IMU Marine Insurance and Vetting Inspections

BNA - 051 SHIP MANOEUVRING AND FUTURE ISSUES

Block

2 MARINE INSURANCE AND VETTING INSPECTIONS UNIT 5 Marine Insurance

5

UNIT 6 Vetting Inspections

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MARINE INSURANCE AND VETTING INSPECTIONS This block has two units. Unit 5 "Marine Insurance" deals with marine insurance and explains the importance of insurance and its various ingredients. The two major insurance policies i.e. the hull and machinery insurance and protective and indemnity insurance, various terms related to marine insurance are introduced in this unit. Unit 6 "Vetting Inspections" describes the importance of vetting inspections of ships so as to ensure compliance of international laws in the matter and to help the operator in selection of vessel(s) to meet operational requirement and better efficiencies.

UNIT 5 MARINE INSURANCE Structure 5.1

Introduction Objectives

5.2 Preamble 5.3

Definitions

5.4 Hull and Machinery Insurance 5.5 Protection and Indemnity Insurance 5.6 Summar y

5.1 INTRODUCTION The general principles of marine insurance are the same as with other types of insurance in that there are two parties: the assured and insurer (or carrier). The assured or insured agrees to pay a premium and the insurer agrees that, if certain losses or damage occurs to certain interests of the insured, the insurer will indemnify the insured. The similarities pretty much end here. The complex circumstances involved in sea voyages require very specific arrangements for the provision of marine insurance. The fixing of rates and special conditions, for example, requires a vast knowledge of the nature of vessels and cargoes and of the conditions of navigation. No shipowner is legally obliged to insure neither his vessel nor a merchant to insure his goods, but since the ship and/or the goods are invariably heavily financed by banks and other financial institutions, it becomes essential that both are insured with reputed insurers — in fact it is demanded by these financiers. Most marine risks are underwritten by Lloyd's underwriters, who in addition to marine risks underwrite other risks. (Lloyds is still in the process of settling claims amounting to millions of dollars relating to the September 11, 2001 attack on the twin towers of the World Trade Centre in New York.) There are several other insurance companies all over the world, who deal exclusively with marine insurance or have specialized departments for the same; but for the purpose of this study we shall concentrate on Lloyd's. The More Things Change, the More They Remain the Same The Corporation of Lloyd's, universally known as Lloyd's of London does not itself undertake insurance or issue policies, but provides facilities for its members to transact their underwriting business. The story goes that Edward Lloyd operated a Coffee Shop on Tower Street in London, where underwriters, brokers, agents congregated and this has grown into the huge entity that now has an international presence. In those days, clients sought insurance from an underwriter of some sort. These underwriters would pledge their own balance sheet in return for a premium, using something called a slip system. The principles and the procedure remain essentially the same today, except that the slips of paper and pencil stubs have given way to plasma screens and computer keyboards and the messenger boys to internet and telephone.

Objectives The aim of the unit is to be give the student • • •

give a brief overview of marine insurance, state the salient features of Hull (and Machinery) insurance policies, describe the risks covered by P and I insurance and

•

distinguish between H & M and P & T

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Marine Insurance and Vetting Inspections

5.2 PREAMBLE The definition of marine insurance as given in the Marine Insurance Act 1906 (MIA) is "a contract whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses i.e. the losses incident to a marine adventure". Marine insurance as branch of commerce existed — although in a rudimentary form — from the early days of sailing ships. The laws relating to marine insurance were codified in Britain as the Marine Insurance Act 1906. They are still the basis of business all over the world even today, of course, with certain amendments. The operation of ships is a complex activity that takes place in an environment, which is often unpredictable and sometimes hostile. Catastrophic losses due to cyclones, hurricanes and tidal waves as well as risks due to human error necessitate a process to identify and analyse such risks and evolve measures to counter or neutralize them. Risk management may be defined as a systematic method of protecting resources against losses so that the aims of the organization can be achieved without interruption. It is based on the optimum utilization of resources, personnel, financial or material, in order to achieve the objectives of the organization. It must not be confused with insurance, although insurance does forma part of risk management. The subject of Marine Insurance is a very complicated and complex one and not easy for the average seafarer to understand. The business of marine insurance employs several thousands of highly qualified professionals, financial experts, lawyers, etc The jargon and the language used are very confusing and it is best left to the experts in the field. We shall however deal with a few of these terms without hour going into the details. Some of these terms will be dealt with in greater detail in the syilabus for the Mate's/Master's examinations.

