Marine insurers should refuse to pay says OECD

Citation

(2002), "Marine insurers should refuse to pay says OECD", Disaster Prevention and Management, Vol. 11 No. 5. https://doi.org/10.1108/dpm.2002.07311eab.002

Marine insurers should refuse to pay says OECD

Marine insurers should refuse to pay says OECD

Marine insurers should refuse to pay the fines of ship-owners found guilty of safety or pollution-related offences, a group of leading industrial countries is recommending as part of a new crackdown on substandard shipping.

The Organisation for Economic Cooperation and Development is also urging flag states to reject ships that do not comply with international standards, and calling on its own members to back a licensing system for classification societies.

Other moves designed to eradicate substandard ships would include stiffer sanctions by port states on operators and users of unseaworthy tonnage, including detentions and penalties severe enough to actively discourage the deployment of high-risk ships.

The proposals are contained in a policy statement on substandard ships prepared by the OECD's Maritime Transport Committee.

While non-binding, the statement sets out how governments could complement the work of the International Maritime Organisation to promote safer and more environmentally sound shipping.

The Maritime Transport Committee stresses that, if substandard ships are to be eliminated, "industry itself must play a major role". The aim is to ensure that those who behave irresponsibly should be held accountable and face strong disincentives, while responsible operators should be encouraged through incentives.

Insurers could play an important role in this effort, the OECD believes, by identifying and targeting providers and users of substandard ships and refraining from providing cover unless the deficiencies are remedied.

The committee plans to undertake a study of the marine insurance system to ascertain whether it is feasible to remove cover from unsafe ships without jeopardising the rest of the maritime industry.

The OECD lends its support to IMO efforts to examine the track record of flag states in implementing international rules and standards, and backs proposals to extend the IMO's charter and allow it to review the overall performance of its members.

The policy statement also recognises the importance of port states in the fight against unsafe shipping. OECD members will actively work with port states and appropriate authorities to encourage a culture of safety and environmental consciousness in as many jurisdictions as possible.

Classification societies come in for particular scrutiny, with the OECD committee keen to publicise those ship inspection agencies that are not applying adequate standards.

Member countries will also consider the possibility of a licensing system, perhaps operated by the IMO, "aimed at ensuring that classification societies meet acceptable standards of performance".

Another area in need of improvement in the new safety drive is seafarer training and conditions of work, the OECD says. While accepting that "there is a clear place for crews that are low cost and efficient", the policy statement stresses that "substandard crews or substandard crew conditions should not be tolerated".

Those ship-owners and other industry parties that maintain high standards should be rewarded through, for example, reduced classification fees, cheaper insurance premiums, fewer and less time-consuming port state inspections, and lower port charges. Publicity is another weapon that could be used to greater effect in the war against substandard shipping, the committee notes.

Pressure on those who operate or use dangerous ships "must not be eased in any way", the OECD committee insists. Those who flout standards "should face strong disincentives and penalties and these should not be permitted to be simply added to the list of risks against which the perpetrators can already insure".

Irresponsible players "must not be permitted by the international system to profit unfairly from their actions".

(Janet Porter and Andrew Spurrier, Lloyd's Casualty Week, Vol. 328 No. 4, 19 April 2002).