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

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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