5.3 DEFINITIONS Before we proceed, it is necessary to be aware of a few definitions and terms. Risk Risk may be defined as the uncertainty or lack of knowledge concerning the outcome of events. For example, the risk of a vessel becoming a total loss. Hazard Hazard is a condition that increases the likelihood of loss. For example, in poor visibility conditions, the use of high speed is a hazard that may lead to a collision. Peril Peril is the cause of a loss. For example, fire is a peril which may cause extensive damage to the ship and/or her cargo. Risk Response Risk response is the manner in which an organization wishes to respond to the assessed exposure to risk. The response may be acceptance or avoidance of the risks and as a consequence decide on a way to treat the risks which are acceptable (though they may be undesirable). This risk treatment is always at a cost and may involve reducing the exposure, transferring the risk or retaining it, or a judicious mix so that the organization achieves its aim of maximum profit at a minimum cost. Transfer of risk is done by suitably worded provisions in the contract or by using professional risks carriers like Insurance Companies and P and I clubs. Policy The document which embodies the contract of insurance is called a 'policy' and its wording covers maritime perils on insurable property whilst afloat. But the MIA provides for the insurance to extend to protecting the assured against losses on inland waters or any land risk incidental to the sea voyage.

Clauses

Marine Insurance

Clauses because of the international nature of the business with huge sums of money involved, fraud and other illegal acts has always been a feature of marine insurance. To minimize this possibility certain conditions, warranties called clauses are included in the policy which guard the interests of both the insurer and the insured. Types of Policies Though commonly in one form, marine policies are known by different names according to their manner of execution and the nature of the risks covered. A few of these policies are described below: Voyage Policy

This is a policy in which the limits of the risk are determined by places or termini (destinations) as, for example, Chennai to Rangoon, or Mumbai to Dubai. Such policies are always used for goods insurance, sometimes for freight insurance, but only rarely nowadays for hull insurance. Time Policy

This is designed to give cover for some specified period of time, say, for instance, from noon, 1 st January 1976 to noon, 1 st January 1977. Time policies are usual in the case of hull insurance, though there may be cases where an owner prefers to insure his vessel for each separate voyage under a voyage policy. Voyage and Time Policy (or Mixed Policy)

Under such a policy the hull machinery, etc. of a vessel could be insured for a named voyage and by agreement for some stipulated period after arrival at her destination, for example, from Cardiff to Bahia Blanca and for sixty days after arrival at Bahia Blanca. Construction Policy or Builder's Policy

This is designed to cover the risks incidental to the building of a vessel, usually giving cover from the time of laying the keel until completion of trials and handing over to owners. In the case of a very large vessel, the period may extend over several years. While time policies for periods over 12 months were invalid, advantage was taken of the provision of the Revenue Act, 1903 which allowed a construction policy to be stamped as a "voyage policy". On account of the changes introduced by the Finance Act, 1959, there would now seem to be no reason for keeping up the fiction that for insurance purposes, a ship under construction is making her "first voyage". Port Policy

This is to cover a vessel during a period in port against the risks peculiar to a port as distinguished from voyage risks. This kind of policy is probably very rarely used nowadays, except possibly in the case of a vessel laid up out of commission, as most vessels while employed are covered by time policies which during their currency indicate whether the vessel is at sea or in port. Marine Losses Marine losses may be classified as follows Total Loss

Actual, Presumed, Constructive.

