| The Board of Directors | |
| noted | that the open policy years have developed according to predictions but that claims over years continue to increase in costs. The current policy year is showing a balanced development through its first six months. |
| decided | that calls have to be levied to reflect the Association’s exposure. A general increase of 10 % shall be levied and the Association shall aim to maintain a 0 % supplementary call for 2005/2006 and preceding open years. |
| instructed | the management to contact each Member individually to discuss renewals for 2005/2006. After levying the mandatory general increase, the new call shall include reinsurance cost and any change thereof as well as the exposure for claims pooled in excess of the Association’s retention. The call shall furthermore reflect the exposure of the Association’s retention as well as an assessment of the Member’s records and risk exposure. |
| The Board decided further to maintain the estimated total call for 2004/2005. | |
| In short: | A 10 % general increase An estimated supplementary call of 0 % A predicted release call of 25 % for 2005/2006 Call to be debited in four instalments |
The Board of Directors decided for the insurance year 2005/2006:
Owner’s Protection & Indemnity
General Increase
The 2005/2006 Estimated Total Call (ETC) shall be increased by 10 % prior to any increase for claims records and/or other adjustments of premium. Any increase in reinsurance cost shall be added to the call. The call shall reflect the contribution to Pool claims in excess of the Association’s retention to the pool of currently USD 6 million.
Premiums
All premiums are debited as advance and supplementary calls. It is anticipated that this policy year will be closed in the year 2008. The Board decided that the premium shall be debited in four instalments: at inception on February 20th, May 20th, August 20th and November 20th. For 2005/2006 the premium will be based on Gross Tons (GT) as per the International Convention on Tonnage Measurements of Ships 1969.
Supplementary Call
The supplementary call for this year will initially be decided upon in 2006. The current estimated supplementary call for 2005/2006 is 0 %.
Release Call
The release call for 2005/2006 is preliminarily set at 25 %. Members should be aware that even if a release call has been paid, the Association retains the right to make overspill calls as per the P&I Rules (Rule 23).
Payment of Premium
Premiums are to be paid in accordance with the enclosed “Procedures for Payment of Premium”.
Renewals
The premium for 2005/2006 will be based on the Member’s record for the five year period 1999-2003, including current year if adverse. Records and claims summaries are now available through the Swedish Club extranet, SCOL. The information is updated overnight.
Limit of Liability
The overall liability of the Association for 2005/2006 is, unless otherwise stated in the Policy or in the P&I Rules, limited to a maximum collection of 2.5 % contribution of each entered vessel based on the International Convention on Limitation of Liability for Maritime Claims 1976, property claims Article 6 paragraph 1(b), in excess of reinsurance jointly placed by the International Group. (See also current P&I Rules, “Appendix”.) The limit of liability for Oil Pollution is USD 1,000,000,000. In respect of WAR P&I the limit is USD 500,000,000 and in respect of war liabilities arising from Bio-Chem etc, the limit is USD 30,000,000.
Lay-up Returns
Members are allowed up to 50 % premium returns for vessels laid up in a safe port for more than 30 consecutive days if the vessel has only watchmen and no cargo onboard. The Association, however, will always retain a minimum premium of USD 0.90 per GT.
Return premium is not granted for vessels less than 500 GT, nor for tugs, barges or passenger ships/ferries in coastal trade.
Claim for lay-up returns should be made to the Association as soon as possible, however, latest 12 months after expiry of the policy year. Sufficient information has to be supplied in order for the Association to calculate the return. A lay-up return application form is enclosed.
Reinsurance
The Association is participating in the International Group of P&I Clubs’ general reinsurance arrangement in excess of USD 50,000,000 and a Group Captive tier of USD 20,000,000 in excess of USD 30,000,000. The net cost for these covers are distributed as follows:
 | Tankers carrying persistent oil as cargo: | USD 0.6385 per GT |
| Tankers carrying non-persistent oil as cargo: | USD 0.3041 per GT | |
| Passenger vessels: | USD 0.7476 per GT | |
| Other dry cargo vessels: | USD 0.2677 per GT |
The Association has elected to cover part of the retention of USD 6,000,000 to protect Members’ exposure.
