5 minute read
Dispute mitigation
Jacques Yves Cousteau
We are fortunate to work in a business where no two days are the same. It is known for its drive for innovation – be it technology, operations, the use of data, education – underpinned by a thriving multi-disciplinary industry of shipowners, charterers, builders, crew, insurers, lawyers, salvors, banks, surveyors, adjusters…the list goes on.
All rely on an industry that is responsible for the transportation of 90% of world trade.
There is no doubt that shipping and marine insurance are changing. The regulatory aspects of the business are becoming more onerous.
We have seen the development and implementation of a raft of policies over the past few years including the Insurance Act 2015, the Maritime Labour Convention, IMO 2020, international sanctions and more. Now we are looking forward to the IMO’s GHG (greenhouse gas) strategy, not to mention the impact of the global pandemic.
These have all affected the way our industry does business and impacted finances. They have probably made things harder, but, also spurred innovation.
INNOVATION SPARK
The legal and claims team at C Solutions enjoys a varied workload, from advising on charterparty wordings and disputes, to investigating and managing the legal and insurance aspects of maritime casualties, pursuing recoveries to defending cargo or insurance claims; we act as TPAs for Lloyd’s and other insurers, offer innovative products to the market through our joint venture company Qwest Maritime – forensic investigation, asset tracing, financial due diligence, receivables financing to name but a few. What we know from these roles over the years is there will always be a new problem to solve – something we have not seen before – even for the grey haired amongst us!”
So, what have we learned from the recent unprecedented period of change?
The Insurance Act 2015 sought to achieve a fair balance between assureds and insurers and mitigate the risks of disputes. But, disputes inevitably occur.
For example, we regularly deal with disputes relating to the duty of fair presentation.
Under this obligation, the insured must ensure fair presentation of a risk to the insurer before the contract of insurance is entered into. They must inform the insurer of every circumstance relevant to the risk that the insured is aware of, or ought to be aware of. This provides sufficient information to put a prudent insurer on notice that it needs to make further enquiries if necessary.
Absent such further enquiries, the insured is not required to disclose a circumstance if the insurer knows it, ought to know it or is presumed to know it, or if it is something as to which the insurer waives information.
So far so good. This part of the act is intended to ensure fairness for all parties and provides an opportunity for the insurer to conduct further enquiries if it deems them necessary.
All in the same boat
Chris Telford, Claims Director at C Solutions, argues for collaboration, transparency and partnership to avoid dispute in an increasingly complex and challenging maritime world
MODIFICATION QUANDRY
But what happens when owners modify a vessel post-inception and those modifications lead to a claim under the policy?
One might expect that an insured would inform their insurer about such modifications. But, in English law the duty of fair presentation applies before an insurance contract is entered into.
With that in mind, and to mitigate the risk of disputes, thought might be given to how a policy should deal with such issues post-inception. Has sufficient research into the risk been conducted and has the information been presented clearly and in a fair manner prior to inception?
Coverage issues relating to policy warranties also cross the desk from time to time.
A vessel was insured for H&M and everything connected therewith, Total Loss Only and the policy contained the express warranty “Warranted Class and Class Maintained”. It was reinsured into Lloyd’s and the reinsurance policy contained no express warranties. This means there was no
Crew welfare is at the forefront of many minds, and rightly so. The International Chamber of Shipping estimates the worldwide population of seafarers serving on internationally trading merchant ships to be 1,647,500.
class warranty.
Information provided to insurers included a schedule of all insured vessels under the policy. In respect of the subject vessel, the column in the schedule headed “Class” was blank, as the vessel was not required to be classed in accordance with local law and regulations.
The vessel sank, was incapable of salvage and owners claimed for a total loss. The reinsurers declined the claim citing breach of the class warranty in the insurance policy. Arguments centred on whether the warranty applied to a vessel that could not, in effect, be classed and disputes ensued.
CLARITY OF PRESENTATION
What we hope this scenario demonstrates is that clarity when presenting and writing the risk, considering back-to-back terms and conducting a thorough review of the vessels and policy warranties, are vital considerations.
The key is for all parties to work together to mitigate risk of dispute.
Crew welfare is at the forefront of many minds, and rightly so. The International Chamber of Shipping estimates the worldwide population of seafarers serving on internationally trading merchant ships to be 1,647,500. They perform a remarkable role and it is no hyperbole to say that the world relies on them.
We become involved with crew and witnesses when we are instructed to investigate and manage marine casualties for owners and their insurers. These can be shocking incidents and have led us, in conjunction with our partners Recall Recover and Qwest Maritime, to develop Trauma-Informed Interviewing in a Marine Setting, or TIMS.
It’s a broadened approach that combines established investigative interviewing techniques with expertise in human psychological response to such incidents, to actively support the wellbeing of crew as part of the interview process.
It involves a TIMS investigator backed by a clinical psychologist to provide support, guidance and a pathway of on-going, structured psychological support where required. This supports the crew member, shipowner and insurer with best practice support from experienced experts in the field. All in the same boat.
For more information visit www.csolutionslimited.com
tion with our partners Recall Recover and Qwest
Maritime, to develop Trauma-Informed Interviewing
in a Marine Setting, or TIMS.”
Chris Telford, C Solutions