Partial Loss

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Marine Insurance and Vetting Inspections

A ctual

Total Loss

Actual total loss occurs when the subject matter is destroyed or is so damaged as to cease to be what it was originally insured as or when the assured is irretrievably deprived of it. Presumed Total Loss

When the ship concerned in the adventure is missing, her total loss may, after the lapse of a reasonable time, be presumed. Ordinarily, it will be presumed that the loss arose from "perils of the sea" which is an ordinary marine risk. But if the ship was last known to have been in a war-infested area then, in the absence of other evidence, the presumption will be that she was lost through war risk. Constructive Total Loss

This occurs when the subject matter is reasonably abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure that would exceed its value after the expenditure had been incurred. In case of constructive total loss, the assured may either treat the loss as a partial loss, or abandon the subject matter to the underwriters and claim for total loss. If he elects to abandon, he must serve notice of abandonment on the underwriters, otherwise the loss can be treated only as a partial loss. Notice may be given in any manner, but it must indicate the intention of the assured to abandon his interest in the subject matter to the insurer unconditionally. It must be given with reasonable diligence after receipt of reliable information of the loss but the assured is entitled to a reasonable time to make inquiry if his information is of a doubtful character. Marine Policies The marine policy may cover the risks of a single voyage, or may insure for a certain period of time. Cargo is almost always insured by voyage. Vessels are usually insured fora certain duration of time, usually year by year. Cargo policies may be on a single lot or may be open to cover cargo as shipped by the insured, Hull insurance, or vessel insurance, may cover a ship or a whole fleet. The principle that no contract of marine insurance is valid unless the insured has an insurable interest in the subject matter at the time of loss is typical of marine insurance The term insurable interest has been variously defined. According to the English Marine Insurance Act of 1906, "every person has an insurable interest who is interested in a marine adventure.... a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or damage thereto, or by the detention thereof, or may incur liability in respect thereof '.

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Another issue important in the marine insurance field is misrepresentation or concealment. The marine insurance contract is one which requires the highest degree of good faith. Any misrepresentation of a fact which is material to the underwriter will render the policy null and void. In addition, a policy can be void for breach of any of the warranties implied by law or expressed in the policy. The most common is the implied warranty of seaworthiness of the insured vessel or of the vessel carrying insured goods. Seaworthiness is a general term but has been narrowed by case law. A ship which is seaworthy for a southern voyage may not be so fora transatlantic crossing in winter. Similarly, in cargo policies, the warranty of seaworthiness of the vessel includes fitness to carry a particular cargo.

In voyage policies, the doctrine of deviation states that the underwriter is deemed to have intended to accept only that risk which is involved in the expeditious prosecution of the voyage by the usual commercial route. If, without justification, the vessel departs from the route, or delays unreasonably in pursuing the voyage, the policy will be voided. Once voided by a deviation, the insurance contract is canceled for good and not restored by a return to the proper course. Whether or not a ship has deviated is a question which is either settled by the policy or by usage.

Marine Insurance

,The

main risks insured against in a marine policy are stated in the "perils" clause which is often supplemented by the "specially to cover" clauses, or restricted by provisions eliminating one or more of the insured risks. The traditional "perils" clause is contained in the First Schedule of the British Marine Insurance Act of 1906 from Lloyd's policy. It reads as follows :

"Touching the adventures and perils, we the assurers are contended to bear and to take upon us in this voyage: they are of the seas, men-of-war (warships), fire, enemies, pirates, rovers (pirate or pirate vessel), thieves, jettisons, letters of mart (trad e) a nd coun terma rt (coun ter-tra de), reprisa ls, ta king s a t sea, a rrests, restraints and detainments of all kings, princes and people, of what nation, condition or quality so ever, barratry (an unlawful breach of duty on the part of a Ship's master or crew resulting in injury to the ship's owner) of the master and mariners, and of all other perils, losses, and misfortunes, that have or shall come to the hurt, detriment or damage of the said goods and merchandises, and ship, and company, or any part thereof"

