1. Pandiman – 10 January 2013
Protection & Indemnity Insurance

2. Marine Industry – the wider picture?
 Global population – 7,058,019,224 (07/01/2013)
 96 % of all we need spends part of its time
transported by sea
 Food, raw materials, energy supplies, manufactured
products – almost everything we need in modern life
 Our marine industry is a small but critical part of a
huge industrialised global industry that supports 7
billion people on the planet today
 Without an effective marine industry most would
perish and the lights would go out?

3. The Marine Industry
 What type of industry are we?
 What is our role?
 The importance of local help and expertise
 The front line – Local Correspondents, Surveyors,
Medical Staff, Lawyers

4. P & I History – 1850’s - Industrial Revolution

5. P & I History – Trade and Social Change
 Industrialisation – massive increases in demand for
raw materials, manufacturing, global colonisation,
global trading
 Generated an exponential increase in demand for
shipping
 Commercial and social change – increased third party
liabilities for ship owners
 Appalling loses - 2 out of 3 ships leaving the UK never
returned
 Shipping became commercially uninsurable

6. 1855 – The birth of P & I Insurance
 In desperation some London ship owners turned to
two lawyer friends for advice
 Self insure and mutually insure each other on a “non
profit basis”
 Formed a “ship owners insurance club” which the
two lawyers managed for them
 Timber, iron ore and coal trades with the Baltic States
 Traditionally trade commenced when the ice broke –
20 February
 20/02 - Ships entered in the club and insured for the
year

7. 1855 – The first P&I Club
LONDON, MARCH 1ST,
1866
Notice is hereby given that
the Committee have this
day made a Call of 10/6
per cent., being the first
since the Society was
established in 1855,
PETER TINDALL, RILEY &
CO.,
Managers

8. 1871 – Britannia P & I Club
Nearly 70 Steamers are now
mutually insured in it for
about £90,000.
PETER TINDALL, RILEY &
Co.,
Managers
LONDON, 1ST SEPTEMBER
1871.

9. What is P & I Insurance
 Mutual Insurance, - ship owners share their risks
liabilities and claims in a “Club”
 The “Club” is managed on owners behalf, - non profit
making organisations
 Covers ship owners third party liabilities
 “Pay to be paid” principle, - ship owner pays a claim and
is then reimbursed by the P & I Club (one exception!)
 Club services: claims handling, risk management, loss
prevention, legal advice, technical advice and expertise
 Support and promote ship owners interests

10. International Group & Reinsurance
 13 Clubs in the International Group
 Each Club pays the first £8 million of a claim
 From £8 million to £50 million - claim shared across
IG Clubs in proportion to their size / tonnage
 Above £50 million the IG Group / Clubs part self
insure and then buy commercial reinsurance to
provide levels of cover from £50 million to
approximately £4.2 billion
 International Group represents all clubs and ship
owners in various trade and international forums
 Centre of maritime expertise, - sub committees, etc.

11. P & I Cover - “Heads of Claim”
 Cargo Claims – loss and damage
 Collision – damage to other vessels and liabilities
arising from a collision (pollution, injury, cargo etc.)
 Allision – damage to fixed and floating objects
 Pollution – Incidents of accidental pollution
 Personal Injury – crew, stevedores, passengers
 Salvage and General Average
 Wreck Removal
 Stowaways - repatriation