The reinsurance structure for 2005/2006 is thus:
| Association’s retention | USD 6,000,000 |
| Pool | USD 24,000,000 excess USD 6,000,000 | |
| Group Captive | USD 20,000,000 excess USD 30,000,000 | |
| Group Excess Loss | USD 2 billion excess USD 50,000,000 |
Oil Pollution/United States Oil Pollution Surcharge for Tankers
The oil pollution cover provided by the Association for the Policy year 2005/2006 is as follows:
| Limit of Liability | USD 1,000,000,000 |
| Declarations | Members have to declare all voyages by tankers each quarter in arrears. Forms for declarations will be made available to Members prior to the first declaration. The declarations are to be completed by May 20th 2005, August 20th 2005, November 20th 2005 and February 20th 2006 and returned to the Association. Tankers (including OOs and OBOs) carrying persistent oil any voyage will be regarded as carrying persistent oil for any such quarter. Members are advised to inform the Association immediately if a vessel, declared to the Association as not carrying persistent oil as cargo, is carrying a cargo of persistent oil. Members with OOs and OBOs declared as dry cargo vessels are advised to inform the Association immediately if vessels are carrying oil as cargo whether persistent or non-persistent. |
| Persistent Oil | All hydro-carbon mineral oils other than the non-persistent oils. |
| Non-persistent Oil | Oil which consists of hydro-carbon fractions:
|
| Trading to the United States | Tankers carrying persistent oil as cargo and calling ports or places within the United States and United States Exclusive Economic Zone (EEZ) as defined by OPA 1990 for loading or discharging are subject to additional premium. The United States/U.S. EEZ includes the District of Columbia, Puerto Rico, Guam, American Samoa, U.S. Virgin Islands and Northern Marianas. |
| U.S. Voyage | A U.S. voyage is any cargo voyage involving loading or discharging at any port or place in United States/U.S. EEZ as defined above. One cargo voyage involving loading or discharging at more than one U.S. port or place within U.S./U.S. EEZ shall be regarded as a single voyage. Discharging one cargo at a U.S./U.S. EEZ port or place and loading a new cargo at a U.S./U.S. EEZ port or place constitutes two voyages. |
| Member’s Responsibility | The Member is responsible to report to the Association if any cargo of persistent oil has been loaded, discharged or transhipped in the United States or within the U.S. EEZ. The Member is also responsible to determine whether or not a cargo is persistent. The Association retains its right to ultimately decide whether a cargo is to be considered as persistent. |
Additional Premium U.S.
In respect of tankers carrying persistent oil in bulk as cargo, following additional premiums will apply 2005/2006:
| 1. |
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| 2. | small tankers: Tankers of 1,000 GT or less may opt to pay per voyage as (1) above or a fixed annual premium of USD 2,515 (SBT: USD 2,219). | ||||||
| 3. | parcel tankers: A parcel tanker is a tanker which is constructed or adopted primarily to carry cargoes of noxious liquid substances in bulk and which is capable of carrying at least ten grades of cargoes simultaneously, having been issued with an international certificate of fitness for the carriage of dangerous chemicals in bulk.
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| 4. | SBT-tankers: Tankers equipped with segregated ballast tanks in accordance with the requirements of Regulation 13 of Annex 1 to MARPOL 73/78 will get a 10 per cent differentiation on above additional premiums. Thus, a call to the United States as per (1) above will be USD 0.110/GT, an annual premium as per (2) will be USD 2,219 and (3a) above will be USD 6,640. |
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| | | Non SBT | | SBT | | ||
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| USD and voy | USD and voy | |||||||
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| 1 | 0.126 / GT | 0.110 / GT | ||||||
| Tankers > 1,000 GT | 0.063 / GT | 0.055 / GT | ||||||
| LOOP / Lightering | ||||||||
| ||||||||
| 2 | Tankers 1,000 GT or less | 126 | 111 | |||||
| (or per annum | 2,515 p.a. | 2,219 p.a.) | ||||||
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| 3a | Parcel tankers  5,000 MT of cargo | 376 | 332 | |||||
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| 3b | Parcel tankers 5,001 – 10,000 MT of cargo | 946 | 828 | |||||
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| 3c | Parcel tankers 10,001 MT of cargo or more | 0.126 / GT | 0.110 / GT | |||||
| LOOP / Lightering | 0.063 / GT | 0.055 / GT | ||||||
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Certificates
The Association will assist Members to obtain required certificates. It should however be noted that the Association’s undertakings are always limited to the Civil Liability Convention 1992 (CLC). Please contact us for information and for forms of application.