More recently, war risks have been removed from ordinary marine policies and are covered by separate war risk policies. Ordinary marine policies no longer mean what they state and only cover those risks which are not excluded by the FC and S (Free of Capture and Seizure) clause (an insurance clause providing that loss is not insured if due to capture, seizure, confiscation and like actions, whether legal or not or from such acts as piracy, civil war, rebellion and civil strife). Among the perils "of the seas" that are deemed to be covered under a marine policy are the extraordinary action of the wind and waves, collision, foundering, stranding, striking on rocks and icebergs. Not covered are ordinary wear and tear and losses which can be anticipated as regular incidents of sea carriage or navigation. Hull policies i.e. policies insuring ships, used to be quite specific as to the risks they covered. Modern policies are written to cover most forms of liability. A "collision and running down" provision is contained in the standard hull policy to cower liability incurred for damage to another vessel or structure, and sometimes even personal injuries incurred. The protection and Indemnity policy covers against collision liability not covered by the "collision and running down" clause, as well as against all other liability exposure. Under a marine policy, a loss can be partial or total. Total losses can be actual or constructive. Actual total loss can be defined as the situation in which a ship or its g oods can no longer arrive at their destination in specie (in the same kind or shape). Actual total loss can also be found where the goods are so damaged in the course of the voyage that, while they still exist in specie at that time and can be sold where they are, there is no reasonable possibility that they can be transported to their destination without complete destruction or change. Constructive total loss is distinguished from actual total loss in that no formal abandonment need be made in respect of the actual total loss whereas the tender of abandonment is a prerequisite of a claim under constructive loss. Under the MIA 1906, a marine insurance policy covers the subject matter insured against loss or damage during a definite period which may be stated against during •

As a period of time (in a time policy); or

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Marine Insurance and Vetting Inspections

As the duration of a journey from one place to another (in a voyage policy).

Figure 5.1: A Ship under Loss

5.4 HULL AND MACHINERY INSURANCE Hull and machinery (H and M) policies are usually time policies, the maximum period of insurance usually being 12 months, although the MIA does not restrict the period. Cover usually attaches and expires at noon or midnight GMT. Consignments of goods may be insured on voyage policies 'at and from" one place to another or simply "from" a place to another. The former type gives cover whilst awaiting shipment. Most goods shipped are usually insured on a warehouse to warehouse basis rather than for the sea voyage only. Some cargoes (e.g. FOB shipments) may be covered from the time of loading only. Time policies are not normally used for goods insurance. Where a ship is the subject matter insured of a voyage policy, it is unnecessary for the vessel to actually be at the place named in the policy at the time that the insurance contract is made, hut there is an implied condition in the contract that the adventure will commence within a reasonable time. If it does not, the insurer can avoid the contract. The risk does not attach if : • •

The ship

from a different place from that named in the policy.

The ship proceeds to

a destination other than that named in the policy. Insurers

bind the policy holder to what the policy says, unless amended terms are agreed. How Does a Shipowner Obtain H and M Cover?

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In the London marine insurance market, hull and machinery (H and M) cover is usually obtained by shipowners and managers from: Underwriters at Lloyd's and/or Underwriters at the Institute of London Underwriters (ILU). The braking procedure is similar in both Lloyd's and Companies markets. H and M cover is generally arranged for owners and managers by brokers who act as the agents of assureds. Only Lloyd's brokers may approach underwriters at Lloyd's; no non-broker may approach an underwriter personally to obtain insurance. On instruction from the assured, the broker prepares a slip for presentation of the subject matter details to underwriters. The ship is equivalent to a motor insurance proposal form. The broker supplements the basic facts on the slip with all material information about the risk as supplied by assured (under the principle of utmost good faith). The broker contracts with one or more underwriters to pay an agreed premium for a

policy covering loss or damage, etc. Unless the assured value of the vessel is small, the broker takes the slip first to an influential 'lead" under writer, then to a succession of others, until the risk is comprehensively covered. Those who are ho are interested will usually 'write a line' only on a small percentage of the insured value of the ship. Each under writer indicates acceptance of his share of the risk by putting his signature or initials against the line on the slip bearing the percentage he accepts on behalf of his syndicate or company. When the slip is complete, i.e. the risk is 100% covered, the broker prepares details of the cover on a cover note and sends this to the assured for approval.