12. Cargo – Liabilities to cargo owners

13. Cargo – Liabilities to cargo owners

14. Cargo – Liabilities to cargo owners

15. Cargo - Liabilities to cargo owners

16. Cargo - Liabilities to cargo owners

17. Cargo – Liabilities to cargo owners

18. Collision - Liability to other ship

19. Collision - Liability to other ship

20. Collision - Liability to other ship

21. Allision - Docks, piers, jetties etc.

22. Allision - Docks, piers, jetties etc.

23. Allision - Docks, piers, jetties etc.

24. Pollution - Accidental

25. Pollution - Accidental

26. Pollution - Accidental

27. Pollution – Intentional?

28. Personal Injury

29. Personal Injury

30. Personal Injury

31. Grounding, Salvage and Wreck Removal
New Carissa at Coos Bay

32. Grounding, Salvage and Wreck Removal
Pasha Bulker at Newcastle

33. Grounding, Salvage and Wreck Removal
Giant Step at Kashima

34. Grounding, Salvage and Wreck Removal

35. Stowaways – Care and Repatriation

36. Members (Ship Owners) Obligations
“…nothing should relieve the
Member of his obligation to keep
his entered ships at all times in a
proper condition.”
(Rule 28 (11))

37. Members Obligations
 Warrants that the entered ship must be maintained
in Class (Rule 28 (1))
 Must comply with requirements of ship’s Flag State
relating to the construction, adaptation, condition,
fitment, equipment, manning (and management) of
the entered vessel (Rule 28 (4) (i))
 Must maintain the validity of all statutory
certification (Rule 28 (4) (ii))

38. P & I Club Obligations
 Pay bona fide claims
 Minimise / mitigate owners losses / exposure
 Ensure maintenance of management and ship board
standards across the club membership
 Prudent underwriting
 Maintain financial strength and stability
 Provide high levels of cover at affordable rates
 Provide legal and technical support and advice

39. P & I Club Activities
 Run risk management & loss prevention programmes
and publications
 Ship condition surveys
 Auditing ship owners management / offices
 Auditing manning agencies
 Auditing maritime training centres
 Hosting “in house” training seminars for owners
 Provide global seminars for Members seafarers
 Source advice and appoint experts
 Publish bulletins and circulars

40. P & I Claims Handling
 Successful claims handling, to mitigate the owners
loss, is achieved through successful negotiation and
mediation
 Negotiating position is heavily dependent upon the
quality of evidence and content of reports received
from ship staff, ship owners, lawyers,
correspondents and attending surveyors
 Timely communications, incident investigation,
collection of evidence and comprehensive detailed
reports are crucial to successfully defending an
owners interests

41. Famous Quote:
“P & I Clubs, as non profit making organisations, can
only compete with each other in terms of the quality
of service they can provide to their respective ship
owner members
That quality of service is heavily dependent upon the
competence, experience, knowledge, expertise, advice
and professionalism of their service providers
These include, but are not limited to: Correspondents,
Marine Surveyors, Lawyers, Naval Architects, Fire
Experts, Chemical Experts, Cargo Experts, etc.”
John F Kingdom 1998

42. The Famous P & I Statistic:
 + 80% of P & I claims arise from “human error”
 Human error in this context includes activities of crew,
management, pilots, stevedores, ship agents, - in fact
any and all personnel who may have an involvement in
the operation of a ship
 It is for this reason that P & I Clubs have a particular
interest in seafarers and what they can do to minimise
risks / claims and protect their owners interests

43. P & I Focus has changed
 During the 1980’s there was a “claims explosion”
both in numbers of claims and their costs
 20 years ago P & I resources were very focussed on
“ship condition” with some justification (an example
follows)
 Today the number of claims submitted annually has
been stable for some time, however over the last two
years costs have increased sharply
 P & I Clubs are now equally interested in a ships
management and crew standards, - their knowledge,
training, experience, and competence

56. Ships Condition today
 Whilst the overall condition of ships has improved
there has been virtually no change in the type and
distribution of major defects over the last 20 years.
 Port State Control, Ship Vetting and P & I club surveys
all highlight the persistent levels of some defects
 High on the list are defects affecting:
 Hatch covers, holds and tanks
 Fire fighting and lifesaving equipment
 Charts and nautical publications

