1. MARINE CLAIMS Vidar Solemdal Senior Claims Executive, Gard AS January 15 th, 2014 The Nordic Association of Marine Insurers 1

2. Agenda 1. The purpose of the Claims handling 2. The Claims Handling process 3. Coverage issues to keep in mind 4. Loss estimation 5. Repair specification and tendering 6. Case study 2 The Nordic Association of Marine Insurers

3. 1. General purpose of the claims handling Assist the assured to put the vessel in the same condition as before the casualty occured. 3 The Nordic Association of Marine Insurers

4. General purpose of the claims handling, cont. How can we achieve it? A prerequisite to assist the assured is to know the facts! ◦ Instruct a (good) Surveyor ◦ Take an active (”hands on”) role in the process ◦ Inform, and communicate with the interested parties throughout the claim. ◦ Transparency – both ways ◦ Be aware of coverage issues ◦ Understand that there are always other interests involved that do not necessarily have the same agenda. 4 The Nordic Association of Marine Insurers

5. 2. The claims handling process Response team activated. Information of interested parties. Notice of an accident /casualty Arrange Survey Secure evidence. Secure evidence. Legal and coverage issues and defensive measures to be clarified. Decide and arrange for repair and measures. Collect documentation and present the claim. The claim is adjusted, presented and paid. 5 The Nordic Association of Marine Insurers

6. Possible consequences of a marine casualty: Damage to vessel Damage to other vessel or third party property Salvage General Average Loss of income Fines and other miscellaneous losses Wreck removal Pollution Personal injury Damage to cargo It goes without saying that all of the above very seldom occurs at one casualty alone. The Nordic Association of Marine Insurers 6 Notice of an accident /casualty

7. Can come at any time of the day – or night. Depending on severity it will be received from ◦ Broker ◦ Owner ◦ Master/Vessel By ◦ E-mail ◦ Telephone ◦ Letter - as a Claim Advice from Broker or Claim Statement from Owner Notice of an accident /casualty, cont. 7 The Nordic Association of Marine Insurers

8. The initial notice of a casualty should contain the following:  Vessel identification – full name /IMO no.  Date of casualty (if known)  Vessels location and/or port schedule  Description of damage  Contact details – Agent, Owner (Superintendent), vessel  Special requests, if applicable Notice of an accident /casualty, cont. 8 The Nordic Association of Marine Insurers

9. Based on the extent of the casualty, activation of the crisis response team is considered (ref Contingency plan) on both sides. External and Internal use of resources (experts) are considered Salvage or towage? Inform, and keep informed, interested parties - can sometimes be a challenging task… Response team activated. Information of interested parties. 9 The Nordic Association of Marine Insurers

10. Information of interested parties…. 10 The Nordic Association of Marine Insurers

11. Critical Decisions – Time Aspect The more knowledge you get the fewer alternatives you have Think about what is the worst that can happen! Knowledge Decision Opportunities Time Decision time? 11 The Nordic Association of Marine Insurers

12. Establish contact with Surveyor Consider the complexity of the case Specific instructions given if applicable. Preliminary and final report. Send own employees for on site attendance? Surveyors task: ◦ Proactive, timely and accurate exchange of information with the purpose of cost control and finding the extent, type and cause of damage. Ref §12-10 – Survey of damage. Arrange Survey 12 The Nordic Association of Marine Insurers

13. Arrange Survey cont. 13 The Nordic Association of Marine Insurers

14. Additional info: Please attend the vessel on our behalf in order to investigate the cause, nature and extent of the casualty. Please also render Master/vessel necessary assistance. Owners have advised that the next port call most probably will be Thursday this week. Please confirm details with Owners representative mentioned above. In short, Owners have informed that they had a melt down on one of the main bearings on xxxx. They considered that the matter was not so expensive, and no insurance attendance was necessary. Later it became apparent that the crankshaft had to be renewed, and finally when preparing the crankshaft assembly, it became apparent that also the main engine block had to be renewed due to measurements outside Owners recommendations. For your additional information, the vessels age is 25 years, and you have to consider if the damage to the engine block might be attributed to normal wear and tear. Hence, it is important for the attending Surveyor to consider maintenance, running hours, other engine block measurements etc. Please also look into alternative repair methods – changing the engine block when one bearing housing is over the acceptable figures seems a bit excessive. Please confirm attendance, and for the sake of good order – please send an engineer. Arrange Survey cont. 14 The Nordic Association of Marine Insurers

15. 15 Arrange Survey cont.

16. Loss of Hire (LOH) A challenging task for the Surveyor can sometimes be the LOH Survey. The survey is very similar to a ”normal” H&M Survey, but with more focus on: Vessels schedule (reported in days, hours and minutes) Cost, time and reason for repair and temporary repairs Work not concerning average Extra expenses incurred to reduce delay The Nordic Association of Marine Insurers 16 Arrange Survey cont.

17. Reporting A preliminary report can and should be expected shortly after first visit. When repair is complete, and all or most of documents and invoices are available, the Surveyor will issue his final report. It is recommended that the claims handler review the reports before it is forwarded….. The Nordic Association of Marine Insurers 17 Arrange Survey cont.