Marine Insurance

If the assured approves the terms, a formal policy is drawn up. Some time will elapse before the policy can be signed and contract legally made. In English contract law, presentation of the slip by the broker constitutes an offer, and the writing of each line constitutes acceptance. The contract is concluded when the underwriter writes his initials or signature on the slip. The MIA 1906 requires the contract to be embodied in a policy, so that the contract is not legally enforceable until the policy is drawn up. However, under the code of ethics of the London market, once an underwriter has initiated or signed he is honour-bound to pay any claims on it.

Figure 5.2: Damaged Ship after an Accident

5.5

PROTECTION AND INDEMNITY INSURANCE

I origin of this policy came about in the early 1800's as a result of changes in hull ( physical damage to the vessel). Marine underwriters instituted a clause in the dull policy, which limited their losses by collision to three-fourths of the shipowners collisions liability. Believing shipowners would be more careful if held liable for one fourth of the damages, this limitation, which came to be known as the "British three running down clause", led to the formation of shipowners associations for the p urpose of mutually insuring their exposure. T hese associations were kno wn as Protection and Indemnity (P and 1) clubs and as members, shipowners were able to pool their losses left uncovered by the hull policies. Over time these P and I clubs have grown to represent approximately 95 per cent of the world's maritime P and I insurance. 'Modern typical P and I policies provide for loss due to injury, illness and loss of life (normally defined broadly enough to provide damages required under maintenance and cure, Jones Act, and general maritime law) to which the Insured is legally obligated to pay. P and I also extends benefits for hospital and medical expenses incurred by the Insured beyond those he is legally obligated to pay as well as, repatriation and other

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Marine Insurance and Vetting Inspections

Modern typical P and I policies provide for loss due to injury, illness and loss of life (normally defined broadly enough to provide damages required under maintenance and cure,Jones Act, and general maritime law) to which the Insured is legally obligated to pay. P and I also extends benefits for hospital and medical expenses incurred by the Insured beyond those he is legally obligated to pay as well as, repatriation and other medically necessary transportation expenses; damage to other vessels caused by collision or other non-collision losses such as the dropping of cargo on the deck of the vessel or forcing another vessel aground; damage to property other than vessels; wreckage removal, damage to cargo; fines and penalties; expenses related to the prosecution of mutiny or misconduct; quarantine expenses and defense costs. Crew cover, loosely and informally explained is an extension of the P and I to cover the liability of a vessel owner/operator to the crew; similar to the way that Workers' Compensation covers employees in non-marine environments.

The Origins of the P and I Clubs The present P and I Clubs are the remote descendants of the many small hull insurance clubs that were formed by British shipowners in the 18th century. These were set up by groups of shipowners, drawn in each case from a small geographical area, who were dissatisfied with the scope and cost of the hull insurance then p r o v id ed b y t he t wo co mp a n ie s wh o had b ee n g r an ted i n 1 7 2 0 a sta t uto r y monopoly which excluded other companies from such business, namely the Royal Exchange Assurance and the London Assurance, and by individuals operating in London from, for example, Lloyd's Coffee House. These hull clubs were essentially unincorporated associations or co-operatives of shipowners who came together to share with each other their hull risks on a mutual basis, each being at the same time an insured and an insurer of others – still the basic concept of the present P and I Clubs, despite the fact that they are now incorporated so that in law it is the club and not the individual members who provide the insurance.

Temporary Decline of the P and I Clubs After the removal in 1824 of the company monopoly in favour of the Royal Exchange and the London Assurance, greater competition had a salutary effect on the rates, terms of cover and service offered by the commercial market and by Lloyd's underwriters. The hull clubs became less necessary and went into decline. A few exist today, but their share of the total market is not very significant.