War Clause
All Swedish flagged vessels are subject to the “The Swedish Club Outbreak of War Clause (P&I)”, (P.9), as enclosed.
U.S. Terrorist Insurance Act of 2002
Reference is made to letter and circular P&I 2413/2002 dated November 22nd 2002 and the cover described under the heading “P&I – War Risks”.
Policy Endorsement
All policies and certificates of entry issued by the Association will include the following endorsement:-
This certificate policy is evidence only of the contract of indemnity insurance between the above named Member(s) and the Association and shall not be construed as evidence of any undertaking, financial or otherwise, on the part of the Association to any other party.
If a Member tenders this certificate as evidence of insurance under any applicable law relating to financial responsibility, or otherwise shows or offers it to any other party as evidence of insurance, such use of this certificate by the Member is not to be taken as any indication that the Association thereby consents to act as guarantor or to be sued directly in any jurisdiction whatsoever. The Association does not so consent.
Certificate of Financial Responsibility (COFR) – U.S. Trading
Members are reminded that trading to the United States requires a COFR in advance. The Association does not issue such certificates. A COFR may be obtained through specialised institutes issuing such certificates. The Association will provide necessary documents to such approved institutes as may be required for obtaining a COFR
P&I Rule changes and additions valid from February 20th 2005
Rule 4 (section 5): Additional section – Paperless trading
Unless the Association otherwise decides there shall be no recovery from the Association in respect of liabilities, costs or expenses whatsoever or howsoever arising, whether directly or indirectly, out of or in consequence of:
- the Member’s participation in or use of any system or contractual arrangement the predominant purpose of which is to replace paper-based documentation in shipping and/or international trade with electronic messages, including, without limitation, the Bolero system (any such system or arrangement being referred to in this Rule as a “paperless system”), or
- a document which is created or transmitted under a paperless system which document contains or evidences a contract of carriage, or
- the carriage of goods pursuant to such a contract of carriage, save to the extent that the Association in its sole discretion may determine that such liabilities, costs or expenses would have arisen and would have been covered by the Association if the Member had not participated in or used a paperless system and any contract of carriage had been contained in or evidenced by a paper document.
Rule 6: Additional paragraph – Pollution liabilities – STOPIA
A member insured in respect of a ship which is a “Relevant Ship” as defined in the “Small Tanker Oil Pollution Indemnification Agreement” (STOPIA) shall, by virtue of entry with the Association, and unless the Association otherwise agrees in writing, become a party to STOPIA for the period of entry of that ship in the Association. In the event that the Member exercises his rights under STOPIA to withdraw from that agreement, and unless the Association has agreed in writing, there shall be no cover under Rule 6 in respect of such ship so long as the member is not a party to STOPIA.
Rule 7 section 6 sub-section 3: Additional paragraph – MARPOL violations
Irrespective of points 1 and 2 above, the Association shall have no liability in respect of fines for
……………
(vi) infringement of MARPOL regulations where the ship’s oily water separator or similar pollution prevention device has been bypassed or rendered inoperable.