57. Summary of Major Defects
As % of All
Major Defects
20
15
10
5
0
Type of Defect

58. Claims Types over 10 yrs - Numbers
Penalties Spillage Third Party Wreck Removal
Passenger liabilities 695 1,429 59 Total loss
1,116
262 25
Breakdown
Other
5,436 Breakdown Cargo
130
Non-contact damage Collision
188
Crew
Fire/Explosion
Damage to Property
69
Grounding Fire/Explosion
260 Grounding
Damage to Non-contact damage
Property
2,949 Other
Passenger liabilities
Crew
15,699 Penalties
Spillage
Third Party
Collision Cargo
1,179 57,696 Total loss
Wreck Removal
Total: 87,192

59. Claims Types over 10 yrs – Costs USD
S pillage Third Party Total loss Wreck Removal Breakdown
37,682,454 36,920,105 22,327,080 6,859,810
Breakdown Cargo
Penalties 6,155,405
12,584,761
Collision
Passenger liabilities Crew
1,565,093
Damage to Property
Other
26,150,385 Fire/Explosion
Non-contact damage Grounding
4,551,286 Cargo
456,511,375 Non-contact damage
Grounding
41,721,951 Other
Fire/Explosion Passenger liabilities
27,990,456
Penalties
Damage to Spillage
Property
113,117,804 Third Party
Total loss
Crew Wreck Removal
207,480,243
Collision
112,699,986 Total: USD 1114 million

60. Claims Types over 10 yrs – Percentage Cost
Breakdown
Spillage Third Party Total loss Wreck Removal Cargo
Penalties 3% 1%
3% 2%
1% Breakdown Collision
1%
Other Crew
2%
Non-contact damage
Damage to Property
0% Fire/Explosion
Grounding Grounding
Cargo
4%
Fire/Explosion
41% Non-contact damage
3% Other
Passenger liabilities
Damage to
Property
Penalties
10% Spillage
Third Party
Total loss
Crew Wreck Removal
19%
Collision
10%

61. P & I Clubs – Claims Concerns
 Tankers: Cargo contaminations
 Tank preparations / line washing – procedures and
records
 Sampling: Manifold, First foots, load port /
discharge port samples, water dips - records
 Segregation valve integrity
 Tank coating maintenance
 SW ingress – Main deck water tight openings

62. P & I Clubs – Claims Concerns
 Container Vessels:
 Overloaded containers and stack weights
 Collapsing containers
 Securing arrangements and containers lost
overboard
 Miss declared or undeclared dangerous goods
 Ship design and parametric rolling
 Speeds in poor visibility and heavy weather
 Ship size – cargo values and salvage issues

63. P & I Clubs – Claims Concerns
 Bulk carriers: Cargo Damage
 Wet Damage: Hatch maintenance / weather tight
integrity, bearing pad wear, gaskets, drain
valves, compression bars
 Wet damage: Ballast tank, pipeline and vent pipe
leaks
 Heat Damage: Grain, - bunker heating & transfer
operations
 IMSBC Code – Cargo liquefaction & DRI

64. P & I Clubs – Claims Concerns
 All Ships:
 Pollution, - OWS MARPOL violations, - Bunker spills
- procedures and controls
 Pilotage incidents –
BRM, collisions, groundings, dock damages, crane
damages
 Groundings – incidents at anchorages – weather /
Masters judgement
 Machinery space fires – inadequate maintenance
and poor housekeeping

65. P & I Clubs – Claims Concerns
 Enclosed space entry – fatalities & injuries
 Lifeboat accidents – OLR failures, fatalities &
injuries
 Mooring incidents – fatalities, injuries and
damages
 Personal Injuries – health and fitness
issues, medical costs – repatriation
 Stowaways – Security, - care & repatriation

66. The importance of Pandiman
 You are only one of hundreds of Club Correspondents
around the world
 A typical “claims team” of 4 persons will have about
200 open files current at any one time
 Britannia personal injury team of 4 persons has about
800 open files current at any one time
 Philippines provides seafarers to 26% of the world
fleet
 50% of Britannia Members are in Asia / Pacific region
 More Filipinos on Britannia vessels than other Clubs?

