Cover Limit for Passenger’s and Seamen’s Risks and Overspill Protection Cover
At its meeting on 6 February 2007, our Club's Board approved the proposal for a limit on Club cover for passengers' and seamen's risks and for a collective overspill protection cover, in the interests of achieving consensus among the International Group of P&I Clubs (Group). This proposal has already been approved by the requisite majority of the Group Clubs and will come into effect on 20 February 2007.
1.Background
Members may be aware that there has been a discussion within the Group regarding the level of cover provided for passenger risks. This debate has been highlighted by the fact that the 2002 Protocol to the Athens Convention, which provides for a high liability limit and for direct action against insurers,is likely to enter into force within the next year or two. The debate also recognizes the increasing high number of passengers and seamen on board cruise or other passenger ships.
While it has been difficult to balance the interests of the owners of passenger ships with those of other types of vessels, the Group has, by securing appropriate reinsurance, found a solution that provides high levels of cover for passengers' and seamen's risks on board passenger ships, whilst minimising overspill claims exposure - the probability of which is considered, by some markets, to be increasing.
2.Limit on Club Cover for Passengers' and Seamen's Risks
For the 2007 Policy Year, Club cover for passengers' and seamen's combined risks shall be limited to US$3 billion, with a sub-limit of US$ 2 billion for passenger claims only, each vessel each accident. The Special Clause "PASSENGERS AND SEAMEN LIABILITY LIMITATION CLAUSE"(please see attached) shall apply to all mutually entered ships which fall within the "Ocean Going Class". The insertion of a Special Clause is similar to that currently used to limit oil pollution liability to US$1 billion.
3.Overspill Protection Cover
For the 2007 Policy Year, the Group shall place, on behalf of all Clubs, reinsurance cover for overspill liabilities, up to US$1 billion, for claims in excess of US$2.05 billion. The cost of this additional US$1 billon overspill protection cover will be incorporated into the Group's excess of loss reinsurance programme (which reinsures the Group Pool from US$50 million to US$2.05 billion) and will be reflected in the reinsurance rates, per gross ton, charged to the Members. This cover will significantly minimise the Members' potential liability for an overspill call.
PASSENGERS AND SEAMEN LIABILITY LIMITATION CLAUSE |
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| 1. | Unless otherwise limited to lesser sum or the sums as set out in paragraph 2 and 3 below, the Association's aggregate liability arising under any one owner's entry shall be limited to (1) US$2 billion (US$2,000,000,000) in respect of liability to Passengers each ship any one occurrence. (2)US$3 billion (US$3,000,000,000) in respect of liability to Passengers and Seamen each ship any one occurrence. |
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| 2. | Where an owner, demise charterer, manager and operator in respect of the same ship are separately insured with the Association and/or or by any other insurer which participates in the Pooling Agreement of the International Group of P&I Clubs, the aggregate of claims in respect of liability to Passengers recoverable from the Association and/or such other insurers shall be limited to US$2 billion (US$2,000,000,000) each ship each occurrence and the liability of the Association shall be limited to such proportion of that sum as the claims recoverable by such persons from the Association bears to the aggregate of all such claims otherwise recoverable from the Association and all such insurers. |
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| 3. | Where an owner, demise charterer, manager and operator in respect of the same ship are separately insured with the Association and/or or by any other insurer which participates in the Pooling Agreement of the International Group of P&I Clubs, the aggregate of all claims in respect of liability to Passengers and Seamen recoverable from the Association and/or such other insurers shall be limited to US$3 billion (US$3,000,000,000) each ship any one occurrence and liability of the Association shall be limited, provided always that: (1)where claims in respect of liability to Passengers have been limited to US$2 billion (US$2,000,000,000) in accordance with paragraph 2 above to such proportion of the balance of US$1 billion (US$1,000,000,000) as the claims recoverable by such persons in respect of liability to Seamen bears to the aggregate of all such claims otherwise recoverable from the Association and all such insurers; and (2)in all other cases, to such proportion of US$3 billion (US$3,000,000,000) as the claims recoverable by such persons in respect of liability to Passengers and Seamen bears to the aggregate of all such claims otherwise recoverable from the Association and all such insurers. |
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| 4. | For the purpose of this Clause "PASSENGERS AND SEAMEN LIABILITY LIMITATION CLAUSE a "Passenger" shall mean a person carried onboard a vessel under a contract of carriage or who, with the consent of the carrier, is accompanying a vehicle or live animals covered by a contract for the carriage of goods and a "Seaman" shall mean any other person onboard a ship who is not a Passenger. |
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| 5. | Any matters which are not stipulated for in this Special Clause shall be subjected to the Rules of the Association. |
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