Rule 10 section 1 sub-section 3: Additional provision – ISPS Code
2. With regard to statutory requirements:
The Member must comply with the flag State’s or other competent authorities’ requirements relating to the entered ship’s design, construction, adaptation, fitment, condition, equipment, manning, safe operation, management and maritime security. Valid certificates covering such requirements, including ISM Code certificates and ISPS Code certificates, must at all times be maintained. If the Member fails to fulfill his obligations under this point the Association may reject to compensate liabilities, costs or expenses caused by such failure.
Rule 22: Clarification and addition in respect of additional premiums
Clarification:
During or after the end of a policy year which has not been declared closed, the Association may levy one or more additional premiums to be paid by each member in respect of ships entered for that policy year. Such additional premiums shall be calculated pro rata on the net premium debited for the policy year.
Addition:
The Association may decide in its sole discretion that any premium, whether paid in advance or charged as an additional premium or otherwise, shall be used for transfers to any reserves or provisions including reserves or provisions in respect of any deficiency which has occurred or which may be thought likely to occur in respect of any closed policy year.
Old Years
The current position on the old years is as follows:
| Year | Status | Estimated Additional Call | Release Call |
| 2001/2002 and earlier | Closed | – | – |
| 2002/2003 | Open | 0 % | 25 % |
| 2003/2004 | Open | 0 % | 25 % |
| 2004/2005 | Open | 0 % | 25 % |
| 2005/2006 | Open | 0 % | est 25 % |
P&I – Excess War Risks Cover
U.S. Terrorism Risk Insurance Act of 2002 (“TRIA”), Special War Risk P&I Cover for Owner’s and Charterer’s under the Group cover.
All Members entered for P&I, or Charterers’ entries under the Group Cover, are automatically covered for P&I War Risks, including acts of terrorism as defined in the U.S. Terrorism Risk Insurance Act of 2002 (“TRIA”). This cover, subject to the definitions in TRIA and acts of terrorism defined by TRIA, will be partly reimbursed by the United States under a formula established by federal law. Under this formula, the United States will pay 90 per cent of covered losses exceeding a statutorily established deductible to be paid by the insurer providing coverage. The proportion of the premium attributable to coverage for certified acts of terrorism as defined in TRIA is identified under “Premium” below. The War Risk cover is subject to the following conditions:
| Reinsurance: | This contract is a reinsurance of the Association. |
| Conditions: | This policy is to pay claims for P&I risks as defined in the Rules of the Swedish Club, for which cover is excluded from vessel’s entry by reason of the War Exclusion clause contained therein, Rule 11 section 5, but including the following clauses: Notice of Cancellation, Automatic Termination of Cover and War and Nuclear Exclusion Clause – Hulls, etc. (W.1.2.P) Chemical, Bio-Chemical, Electromagnetic Weapons and Computer Virus Exclusion Clause. Clause No. 2249 (GPI) Cover may be terminated by the Association giving seven days notice. |
| Trading: | Worldwide but liberty to cancel giving seven days notice. |
| Deductible: | USD 50,000 any one accident each vessel. |
| Limit: | Special Limit for Owners Where the Member and another party or other parties interested in the operation of the ship are insured under more than one owner’s and/or charterer’s entry with the Association or with the Association and any other association(s) which participates in the Pooling Agreement and the General Excess Loss Reinsurance Contract, the aggregate of claims brought against the Association and such other association(s) in respect of losses, liabilities, costs and expenses covered under this special war risk P&I cover for owners and/or charterers, shall be limited to USD 400 million any one incident or occurrence each vessel. If such claims exceed this limit, the liability of the Association in respect of each certificate of entry shall be limited to that proportion of that limit that claims recoverable from the Association under that certificate of entry bear to the aggregate of the said claims recoverable from the Association and from such other association(s), if any. Special limit for charterers As far as charterer’s entries reinsured under the Pooling Agreement and the Group’s Excess Loss Reinsurance Contract are concerned, the special war risks P&I cover functions