67. The importance of Pandiman
 Ship owners are suffering a prolonged recession –
looking to cut costs everywhere, - for some their
survival is at stake
 P & I Clubs are under real pressure to cut back /
reduce overheads and claims costs
 More claims in terms of numbers and cost are settled
via Pandiman than any other Correspondents
 Pandiman is a focus of attention by both P & I Clubs
and the International Group regarding performance
and cost

68. Correspondents - What can YOU do?
 Communicate
 Prioritise tasks
 Inform
 Investigate
 Collect and retain evidence
 Advise
 Provide factual and objective reports

69. What YOU should do
 Keep the P & I Club, Owners / Managers and where
appropriate, Manning Agents fully informed of your
actions / progress
 Acknowledge / confirm receipt of all incoming
communications (as soon as possible)
 Arrange to investigate any accident or incident
promptly
 Collect all relating evidence and documentation
 Ensure there is a record of the sequence of events
 Ask all witnesses to write down what happened
 Take photographs / video

70. What you should NOT do
 Allow anyone onboard until positively identified
 Allow opposing surveyors or lawyers onboard, unless
accompanied by a surveyor or lawyer acting for the
owner
 Give written material or physical evidence to
opponents lawyers or surveyors
 Give a subjective opinion or admit liability, verbally or
in writing
 Sign any document which contains incorrect
information

71. What you should NOT do
 Make any false statements to the Authorities
 Instruct the crew to be economical with the truth
 Attempt to influence or persuade witnesses to alter
their evidence
 Alter, erase, fabricate or tamper with evidence
 Fail to preserve evidence (e.g. VDR recordings, data
loggers, course recorders, etc.)
 Attempt to hide or destroy communications or
evidence (remember exchanges may become
discoverable)

72. Collection of Evidence
 Evidence relating to the incident will be needed by
the Club to settle claims received from injured
persons, the cargo/property owners, or from a
terminal operator.
 Evidence is also needed by the Club to defend the
Ship Owner against spurious, unwarranted or
exaggerated claims
 Masters, Correspondents, Surveyors and Lawyers all
have an important role in the collection of evidence
to help the Club evaluate the damage and establish
liability.
 The Mariner’s Role in Collecting Evidence, published
by the Nautical Institute, is recommended reading.

73. Collection of evidence
 “Courts depend upon evidence. Contemporary
evidence is of the utmost importance. It is vital
to make a note or report of any incident
immediately, if possible while it is still in
progress. Photographic or video evidence is of
particular assistance to the judge or arbitrator in
trying to establish the true facts.”
The Right Honourable Sir Anthony Clarke.
Master of the Rolls, The Royal Courts of Justice,
London.(2006)

74. Contemporary evidence – an example

75. Collection of evidence – selected examples
 Collection of Evidence with respect to some selected
P&I risks, namely:
 Cargo damage in heavy weather
 Collision
 Personal injury

76. Cargo damage – heavy weather
 To defend a claim for cargo damage, loss or
shortage, the carrier must be able to demonstrate it
has fulfilled its obligations under the contracts of
carriage, the cargo was carried in a seaworthy ship
and the cargo was cared for properly
 The obligation to care for the cargo embraces loading
and discharging operations as well as during the
voyage
 All cargo handling operations need to be accurately
recorded and fully documented
 Available to the carrier as evidence to defend a claim

77. Cargo damage – heavy weather
 Masters are aware heavy weather may provide the
Owner with a defence to cargo claims arising from
cargo damage. Such defence requires evidence not
only of severity and duration of the weather but also
extent to which it was predicted or should have been
predicted
 P & I Clubs will often employ weather experts to
collect and collate evidence
 Ship’s log book entries for weather must be accurate
or are looked upon with some scepticism - useful if
photos/video taken of conditions

78. Cargo damage – heavy weather
 Duty on the carrier and the Master to properly
load, stow and carry cargo can encompass correct
navigation
 Failure to alter course or slow engine speed to reduce
the ship’s motion may be failing to ‘care for the cargo’
 Navigation of the vessel has to be evidenced
 Accurate and full log book entries that are clearly
legible are crucial

