Launch Seminar and Nordic Plan Amendments Overview

Launch seminar Thursday 8 October 2015

Nordic Plan 2013 Version 2016 Trine-Lise Wilhelmsen Hans Jacob Bull Kaja de Vibe Malling

The work in the Standing Revision Committee (SRC) Starting point: NP 2013 based on NMIP 2010 Nordic Plan Agreement No. 3 Composition of SRC: Nordic SAs, Cefor, Nordic average adjusters Chair and secretary NIFS No. 4: Revision every three years SRC working from June 2014 to August 2015 with Revision of clauses/commentary Revision of commentary Deleting history in commentary

Overview of the amendments Concepts: policy = insurance contract Cl. 1-1; definitions Cl. 1-1/1-3; new rules on broker Cl. 2-2/2-3; assessed insurable value Sanctions (2-17) Chapter 3, in particular safety regulation Ch. 5 Due date/subrogation

Overview of the amendments Chapter 7 and 8 (co insurance) Hull ins. (10-12) average adjuster group Ch. 15 several, mostly editorial Ch. 16 - simultaneous repairs Ch. 18 - substantial amendments by separate group Ch. 19 several

Concepts; insurance contract Policy replaced with insurance contract Cl. 1-2 : policy upheld as the written confirmation of the insurance contract. But distinguished from insurance contract = individual agreement (policy and conditions) The point to avoid using the policy on the contract because formal policy often replaced with data processed insurance confirmation

The policy vs. The insurance contract

Concepts; broker Cl. 1-1 (d); broker = entity instructed by the person effecting the insurance to act as intermediary Cl. 1-3: Broker authority to act on behalf of person effecting insurance receive return of premium/settlements of claim But not to receive premium on behalf of the insurer

The broker is representing the person effecting insurance, not the insurer NHC DNK TSC GARD CODAN Etc.

Concepts; agreed insurable value Cl. 2-2/Cl. 2-3 Assessed replaced with agreed The parties may agree as before The sum insured deemed to constitute agreed insurable value Taken from Ch. 18 For the purpose of clarity

Cl. 2-17 Sanction Limitation and Exclusion clause No insurer shall be deemed to provide cover and no insurer shall be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit may expose that insurer or his reinsurers to any sanction whether primary or secondary, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, the United Kingdom, the United States of America, France, the Russian Federation, the People s Republic of China or any State where the insurer or his reinsurers have their registered office or permanent place of business. In the event of the subject-matter insured having been engaged or engaging in any activity whatsoever that may expose the insurer or his reinsurers to any sanction whether primary or secondary, prohibition, restriction, law or regulation as described in sub-clause 1 above, the insurer shall be entitled to terminate the insurance by giving 14 days notice. Termination also applies to the rights of the mortgagee, but the insurer shall immediately notify the mortgagee of the termination.

Countries that introduced sanctions against Russia

Ch. 3; Cl. 3-15 (2) The insurer may stipulate safety regulations (3) Claims arising out of ice damage due to failure to exercise due care further reduction in liability (4) Held covered in conditional areas if notified

Ch. 3; Safety regulation, the Plan Cl. 3-22 last sub-clause deleted Cl. 3-22 new sub-clause instead of 12-5(f): When establishing the Safety Management System that is necessary to fulfil the assureds obligation to comply with the International Safety Management Code as adopted by IMO, the assured shall ensure that the system includes instructions and procedures for the use and monitoring of lubricating oil, cooling water and boiler feed water. Cl. 3-25, sub-clause 2 shall not be applied.

Ch. 3; Safety regulation, the Commentary Modernized and rewritten The issues: Specific duties vs. functional requirements The ISM code addressed in more detail: Status as a safety regulation; the Code per se, and not the individual instruction or procedure Causation if failure to supervise the system leads to repeated breaches of f.ex. look out procedures Burden of proof Negligence measured against breach of the Code

Ch. 3; Safety regulation, the Commentary; issues Safety regulation stipulated in the insurance contract The policy or also regulations in the Plan?

Panel: Safety Regulations - Marthe Romskoug (Wilhelmsen Insurance Services) - Nicolas Wilmot (Gard) - Hogne Nesse (H egh Autoliners) - Frode Berg (Willis) Moderator: Hans Jacob Bull

Chapter 5 Settlement of claims - Amendments

Cl. 5-6. Due date The time limit is amended from six to four weeks Compensation is payable four weeks after the date when the claim adjustment is or should have been issued.