Rebirth due to Growth of Third Party Liabilities But as the hull clubs declined, shipowners found the need to create similar associations for a different purpose. T he need sprang partly from the steady increase from the middle of the 19th century onwards in the burden upon British shipowners of liabilities to third parties. It became more usual for injured crew members to seek compensation from their employers, and claims by dependants of crew members who were killed were facilitated by Lord Campbell's Act of 1846 ( An Act for co mpensating the families o f persons killed by accidents). T he possibility of claims by passengers was greatly increased by the same Act and by the vast numbers of passengers who constituted the flood of emigrants to North America and Australia in the second half of the century. Shipowners needed cover against these risks. They were also becoming increasingly aware of the inadequacy of the insurance cover that they did have in respect of damage caused by their ships in collisions with other ships. The usual cover for claims by other ships and their cargo for damage caused in collision excluded altogether one fourth of such • damage and; more seriously, was limited in amount (apparently the maximum recovery under the policy, including both damage to the insured ship and liability for the damage it had caused, was the insured value of the ship). Eventually, in 1855, the first protection association was formed. This was the Shipowners' Mutual Protection Society, the predecessor of the Britannia P and I

Club. It was intended to operate like a mutual hull club, but to cover liabilities for loss of life and personal injury and also the collision risks excluded from the current marine policies, particularly the excess above the limits in those policies. Other similar associations were formed.

Marine Insurance

In 1874, the risk of liability for loss of or damage to cargo carried on board the insured ship was first added to the cover provided by a protection club. The values of cargoes had risen and cargo underwriters had become keener on recovering their losses from shipowners, in which they were encouraged by a somewhat more sympathetic approach by the courts. After 1874, many clubs added an indemnity class to provide the necessary cover. Subsequently, most of these separate classes have been amalgamated with the class reserved for the original protection risks, and today the distinction between the two classes has virtually disa p peared within the P and 1 Clubs.

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While all the original P and I Clubs were based on various towns and cities within the United Kingdom, clubs were subsequently established and today flourish in Scandinavia, in the United States and in Japan. Most of the major clubs now belong to the International Group for reinsurance and other purposes. Moreover, many clubs originally based in the UK have comparatively recently been re-formed in such places as Bermuda and Luxembourg in order to secure, in respects of clubs' funds representin g calls or premiums paid by their Members but not yet used for the payment of claims, freedom from exchange controls. Such freedom is demanded by the shipowners from all parts of the developed and developing world who now make up the truly international membership of the larger clubs. The popularity of the club system of insuring liability risks can be judged from the fact that approximately nine out of ten ocean-going ships are currently entered in a P and I Club. Mutual Character The P and I Clubs all operate on a mutual or non-profit basis aiming to call up only sufficient move) in each year to meet costs, expenses and claims for that year. There are no shareholders and the shipowner members of the association insure each other.

•

The thirteen P and I Clubs co-operate in two important areas. First the clubs themselves share claims with each other and buy high levels of reinsurance o n a collective basis. This enables each club to provide much higher levels of cover than are normally available in the commercial market. The second area of co-operation is in matters of common interest, such as new legislation or discussions at the International Maritime Organisation (IMO) or standard shipping contracts.

The Cover The P and I Clubs provide cover for a shipowner's liabilities, not the fabric of the ship itself. The risks covered will usually include: (a)

Death and personal injury of •

Seamen

•

Passengers

•Third parties (b)

Liabilities in respect of stowaways or persons saved at sea.

(c)

Liabilities arising from collisions.

(d)

Liabilities arising from groundings.

(e)

Liabilities arising from damage to fixed and floating objects.

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Marine Insurance and Vetting Inspections

(f)

Liabilities arising from pollution.

(g)

Liabilities arising from wreck removal.

(h)

Liabilities arising from towage operations.

(i)

Liability to cargo, together with other legal and other costs associated with dealing with these claims.