79. Cargo damage – heavy weather
 Provide the best evidence of the hatch covers and
W/T fittings condition before the incident occurred
 Ultrasonic testing / hose testing – surveyors reports
 Recent Class and Flag State survey reports
 Surveyors photographs or ship photographs with
date / time recorded
 Hydrostatic tests
 IG pressure records
 Collect and retain any photos and / or video of heavy
weather conditions experienced

81. Collision
 First priority will be safety of lives, the ship and the
environment
 Important there is a contemporaneous record of
events backed up by photos and video
 A multitude of people will attempt to gain access to
the vessel as soon as possible: Correspondents, ship
owner's lawyers and surveyors, those acting for the
other side, Class surveyor, other surveyors, Port State
Control, Flag State Administration, etc.
 Master needs Correspondent to help manage
workload

82. Collision
What type and scale of damage has occurred?
 Local P & I Correspondent to attend as soon as
possible
 Record ship damages, pollution, deaths or personal
injuries, and cargoes for both for own vessel and, as
best as possible, in relation to other vessel
 Each of these types of damages will possibly require a
different expert or lawyer to attend on board to take
evidence, and subsequently defend the Owners

83. Collision
 Personal injuries and / or deaths, whether on board
own vessel or colliding vessel are relevant to liability
cover.
 P & I Clubs can immediately assist with locating
relevant medical assistance, possible hospital and any
Medivac services
 Extent of pollution and type of oil/product is also
important

84. Collision
 Seaworthiness of vessel, limitation of liability
 Possible investigation by coastal states and flag state
 ISM implications
- Compliance with mandatory rules and regulations
- Resources and personnel
-Development of plans for shipboard operations
- Emergency preparedness

85. Collision
Evidence prior to a collision
 Records of the daily routine of the vessel will be
crucial
 Evidence of good passage planning, speed and ‘look
out’
 Copies of rough log, official log, deck log and engine
log
 Soundings record
 Working charts and movement books
 Surprising how often the circumstances of working
charts and radar are erased before they can be taken
as evidence

86. Collision
After a collision
 Master, crew and Correspondent should
collect, record and preserve as much detail of the
collision as they can immediately after an incident
 Vessel’s position and exact time at point of collision
 An estimate of the angle of blow with the other
vessel
 An estimate of the speed of each vessel at time of
collision
 Any alterations of course and speed prior to a
collision

87. Collision
After a collision:
 Take witness statements from crew on bridge and any
other witnesses
 Third party evidence should be sought - pilots, local
port authority VTS systems
 Contact ships in the vicinity by VHF and obtain details
of ship names and duty officers
 Keep all scraps of paper
 Master to collect all relevant evidence and bundle it
together for storage in his office immediately after
the incident, for collection by the Correspondent
 Make photocopies prior to and at arrival at the next
port

88. Collision
 Growing availability of electronically computerised
data stored in bridge systems. Master and Officers
must be familiar and able to preserve this data
 However, in practice Masters and crew are often
unfamiliar with use of VDR equipment and data
saving
 In the event of an incident, data must be ‘backed up’
as soon as possible, otherwise data will be lost
 If required, a shore technician should be appointed to
ensure that VDR data is extracted and preserved

89. Personnel accident, injury or death
Accident form
 Accident date / time / location and conditions
 Activity being undertaken
 Employee details
 Injury location / Brief details of injury
 Description of accident
 Work permits and P.P.E. employed
 Witness statements
 Photograph / video evidence
 Immediate cause of accident
 Underlying cause of incident

91. In Summary:
 Prioritise and Communicate
 Acknowledge all incoming communications
 Keep P & I Club, Owners / Managers / Manning
agents informed of your actions, events and progress
as soon as possible
 Recommend / appoint suitable experts
 Investigate and record the incident
 Obtain witness statements
 Collect and retain all appropriate evidence
 Forward detailed reports that are factual and
objective, with supporting evidence

92. Questions?