as a primary cover. The limit is USD 400 million each incident or occurrence each vessel, provided always that where a ship is separately insured under more than one charterer’s and/or owner’s entry with the Association or with the Association and any other association(s) which participates in the Pooling Agreement and the General Excess Loss Reinsurance Contract, the aggregate of claims brought against the Association and such other association(s) in respect of losses, liabilities, costs and expenses covered under this special war risk P&I cover for charterers and/or owners, shall be limited to USD 500 million any one incident or occurrence each vessel. If such claims exceed this limit, the liability of the Association in respect of each certificate of entry shall be limited to that proportion of that limit that claims recoverable from the Association under that certificate of entry bear to the aggregate of the said claims recoverable from the Association and from such other association(s), if any. |
| Excess: | This policy to pay claims only in excess of amount recoverable under vessels’ Hull and Machinery and Crew Marine or War Risks policies, and any P&I inclusion clauses attached thereto and any other War Risk Cover arranged by the Member. Such a War Risk Policy shall cover the vessel’s proper value for hull and include a separate cover for liability up to the same amount or maximum USD 100,000,000. |
Following document was issued last year as an explanation to the excess point for P&I War Risks:
Quote
The Excess Point
The wording of the excess point for the International Group of P&I Clubs’ reinsurance contracts has been changed from policy year 2003/04 and now reads as follows:-
“This policy to pay claims excess of amounts recoverable under vessels’ or crew war risks P&I policies subject to a minimum excess of the proper value of the entered ship or USD 100,000,000 whichever is the less (applicable to owners’ entries and not to charterers’ entries), and further subject to a minimum excess of USD 50,000 any one event.”
Once again the brokers and reinsuring underwriters are concerned that the intent of this clause should be clearly understood and, following discussions with the International Group, the brokers have issued the following clarification with the approval of reinsuring underwriters:-
| “It is therefore our understanding that in respect of Owners’ entries this policy will respond excess of underlying insurances with a limit of at least the proper value of a vessel. In the event that a vessel is not so insured, this policy will respond as if an underlying policy with a limit up to the proper value were in place, except that for a vessel with a proper value of more than USD 100m, the deemed underlying excess shall be USD 100m. Further we understand that this policy will be in excess of all other policies placed by owners for vessels’ or crew war risks P&I. We do not believe that corporate general liability umbrellas placed on behalf of organisations of which shipping forms a part are underlying policies hereon (even if they might include some war and terrorism cover). We believe reinsurers understand that Club boards may exercise their discretion as to what constitutes the proper value of an entered vessel, but the payment of claims under this policy remains subject to the criteria above and the Claims Co-operation Clause.” |
Members should note that they are deemed to have underlying cover with conditions equivalent to the cover above (“P&I – War Risks) equal to at least the hull value of the ship. Furthermore this cover is excess of any cover which the Member has actually taken out which covers the risk, unless the cover is a corporate general liability umbrella cover. A corporate general liability umbrella cover is difficult to define and it is important that any Member who considers that he has such a cover should inform the Association so that the position can be clarified.
Members are recommended to seek similar clarifications to those set out above from the underwriters of their underlying War Risks cover.
Unquote
The following clause is deemed incorporated in the P&I – EXCESS WAR RISKS COVER:
CHEMICAL, BIOLOGICAL, BIO-CHEMICAL, ELECTROMAGNETIC WEAPONS AND COMPUTER VIRUS EXCLUSION CLAUSE
(Clause No. 2249 (GPI))
This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith
- In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by or contributed to by or arising from
1.1 any chemical, biological, bio-chemical or electromagnetic weapon.
1.2 the use or operation, as a means for inflicting harm, of any computer virus.
