Standard Club: Renewal 2019/20 Policy Year
Please find below an update to members on various renewal matters:
1. Changes to the P&I, Offshore, Defence, War Risks and London class rules
The changes set out in our circular dated 21 December 2018 were approved at the meetings of members held on 29 January 2019.
2. Limits of cover for the 2019/20 policy year
The proposed cover limits are the same as the current policy year, and are set out below:
• Oil pollution claims will continue to be limited to $1bn any one event, subject to the usual International Group non-aggregation wording.
• Crew and passenger claims will be limited to $3bn in the aggregate any one event, with passenger claims being sub-limited to $2bn, subject to the full limitation wording.
• All other claims will be limited as defined in the overspill claim rules.
A number of members have enquired whether excess oil pollution cover is likely to be available for 2019/20 policy year. It is anticipated that oil pollution cover excess of US$1bn will be available to poolable members to purchase for 2019/20 and they should contact their broker or usual club contact if interested. If arranged by the club, it will certify the cover only as agents on behalf of underwriters.
Cover in respect of charterers’ entries, cover for charterers named as joint entrants and coassureds, and cover for members’ liabilities arising under consortium arrangements, is subject to a limit of $350m for P&I risks unless otherwise stated in the certificate of entry.
Charterers’ P&I cover is provided pursuant to reinsurance placed separately from the International Group Pool. This reinsurance can accept risks with a combined single limit (P&I and Damage to Hull) of up to $1bn subject to agreement.
The cover for charterers can include, if agreed by the managers and against an additional premium, cover for liabilities of the charterer in his capacity as owner of the cargo.
For additional covers, such as fixed premium P&I, P&I war risks, offshore and specialist risks, contractual covers, K&R, professional liability, traders etc., limits are as specifically agreed and are dependent on cover under the non-poolable reinsurance programme (currently not exceeding $1bn) or other specific reinsurances. These are specific to the member concerned and set out in each certificate of entry.
3. War risks
Cover for excess war and terrorism risks in respect of standard P&I cover continues, as before, with a limit of $500m. Cover for war and terrorism risks in respect of additional covers continues to be limited to the amounts specifically agreed by the club and set out in the certificate of entry, or $100m, whichever is the lesser. Cover for bio-chem risks for owners continues to be limited to $30m.
4. US terrorism risks
The board has resolved that cover for acts of terrorism as defined in the US Terrorism Risk Insurance Program Reauthorization Act 2015 will be made available for the forthcoming policy year (the TRIRA resolution). The Act applies to very few ships entered in the club but, for those that are eligible, a premium of US cents 0.25 per gt will be deemed attributable to these risks and will be included within the overall premium. Under the terms of the Act, the US Government pays a proportion of covered terrorism losses exceeding the statutory established deductible paid by the insurance company providing the cover.
The Act, as amended, also imposes a program trigger on the Government’s compensation, ie insurers cannot have the benefit of the Government’s compensation unless the aggregate industry insured losses from a certified act of terrorism exceed a certain insured loss or ‘trigger’ amount (currently $180m). In addition, if the aggregate insured losses exceed $100bn during any program year, the Government shall not make any payment for any portion of the amount of such losses that exceed $100bn and no insurer that has met its insurer deductible shall be liable for the payment of any portion of that amount that exceeds $100bn.
5. Blue cards
The club will provide blue cards in respect of CLC, Bunkers and Wreck Removal Conventions and the EU Passenger Liability Regulation for ships entered in the club for the forthcoming policy year. Blue cards will also be issued prior to agreement of renewal terms provided the member gives a written undertaking to the club that they will renew with the club or another International Group P&I club.
6. MLC Certification
The club can provide MLC certificates of financial security in respect of outstanding wages and repatriation of seafarers together with incidental costs and expenses in accordance with MLC Regulation 2.5, Standard A2.5.2 and Guideline B2.5, and compensation for death or long-term disability in accordance with Regulation 4.2, Standard A4.2.1 and Guideline B4.2. Upon completion of the relevant application form, the club is able to provide MLC certificates of financial security on the basis set out in the MLC Extension Clause. This provides that the club will pay claims advanced by seafarers which fall within the scope of the Regulations and Standards specified in the MLC Certificates of financial security. The clause also provides that where such payments fall outside the scope of standard cover, members will be obliged to reimburse the club. In such circumstances, all members and joint entrants are reminded that they are jointly and severally liable to reimburse the club for any MLC liabilities falling outside standard P&I cover.
Where the P&I policy excludes crew risks, the insurers who provide owners with P&I cover for crew risks should provide the MLC certificates of financial security. However, in certain circumstances, the club may still issue the certificates upon receipt of a club approved indemnity.
7. Calls and releases
The board reviewed the club’s financial position at its meeting on 29 January 2019. No supplementary calls are expected to be necessary for any open policy year for any of the P&I, Defence, London or War classes.
For the P&I and Defence classes, release call margins were confirmed at 0% for the 2016/17 and 2017/18 policy year and 6% for the 2018/19 policy year, with provisional release calls for the 2019/20 policy year set at 6%. The 2016/17 policy year is expected to be closed in May 2019.
The London and War class release call margins were confirmed at 0% of ETP for all open policy years, with the provisional release call for 2019/20 also set at 0%.
8. Outstanding premiums
Members are reminded that all renewals are subject to there being no outstanding sums owing to the club at 20 February 2019. In the event that any sums are outstanding, cover will be suspended from 20 February, without further notice, until such sums are paid. Members are also reminded that when they appoint a broker, the broker is the member’s agent.
Accordingly, payment of premium to the broker does not constitute payment to the club and it remains the member’s responsibility to ensure that premium is paid to the club.
All insured parties are deemed to have confirmed that they accept to be bound by all of the club rules including, but not limited to, the rules relating to supplementary calls, release calls, overspill calls, law and jurisdiction, and accept the liability to pay supplementary, release and overspill calls as levied by the board under rules 18, 19 and 21 respectively. The reference to these specific obligations and rule provisions does not in any way derogate from all insured parties’ agreement to be bound by all of the club rules.
As advised in our circular of 24 January 2019, The Standard Club Ireland DAC (Standard Ireland) is now authorised by the CBI to operate in Ireland. All renewing EEA members currently entered in The Standard Club UK Ltd (Standard UK) are being underwritten into Standard Ireland from 20 February 2019.
Whilst all of the above points regarding the 2019/20 policy year will equally apply to members renewing into Standard Ireland, the board of Standard Ireland will be meeting on 18 February 2019 and will specifically be reviewing the club’s financial position and be asked to adopt the TRIRA resolution.
RESIGNATION AND APPOINTMENT OF STANDARD CLUB UK AUDITORS
Following the merger of the club’s auditors Moore Stephens LLP with BDO LLP, the business of Moore Stephens has been transferred to BDO. Moore Stephens has therefore resigned as auditors of The Standard Club UK Ltd and BDO have been appointed as the new auditors.
If you have any questions regarding the above, please do not hesitate to contact your usual club contact.
Source: Standard Club