Figure 5 .3 (a): P & I Covers Personal Injury to Seamen

Figure 5.3 (h): P & I Covers Death and Personal Injury to Seamen

The Service Given by P and I Clubs A P and I Club operates as a combination of an insurance company, a law firm and a loss adjuster. This means that a club should be able to assist a shipowner in dealing with every aspect of a casualty from finding experts and contractors to deal with the immediate casualty all the way through to providing legal advice and payin g claims. The P and I Club exists in order to help the shipowner and pay his liability claims. Almost always, the shipowner and his club will work together in order to solve theproblems and it is very rare that a club will be in dispute with a shipowner over cover. The clubs are unique organisations in that they provide not only insurance cover, b ut also claims handling ( legal) ad vice and a casualty respo nse ser vice. I n managing a shipowner's liabilities, a club may have to deal with the loss of two bags of rice or the total loss of a fully loaded VLCC. The club's reaction therefore needs to be highly flexible and geared to the particular incident. The clubs have access to a high quality network of specialist technical advisers, maritime lawyers and local commercial correspondents. Correctly used, that network should ensure that the shipowner and his club will be properly advised on the essential elements of the claims which arise out of a casualty. The shipowner can expect to be told whether or not he is liable for the claim, how much it may cost, whether he is entitled to limit his liability and whether he may expect to recover all or part of his loss from some other party who may also be to blame.

The Role of the P and I Clubs in Oil Spills The International Group of P and I Clubs will between them insure almost all internationally trading tankers. The clubs will therefore have a role to play in nearly 14every oil spill of any consequence. Although in Civil Liability Convention (CLC)

countries, the clean-up operation will be conducted by government agencies and in the USA by the shipowner, the club will almost always be closely involved, even if only to approve expenditure.

Marine Insurance

Figure 5.4: Spill Over of Oil from Ship

Insurance Guarantor In the context of an oil pollution incident, the club will almost always have provided the insurance guarantee, the Civil Liability Convention Certificate. In the USA, which has its own Oil Pollution Act (OPA 90), there are separate guarantors, but they rely on the clubs to provide the actual cover and service. Liaison with International Oil Pollution Compensation Fund (IOPCF) In larger oil spills where the IOPCF may be involved, the P and I Club will liaise with the IOPCF, both so as to keep them informed and so as to ensure that there is a smooth flow of funding without different views being taken on the recoverability of expenditure at different levels. In practice the clean-up costs (which come at the beginning) are usually the concern of the club and the IOPCF will only become involved in payments at higher levels for third party claims. C

Source of Funds Very few shipowners can afford the cash flow needed to fight a major oil pollution incident and even the oil companies do not like to be out of pocket for too long. The club will therefore expect to act as banker for the clean-up operation and third party compensation payments. This means that it is important to agree expenditure in principle in advance of incurring it so that disputes can be avoided. Legal Advice This falls into two parts, the overall issues of liability and details of particular claims. In both areas the club (using outside legal advice where appropriate) would expect to assist the shipowner. Casualty Response The club will not itself conduct a clean-up or salvage operation but it will be in a position to find appropriate advisers. surveyors and through them contractors capable of doing the work. 15

Marine Insurance and Vetting Inspections

Tanker Casualties Some aspects of a casualty are reasonably predictable. For example, a sizeable oil spill is likely to involve a large clean-up operation. There will probably also be third party claims from fishermen, boat owners and the owners of shore-side property. There may be thousands of individual claimants. Each claim must be sifted and assessed. In other types of casualty, different considerations will apply. A collision could involve death and injury claims, and probably salvage issues. Casualty response is essentially about practicalities. It is based upon systems which can be adapted for use in any type of casualty in any location. Where Does the Club Fit in? The club needs to be adaptable to deal with a casualty on any scale involving a ship of any type in any place. To achieve this, the approach needs to be both flexible and simple. For example, an oil company owner will have a highly developed response plan which is driven and manned by the oil company often operating from its own building with its own staff. In such a case, the club will usually interact with the oil company, providing advice and comment. Only rarely will the club be expected to take the lead. At the other end of the scale is a shipowner who owns a few ships operated from a remote corner of the world and who simply does not have the manpower or resources to deal with a major casualty. In that case, the club will be expected to pla y a prominent role in or g anising the response on behalf of the shipowner and may be called upon to provide a response centre and staff. Many shipowners have trained their own personnel to handle media enquiries but, for those owners who have not, the club will be able to assist. International Tanker Owners Pollution Federation (ITOPF) and the Clubs T he club s r ely heavily on IT OP F in many o f these areas. IT OP F's technical expertise and breadth of experience is unrivalled and ITOPF will normally be asked to assist in any oil spill of significance, be it from a tanker or non-tanker, wherever it may occur. The Federation's practical experience of oil spill clean-up me t ho d s, e n v ir o n me n ta l d a ma ge as se s s me n t a nd r es to r a tio n tec h n iq ue s is invaluable in delivering common sense advice based upon sound scientific principles — principles which, all too often, are not uppermost in the minds of government authorities. ITOPF's ability to deliver objective and practical advice on pollution issues is invaluable in two ways : (a)