18. English skills can vary… “Inspektion report of the crankshaft The fillets locks not so bad when I cannot say if that are some ovality of the fillets that can I not se before I have set up the grinding machine. In the fillets are those lots of martial spots from the beeringshells.some being grinding of before set up the machine. I want try and grinding from this fillets if that be possible at use. Under this time I try we have the equipment for at make new fillets standby at send to the ship. For the hardness and cracks nobody news how deep this going. I want cutting to 3mm undersize after that we take a new design Kind regards” Preliminary report from a service engineer. The Nordic Association of Marine Insurers 18 Arrange Survey cont.

19. The Nordic Association of Marine Insurers 19 Arrange Survey cont.

20. Final Survey report should include:  Vessel details  Survey details – where, when, who  Occurrence – when, where, what  Cause – Surveyor and Owners allegation  Repairs – temporary, permanent – deferred  Extra expenses to reduce delay  Time  Work not concerning average  Approval of cost or cost estimate The Nordic Association of Marine Insurers 20 Arrange Survey cont.

21. Secure evidence: Establish facts and options Interviews of crew – collision/grounding/TPL cases Master C.Eng. Statement of facts (SOF) Letter of Protest VDR records Pictures (usually camera on the bridge!) AIS/VTS records Secure evidence 21 The Nordic Association of Marine Insurers

22. Collision liability? P&I? Other covers? Other interests? TLO/CTL? Forum Shopping / Conventions Legal assistance (London/Local)? Choice of jurisdiction Limitation possibilities (76 and 57 convention) Guarantees/ LOU Bank guarantee (alternatively Club Letter) Recovery possibilities? Stevedore damage Unsafe berth/port Collision/Contact Repairers/Yards negligence Legal and coverage issues and defensive measures to be clarified. 22 The Nordic Association of Marine Insurers

23. Ensure that sufficient time is spent on a repair specification, tendering and comparison of yard quotations. Not always easy to ”convince” Owners (or LOH insurers), but money and time will most likely be saved. Ref also NMIP §12-11, 12 Cooperation Owner – Surveyor – Underwriter is essential. In most cases Surveyors attendance during repair bill negotiations will be an advantage for all parties. Decide and arrange for repair and measures. 23 The Nordic Association of Marine Insurers

24. Invoices Final Survey report Other expenses Clarify other aspects and questions with Owner, Surveyor, Repair yard and others Ready for adjustment (Owners statement of claim) Collect documentation and present the claim. 24 The Nordic Association of Marine Insurers

25. Adjustment Inhouse or external Appoint technical expert(s). Communication between adjuster – handler – surveyor – assured Draft adjustment. Disagreement on adjustment State Adjuster (Dispasjør) Technical umpire The claim is adjusted, presented and paid. 25 The Nordic Association of Marine Insurers

26. The basic claims handling process Response team activated. Information of interested parties. Notice of an accident /casualty Arrange Survey Secure evidence. Legal and coverage issues and defensive measures to be clarified. Decide and arrange for repair and measures. Collect documentation and present the claim. The claim is adjusted, presented and paid. 26 The Nordic Association of Marine Insurers

27. 3. Coverage issues to keep in mind NMIP is an agreed document and ”all risk” plan. Most casualties will be covered Exceptions must be identified Shall the handler inform the assured if the casualty at an early stage is considered to be not covered by the policy? 27 The Nordic Association of Marine Insurers

28. Coverage issues, cont. The Nordic Association of Marine Insurers 28 §3-22 Safety regulations §3-32 Intent §3-33 Gross negligence §10-3 Loss due to ordinary use §12-3 Inadequate maintenance etc. §12-4 Error in design etc. §12-5 (a) – (f), Losses that are not recoverable

29. Coverage issues, cont. §12-5 (a) Crew wages and maintenance §12-5 (b) Shifting storage and removal of cargo §12-5 (c) Accomodation of passengers §12-5 (d) Mooring lines etc. §12-5 (e) Corrosion protection (anodes) § 12-5 (f) Loss due to lubricating oil, cooling water or feed water becoming contaminated…., unless proper measures were taken as soon as possible after the assured, the master or the chief engineer became, or must be deemed to have become, aware of the contamination… The Nordic Association of Marine Insurers 29

30. Coverage issues, cont. Example: Severe damage occured to an to Auxiliary Engine. Surveyor receive a copy of the historical lubeoil analysis showing that the three last analysis prior to casualty says: ”oil not fit for further use”. 30 The Nordic Association of Marine Insurers

31. 4. Loss estimation Loss estimation A number of different factors will be considered when setting the reservation: Input from Surveyor (with details of casualty) Repair location – local pricelevel Recent ”similar” cases Standard overhead for Class, Surveyor, Agent, port etc Handlers ”gut feeling” Input from Owners The Nordic Association of Marine Insurers 31

32. 5. Repair specification and tendering The Claims leader can assist the Owner with the preparation of the repair specification. Be as accurate as possible Always ask for unit prices, working hours, overtime charges and payment terms. Include penalty clauses (and also ”bonuses”) Only written VO’s are acceptable. Reserve the right to use own subcontractors Reserve the right to cancel orders Read and understand the yards general terms and conditions – and make your own. Negotiate prior to awarding the contract. After it is far too late. The Nordic Association of Marine Insurers 32

33. Repair specification and tendering, cont. The Nordic Association of Marine Insurers 33

34. Repair specification and tendering, cont. The Nordic Association of Marine Insurers 34

35. 6. Case study The Nordic Association of Marine Insurers 35

36. The Nordic Association of Marine Insurers 36