited number of cases where cover terminates if a particular alteration of risk occurs;
Change of ownership
Loss or suspension of the main class
MARSH
• The Claims Leader is responsible for setting up a Claims Adjustment
Clause 9-9. Claims Adjustment
MARSH
Appoint
loss adjuste
r
Appoint loss
adjuster
AssignMarsh
resource
Assign
Marsh
resource
Prepare
claims
Handling
procedure
The claims monitoring phase – Clause Consideration
• Negotiations phase
• The limit of liability of the insurers
• Collision consideration
• Total loss consideration
• Defense measures
MARSH
Clause 18-1. (g) The limit of liability of the insurer
• H&M liable up to the sum insured for loss caused by any type of casualty
• Loss mitigation/salvage costs capped at USD 500 million
• The H&M insurer has a separate liability to third parties which is a result of collision or striking
Hull insurance “on full conditions”;
• Physical Damage to the unit
• Loss mitigation/ salvage cost
• Collision liability
MARSH
• The insurer will indemnify the assured for loss of liability imposed on the assured due to collision or striking by the MOU, its accessories, equipment or cargo, or by a tug used by the MOU
• The exclusion of liability for damage to or loss of fixed installations on the continental shelf under paragraph 18-14 of the 1996 plan was removed during the 2013 revision.
Liability of the assured arising from collision or strikingClause 18-35. Scope of liability of the insurer
MARSH
• Collision liability under the H&M policy equals to sum insured but not exceeding USD 500 M. or 50% of sum insured, whichever is the higher amount.
• Loss Scenario: Value Drillship “X2”: USD 1,400,000,000 Bn.
Split H&M USD 1,120 Bn./ HI USD 280 Mill.
Collision Liability: USD 560,000,000
Liability of the assured arising from collision or strikingClause 18-37. Maximum liability of the insurer in respect of any one casualty
MARSH
• If insurance has been effected against total loss and excess collision liability (hull interest insurance), the insurer is liable for the amount stated in the policy
• Loss Scenario: Value Drillship “XX2”: USD 1,400,000,000
Split H&M USD 1,120 Bn./ HI USD 280 Mill.
Excess Collision Liability: USD 280,000,000
Liability of the assured arising from collision or strikingClause 18-39. Insurance against total loss and excess collision liability (hull interest insurance)
MARSH
Clause 18-8. Total loss
The assured may claim compensation for a total loss if the MOU is lost without there being any prospect of being recoverered, or if the MOU is so badly damaged that it cannot be repaired.
Clause 18-10. Condemnation (Constructive total loss) CTL
Cost of repairs will exceed 80% of:a.) insurable value or,
b.) of the value of the ship after repairs if this is higher than the insurable value
Special clause. Condemnation to Clause 18-10 of the Nordic Plan 2013
The asssessed insurable value (Hull and Machinery value) together with the Hull Interest shall be the insurable value or the value of the ship after repairs (estimated/ agreed market value). Furthermore, it is agreed that there is a claim for condemnation where the conditions otherwise specified in that paragraph are satisfied when the cost of repairs exceed the insured value under Section A (Hull and Machinery)
Total LossClauses 18-8./ 18-10. and Special Clause
MARSH
• Loss Scenario: Value Drillship “X2”: USD 1,400,000,000
Split H&M USD 1,120 Bn./ HI USD 280 Mill.
Trigger for total loss: Repair cost exceeds USD 1,120Bn
Total LossClauses 18-8./ 18-10. and Special Clause
MARSH
• Insurers not liable for LOH, when Assured entitled to a Total Loss compensation
Loss of hire insurance for MOUsClause 18-44. Total Loss
MARSH
• When the final claim is likely to take some time to complete, Assured may request Insurers to make an interim Payment on Account
• Basis is completed repair work and cost incurred
• Loss Adjuster will recommend POA in report submitted to Leader for formal approval
Clause 5-7. Duty of the insurer to make a payment on account
MARSH
Appoint
loss adjuste
r
Appoint loss
adjuster
Assign
Marsh
resource
Prepare
claims
Handling
procedure
The final adjustment and settlement phase – Clause Consideration
Formal agreement reached between the parties
Collect documentation
Adjust the claim
Final payment
MARSH
• Claims Lead to issue the claims adjustment as soon as possible. He may give responsibility for drafting the adjustment to an average adjuster
Clause 5-2. Claims Adjustment
MARSH
• The assured as well as the insurer may demand that the adjustment be submitted to a Nordic average adjuster for his opinion before the dispute is brought before the court
Clause 5-5. Disputes concerning the adjustment of the claim
MARSH
• According to § 5-4 – Assured are entitled to interest on their claim adjustment
• Loss Adjuster to review documentation and invoices from the Assured and finalize the claim adjustment
Clause 5-4. Interest on compensation
MARSH
• In The event of a total loss, the mortgagee`s interest takes priority
Clause 7-4. Payment of compensation
MARSH
• Compensation is payable six weeks after the date when the claim adjustment is or should have been issued.
Clause 5-6. Due Date
MARSH
Claims Scenario – Collision Liability – Final Adjustment
• Drillship collides with a fixed installation
• Both units a total loss/ no knock for knock agreement in place
• Drillship owner fully responsible
• Mitigation/ salvage costs incurred in the amount of USD 600,000,000
• Value fixed platform: USD 1,800,000,000
• Value drillship: USD 1,400,000,000 (Split: H&M: USD 1,120,000,000 and HI USD 280,000,000)
What is covered under the Drillship Owner`s H&M policy?
•Total loss of the Drillship: USD 1,400 Bn. (Clause 18-1. g)
•Mitigation/ Salvage: USD 500 Mill. (Clause 18-1. g)
•Collision liability (H&M) USD 560 Mill. (Clause 18-37.)
•Excess Collision liability (HI) USD 280 Mill. (Clause 18-39.)
Total recovery : USD 2,740 Bn.
MARSH
Claims Scenario – Collision Liability – Final Adjustment
What is Drillship Owner`s overall collision liability towards the Fixed Platform Owner?Value Fixed Platform: USD 1,800 Bn.
Drillship Owner`s Hull and Machinery Insurers:
•Collision liability (H&M): USD 560 Mill.
•Excess Collision liability (HI): USD 280 Mill.
Drillship Owner`s P&I Clubs:
•Primary P&I: USD 500 Mill.
•Excess P&I: USD 460 Mill.
Total recovery : USD 1,800 Bn.
•H&M insurer will pay collision liability from ground up/ P&I club XS
•Insurers may require “knock for knock” in contracts where customary in the industry, ref. clauses 4-15. (b) and 3-28. by accepting waiver of subrogation.
•Knock for knock contracts customary in the North Sea.
MARSH
Claims Scenario – Collision Liability – Final Adjustment ITC
• Drillship collides with a fixed installation
• Both units a total loss/ no knock for knock agreement in place
• Drillship owner fully responsible
• Mitigation/ salvage costs incurred in the amount of USD 600,000,000
• Value fixed platform: USD 1,800,000,000
• Value drillship: USD 1,400,000,000 (Split: H&M: USD 1,120,000,000.and HI USD 280,000,000)
What is covered under the Drillship Owner`s ITC H&M policy:
•Total loss of the Drillship: USD 1,400 Bn.
•Mitigation/ Salvage: USD 600 Mill.
•Collision liability-RDC/ FFO Not applicable under H&M
Total recovery : USD 2,000 Bn.
Collision Liability under Drillship Owner`s P&I Clubs:
•Collision liability 4/4 FFO USD 1,800 Bn.
MARSH
Realistic Loss Scenario!!!
Thank You for your attention