Proactively mitigating marine insurance claims challenges (2)

CHUKWUMA ONONIWU

Chukwuma Ononiwu (FCILRM, Nig; FICRMP, U.K.), an alumnus of Abia State University and Lagos Business School Pan Atlantic University, is a consummate insurance broker, seasoned insurance consultant and digital insurance advocate. He can be reached on: riskswisepro@gmail.com and +234-903-596-8732 (text only).

Last week, I wrote on the above topic with particular reference to marine cargo insurance. This week my focus will be on marine hull insurance. 

Marine hull insurance is the insurance of the vessel, its components, its equipment, etc. The classification of vessels is  inclusive but not limited to: sailing vessels, ocean liners, ocean steamers, ocean tankers and risk fleet vessels. Going further, marine hull insurance covers the machinery of the vessel. Thus, it is also rightly titled marine hull and machinery insurance, as it covers the insurance of the hull and the insurance of the machinery of ocean-going vessels and other vessels, inclusive but not limited to barges, tankers and fishing vessels. 

Marine hull insurance is further subdivided into the following: General cargo vessels; dry bulk carrier vessels, liquid bulk carrier vessels, offshore oil vessels, commercial passenger vessels, tourist vessels, etc. 

The pro-active mitigation of marine hull and machinery claims challenges starts prior to the commencement of the insurance cover with the insurance broker, the insurance firm, the insurance firm’s marine risk surveyor and the reinsurance firm having a detailed technical risk assessment meeting to dot the i’s and to cross the t’s.

The critical  pre-requisites for issuance of insurance cover is inclusive but not limited to the type of vessel, the make of construction of the vessel, the details of the builders of the vessel, the age of the vessel, the type of engine propulsion machines in the vessel, the details of the classification/the registration/the certification of the vessel, the seaworthiness of the vessel, the tonnage of the vessel, the dimension of the vessel, the details of the functional fire extinguishers in the vessel, the details of the equipment in the vessel, the details of the components in the vessels, the past voyage timeline of the vessel, the navigation physical hazard of the vessel, the moral hazard of the operators of the vessel, the voyage routes of the vessel, general risk improvement measures on the vessel, and the licence/certification/experience of the professional navigators of the vessel. 

Sequel to the above, there is need for the details of the following: *the professional insurance broker’s risk placement slip; *the professional risks surveyor’s report;  *the certification of the professional builders of the vessel; *adequate reinsurance treaty cover; *adequate co-insurance cover; *the warranty and the guaranty that the vessel will not sail  on a route that is not safe and will divert sail to a route that is safe, if in the course of the voyage, a  peril that will impact on the vessel comes to bear, for instance,  war, conflict, insurrection, anarchy, pirates, bandits, insurgents, etc. 

Summary: Marine hull insurance is the oldest type of insurance. Its fundamental principles are: indemnity, insurable interest, utmost good faith, proximate cause, subrogation and contribution, and loss minimization. Marine insurance generally, is governed by the Marine Insurance Act of 1906.

Very very large ticket international marine risks are  placed at the Lloyd’s of London, by Syndicate Consortium of Lloyd’s: registered, licensed and certified  insurance brokers, insurance companies, co-insurance companies, reinsurance companies and retrocession companies.