The Commentary to Cl. 5-13, sub-clause 2 Cl. 5-13 regulates the right of subrogation of the insurer to claims by the assured for damages against third parties. Sub-clause 2 regulates the situation where the insurer is only partly liable for the loss.

The Commentary to Cl. 5-13, sub-clause 2 New comments and examples (guidelines) in the Commentary to sub-clause 2 regarding allocation of common deductibles between liability and damage, and apportionment of recoveries in this respect

Ch. 7 Co-insurance of mortgagees Ch. 8 Co-insurance of third parties Overview Ch. 8 The Plan: All clauses have been reorganized and rewritten. Few material changes Ch. 8 The Commentary: Completely rewritten Ch. 7 The Plan: No alterations in the clauses Ch. 7 The Commentary: Partly rewritten.

Cl. 8-1 Rights of third parties against the insurer Main elements as before No automatic co-insurance explicitly effected The third party does not have to be explicitly named The insurance covers the third party s interest New formal elements within the scope and overall limits of the insurance Some elements have been moved/deleted Identification rules moved to Cl. 8-3 sub-clause 3 Handling of claims, etc. moved to Cl. 8-5 Previous protection against the insurer s set-off deleted

Cl. 8-2 Protection of third parties against subrogation claims from the insurer The Clause is new Spells out when the insurer has a right of subrogation against a co-insured third party Main rule: no right of subrogation Exception 1: Specified in the insurance contract Exception 2: The co-insured has undertaken an express contractual obligation to remain liable for losses covered by the insurance

Cl. 8-3 Application of the rules in Chapter 3 and Cl. 5-1 The Clause is partly new Sub-clause 1: Corresponds to the previous Cl. 8-2 sub-clause 1 (the co-insured s duty of disclosure) Sub-clause 2: No formal parallell in previous Plan (the co-insured s duty of care) But: No material change Sub-clause 3: Corresponds to the previous Cl. 8-1 sub-clause 1 in fine (identification) The previous Cl. 8-2 sub-clause 2 is not repeated as being unpractical ole cl. 8-2

Cl. 8-4 Amendments and cancellation of the insurance contract Cl. 8-5 Handling of claims, claims adjustments, etc. Cl. 8-4: Corresponds fully with the previous Cl. 8-3 Cl. 8-5: Corresponds fully with the previous Cl. 8-1 sub-clause 2 (first alternative, reference to Cl. 7-3, sub-clause 1)

Cl. 8-6 Cl. 8-7 Other insurance Independent co-insurance of mortgagees and named third parties Cl. 8-6: The Clause is new The insurance is subsidiary to another insurance taken out by the co-insured third party Cl. 8-7: The Clause corresponds to the previous Cl. 8-4 Applies both to mortgagees and other third parties; expressly said in the heading of the clause Needs an explicit agreement to be activated The co-insured party has to be explicitly named No identification with others But: unpaid premium

Ch. 8 Commentary The Commentary has been completely rewritten A new general introduction Explains the concept the assured Explains the relationship between the two Chapters 7 and 8 on co-insurance Explains the different interests a third party may wish to cover through co-insurance Modernized and more helpful comments to all the clauses in Ch. 8 All historic material and comparisons with Nordic ICAs have been deleted

Chapter 7 Co-insurance of mortgagees The Plan The Commentary The Plan No amendments made to the text itself The Commentary The general introduction to the chapter has been rewritten, and contains references to the Commentary to Ch. 8 The Commentary to the separate clauses has been carefully modernized All references to historic material and to the Nordic ICAs have been deleted

Panel: Co-insurance of third parties - rjan Karlsson (Stena Rederi) - Marthe Romskoug (Wilhelmsen Insurance Services) - Roar Sanden (Norwegian Hull Club) Moderator: Hans Jacob Bull

Ch. 10 General rules relating to the scope of the hull insurance Cl. 10-1, sub-clause 2, letter (a) The word supplies has been replaced by provisions : The insurance does not cover: (a) provisions, engine and deck accessories and other articles intended for consumption,

Ch. 12 Damage Text and Commentary: (Cl. 12-5 letter (f) is deleted) Cl. 12-14. Apportionment of common expenses Cl. 12-15. Ice damage deductions Commentary: Cl. 12-1. Main rule concerning liability of the insurer

Cl. 12-14. Apportionment of common expenses Text: second sentence is amended The words common expenses which depend on the length of the period of the repairs is replaced with dry dock charges and quay rental each category

Cl. 12-14. Apportionment of common expenses The Commentary is largely rewritten, in order to reflect current adjusting practice Relevant categories of work The basis on which the common repair expenses shall be apportioned Examples of common repair expenses to be apportioned on a cost basis and expenses to be apportioned on a time required basis Examples of excluded expenses

Cl. 12-15. Ice damage deductions A new second sentence emphasizing that the ice damage deduction comes in addition to the general deductible under Cl. 12-18, sub- clause 1, is added: Damage due to striking against or contact with ice - excluding collision with icebergs on the open sea - is recoverable subject to a deduction stated in the insurance contract. To this shall be added the deductible referred to in Cl. 12-18, sub-clause 1.