P&I Bio-Chem Cover
Subject to the terms and conditions and exclusions set out herein, cover is extended to include the liability of the Member:
| (a) | to pay damages, compensation or expenses in consequence of the personal injury to or illness or death of any seaman (including diversion expenses, repatriation and substitute expense and shipwreck unemployment indemnity), |
| (b) | for the legal costs and expenses incurred solely for the purpose of avoiding or minimising any liability or risk insured by an Association (other than under the Omnibus Rule) |
where such liability would be recoverable under either
| (a) | cover provided by the Club for such liabilities, costs, losses and expenses as would be covered under the Rules but for the exclusion of war risks in Rule 11:5, or |
| (b) | any other policy of insurance providing equivalent cover, |
save only for the operation of an exclusion of liabilities, costs, losses and expenses directly or indirectly caused by or contributed to by or arising from
| (a) | any chemical, biological, biochemical or electromagnetic weapon |
| (b) | the use or operation, as a means for inflicting harm, of any computer, computer system, computer software programme, malicious code, computer virus or process or any other electronic system, |
other than liabilities, costs, losses and expenses arising from
| (i) | explosives or the methods of the detonation or attachment thereof |
| (ii) | the use of the entered ship or its cargo as a means for inflicting harm, unless such cargo is a chemical or bio-chemical weapon | |
| (iii) | the use of any computer, computer system or computer software programme or any other electronic system in the launch and/or guidance system and/or firing mechanism of any weapon or missile. |
Excluded Areas
| At any time or times before, or at the commencement of, or during the Policy Year, the Club may by notice to the Member change, vary, extend, add to or otherwise alter the ports, places, countries, zones and periods specified in Clause 2.1 from a date and time specified by the Club not being less than 24 hours from midnight on the day the notice is given to the Member. |
Cancellation
| Cover hereunder may by notice to the Member be cancelled by the Club from a date and time specified by the Club, not being less than 24 hours from midnight on the day notice of cancellation is given to the Member. |
Limit of Liability
| Subject to Clause 4.2 the limit of the liability of the Club under this extension of cover in respect of all claims shall be in the aggregate USD 30 million each ship any one accident or occurrence or series thereof arising from any one event. In the event that there is more than one entry by any person for Bio-Chem cover as provided herein in respect of the same ship with the Club and/or any other insurer which participates in the Pooling Agreement or General Excess Loss Reinsurance Contract, the aggregate recovery in respect of all liabilities, costs, losses and expenses arising under such entries shall not exceed the amount stipulated in Clause 4.1 and the liability of the Club under each such entry shall be limited to such proportion of that amount as the claims arising under that entry bear to the aggregate of all such claims recoverable from the Club and any such other insurer. |
Deductible
| The deductible shall be USD 50,000. |
Law and Practice
| This clause is subject to English law and practice. |
Charterers’ Limited Liability Cover
For 2005/2006 the Association also offers a limited cover for Charterers including Charterers Liability to Hull. The overall limit is limited but may be arranged up to USD 500,000,000 any claim or occurrence. For further details, please contact each Team respectively.
Additional Covers
P&I – Deviation cover
The Association has a general cover for deviation in favour of the Members.
| Cover: | The cover includes those deviations not covered by the ordinary P&I Rules, such as ordered deviations by the Shipowner. Such deviations shall be reported to the Association and the Association will determine the additional premium depending on the circumstances. The cover may be extended to include Ad Valorem Cargo and Specie and other Valuable Cargo. It may, furthermore, include Feeder/Lightering, Transshipment/Storage, Drydocking with cargo on board. In respect of War, cover in excluded areas subject to agreement. |
| Information: | When advising the Association, include amount and value of cargo under B/Ls exposed. |
| Limit: | Value of cargo exposed, however, not exceeding USD 50,000,000 any one accident each vessel. |
| Declarations: | All voyages shall be declared stipulating the type of cargo and the value of the cargo exposed. |
The following additional covers are arranged by the Association for 2005/2006. Members requiring these covers shall contact each Team respectively.
| AD VALOREM – Declared cargo value in Bill of Lading Additional Cover for Oil Pollution Bunkers Charterers’ Liability to Hull Deviation Insurance Insurance of Deck Cargo shipped against under-deck B/L Shipowners’ Liability to Cargo at Warehouses and/or Wharves Time-Charterers’ Liability Excess Protection & Indemnity Risks Tour Operators Liability Cover |
In this circular we have dealt with our general terms. As always, we are prepared to tailor make the insurance cover to suit the special needs of any Member.
Yours sincerely,
The Swedish Club
Frans Malmros