SAFER SHIPS – WHAT’S THE MARINE UNDERWRITERS’ ROLE? Francesco Siccardi Siccardi Bregante & C.1

THE ROLE OF MARINE UNDERWRITERS IN SUPPORT OF THE SHIPPING INDUSTRY -Protecting the Owner’s asset (vessel) against partial/total loss/collision and salvage liabilities through Hull & Machinery insurance; -Protecting the Owner’s corporate assets, against liabilities arising from vessel’s trading through P&I insurance; -Facilitating the ship financing through mortgage of the insured vessel and assignment of insurance proceeds to lending Banks. -Contributing to safety at sea through implementation of safety rules as Cover warranties and conditions Siccardi Bregante & C.2

HOW CAN MARINE UNDERWRITERS HELP PROMOTING SAFETY AT SEA PREVENTION OF CLAIMS - Condition surveys (no substandard ships) - Prudent underwriting policy - Taking part to safety rules implementation process Siccardi Bregante & C.3

HOW CAN MARINE UNDERWRITERS HELP PROMOTING SAFETY AT SEA SETTLEMENT OF CLAIMS Compliance by the Assured of 1. Rules of Conduct (exclusions of cover) 2. International safety standards (certification) (warranties) Siccardi Bregante & C.4

1. COVER EXCLUSIONS ASSURED’S RULES OF CONDUCT The DUAL THRESHOLD A. Assured conduct in general B. Assured conduct interfering with the employment or navigation Siccardi Bregante & C.5

1.A ASSURED CONDUCT IN GENERAL Siccardi Bregante & C.6 1.WILLFUL MISCONDUCT NOT COVERED Sect 55 M.I.A. (Marine Insurance Act) Club’s Rules Sect 1900 It. Civil Code (Dolo) Norwegian Marine Insurance Plan (intentionally/gross negligence) French Hull Policy (Faute intentionelle) 2. NEGLIGENCE COVERED Thames & Mersey Marine Co Ltd. Sect 1900 It. Civil Code (Colpa) WHAT IS WILLFUL MISCONDUCT: an act intentionally done, or a deliberate omission by the Assured, with knowledge that the performance or omission will probably result in injury, or an act done or omitted in such a way as to allow an inference of a reckless disregard of the probable consequences).

1.B ASSURED CONDUCT INTERFERING WITH THE SHIP’S EMPLOYMENT OR NAVIGATION 1.LOSS ATTRIBUTABLE TO SHIP SENT TO SEA IN UNSEAWORTY CONDITIONS WITH THE PRIVITY OF THE ASSURED Privity: Assured’s knowledge and consent (the Eurysthenes 1976) 2. DUE DILIGENCE ITCH 1983 Negligence of Master etc. covered provided such loss or damage has not resulted from want of due diligence by the Assured Owners or Managers. Due Diligence: lack of reasonable care equal to privity? Sect 524 it Code Navigation: loss caused by negligence of Master covered provided Assured has taken no part (“privy?”). Siccardi Bregante & C.7

2. COMPLIANCE WITH INTERNATIONAL SAFETY STANDARDS (WARRANTIES) CLASS (ITCH ) Vessel MUST BE CLASSED NO CHANGE, SUSPENSION OR WITHDRAWAL OF CLASS Non compliance: TERMINATION OF COVER Siccardi Bregante & C.8

1.C HOW HAVE COVER CONDITIONS CHANGED Privity: blind eye knowledge insufficient: need to have suspicion or belief in the vessel unseaworthiness and deliberately refraining from making enquiries (the “Star Sea”, 2003) ITCH 1983 … Due Diligence by the Assured, Owners or Managers ITCH …. Due Diligence by the Assured, Owners, Managers or any of their onshore management I.H.C Or any of their onshore management deleted Siccardi Bregante & C.9

2.B. HOW HAVE WARRANTIES CHANGED CLASS (IHC 2003)Recommendations imposed by class as to vessel’s seaworthiness to be complied with at the due date [Club Rules] [French Hull Policy] [NMIP] Owners to hold DOC - vessel to hold SMC [Club Rules] MANAGEMENT (IHC 2003) Duty of Assured/Owners Managers to comply with all statutory requirements of vessel’s flag relating to construction, adaptation,condition,fitment, equipment, operation or manning [Club Rules] [German DTV] BUTNon compliance: loss caused thereby not covered Siccardi Bregante & C.10

CONCLUDING REMARKS Are Underwriters reluctant to apply too strictly the rules? Is Market not prepared to accept restriction of cover ? How effective is the role of Marine Underwriters in promoting safety? Siccardi Bregante & C.11