Cl. 12-1. Main rule concerning liability of the insurer New paragraphs in the Commentary regarding electricity consumption as a common repair expense - Any extra electric power actually consumed due to repair work being effected = allowed as a common repair expense as per Cl. 12-1 - The assured has the burden of proving the extent of loss, cf. Cl. 2-12, sub-clause 1 - Practice

Panel: Chapter 10-12 amendments - Sveinung M kestad (Gard) - Bj rn Slaatten (Average Adjuster) - Hogne Nesse (H egh Autoliners) Moderator: Hans Jacob Bull

Ch. 15, 16 and 19 amendments

Ch. 15 War risks insurance Several amendments (mostly editorial): Cl. 15-1. Perils covered (sub-clause 2) Cl. 15-3. Sum insured (sub-clause 2 letter (b)) Cl. 15-4. Safety regulations (sub-clause 2) Cl. 15-5. War between major powers Cl. 15-7. Bareboat chartering Cl. 15-8. Cancellation Cl. 15-22. Limitations to the cover The Commentary

Cl. 15-8. Cancellation Sub-clause 1 first sentence is amended by adding the words in brackets to clarify when the cancellation takes effect In the event of a change of risk, the person effecting the insurance as well as the insurer is entitled to cancel the insurance by giving seven days notice (such cancellation becoming effective on the expiry of 7 days from midnight of the day on which notice of cancellation is issued by or to the insurer). ( )

Cl. 15-8. Cancellation Sub-clause 2 is rewritten: The insurer will endeavour, to the extent practically and commercially possible, to submit a proposal for continuation of the insurance at the best available terms in the changed circumstances.

Ch. 16 Loss-of-hire insurance Cl. 16-12. Simultaneous repairs Text and Commentary First sentence is editorially amended A new last sentence in sub-clause 4 Clarify that the insurer s liability in any event is limited to what would be payable in case the category of work for which he is liable had been carried out separately.

Cl. 16-12, sub-clause 4, last sentence However, the insurer s liability shall not exceed the amount that would have been payable if the category of work for which he is liable had been carried out separately.

Ch. 16 Loss-of-hire insurance Cl. 16-6 and Cl. 16-14 sub-clause 2 assessed is replaced with agreed , ref. clauses 2-2 and 2-3

Ch. 19 Buildersrisks insurance Several amendments in the text, some of them are merely editorial

Cl. 19-2A. Premium in the event of a total loss New Clause Corresponds to Cl. 18-83 If the insurer compensates for total loss pursuant to Cl. 19-13, sub-clause 1, or pays the sum insured pursuant to Cl. 4-21, he is entitled to the entire agreed premium. If the insurer compensates for total loss pursuant to Clause 19-13, sub-clause 2, he is only entitled to the proportion of the entire agreed premium that corresponds to the ratio between the compensation paid and the sum insured.

Cl. 19-14. Damage/Ref. Chapter 12 A new last sentence is added in order to bring the text in line with the Commentary If the subject-matter insured or components etc. have been damaged without Cl. 19-11 or Cl. 19-12 being applicable, the rules in Chapter 12 shall apply, with the exception of Cl. 12-3, Cl. 12- 4, Cl. 12-5 (d), (e) and (f), Cl. 12-6 and Cl. 12-15 to Cl. 12-18. Cl. 12-3 shall apply to rebuilding/conversion of the subject-matter insured.

Cl. 19-21. Limitations on the liability insurance The Clause is amended to be verbatim the same as Cl. 18-98, sub-clauses 5 and 6 The words contractor or sub-contractor is added in sub-clause 1 letters (a), (b) and (d) Editorial amendments

Editorial amendments in Ch. 19 Cl. 19-8. Deductible The words any one is replaced with each Cl. 19-16. Compensation for unrepaired damage The reference is changed from Cl.19-3 to Cl. 19-2 Cl. 19-17. Costs incurred in order to save time A new letter (c) is inserted

Nordic Marine Nordic Marine Insurance Plan Insurance Plan Version 2016 amendments Chapter 18