In helping those responsible for clean-up and damage assessment to respond more effectively and on a realistic scale.

(b)

By providing government agencies and private contractors with help in spill response planning.

SAQ 1 (a)

How does a marine insurance policy differ from a car insurance policy?

(b)

How is a Hull and Machinery policy issued?

(c)

What is the genesis of the P and I Clubs?

(d)

What are the risks covered by P and I Insurance?

(e)

Why is P and I Insurance cover important to oil tanker owners?

(f)

What are the various types of marine policies?

(g) 16

What is the difference between H and M and P and I?

(h)

What is the collision clause that is meant to make shipowners more responsible?

(i)

What are the types of marine losses?

0)

What is your understanding of third party liability?

Marine Insurance

5.6 SUMMARY The Operation of ships is a complex activity that takes place in an environment which is often unpredictable and sometimes hostile. Risk management may be defined as a systematic method of protecting resources against losses so that the aims of the organization can be achieved without interruption. The principles and the procedures of underwriting remain essentially the same today, except that the slips of paper and pencil stubs have given way to plasma screens and computer keyboards and the messenger boys to internet and telephone. Losses are de.. ,ed as Total loss: Actual, Presumed, Constructive. Partial loss : Particular Average, General Average Marine policies are known by different names according to their manner of executive and the nature of the risks covered. The main risks insured against in a marine policy are stated in the "perils" clause which is often supplemented by the "specially to cover" clauses, or restricted by provisions eliminating one or more of the insured risks. eliminating Hull and machinery (H and M) policies are usually time policies, the maximum period of insurance usually being 12 months. Protection and indemnity policies provide for loss due to injury, illness and loss of life to which the insured is legally obligated to pay. obligate

: Some of the pictures/images used in this Unit have been sourced from the internet. We wish to thank the creators/publishers for the usage of their material.

17

UNIT 6 VETTING INSPECTIONS Structure 6.1

Introduction Objectives

6.2 Brief History 6.3

Chemical Distribution Institute

6.4 Ship Inspection Report Programme 6.5 Inspector Accreditation 6.6 Typical Deficiencies 6.7

Practical Issues within the Industry

6.8 Summar y

6.1 INTRODUCTION Ship vetting is an in-depth assessment of a ship with respect to its quality and that of its owner, operator and manager, right from commissioning to current status. Vetting enables the charterer to optimise vessel selection by matching available vessels to operational requirements of the voyage and therefore maximising efficiency.

Objectives The overall aim is to increase safety at sea and to decrease pollution. The following issues are part of the broader perspective of ship vetting: •

check whether the ship complies in every respect with international legislation, with certain industrial standards and certain national laws (e.g. OPA 90 — a ship which does not comply is not allowed to enter any American port),

•

avoid major oil pollution cases because it damages the reputation of oil companies and it involves enormous financial responsibilities. At the same time, the environment is better protected,

•

increase safety on board as well as to better the safety management of a company,

•

decrease the danger of explosion and/or fire and the ensuing damages for the terminal installation and its surroundings, and

•

ensure that cargo is not c7arried on substandard ships. There are too many implications if the cargo is damaged or lost due to substandard vessels, owners, operators or managers,

6.2 BRIEF HISTORY Tanker ownership was traditionally with oil companies. Long term time charters were becoming increasingly rare with the spot charter market becoming very active. In and around the '70s and '80s, the oil industry saw ownership of tankers gradually moving from oil companies to independent shipowners. The pattern of tanker ownership moved from the well established independent shipowner with a substantial fleet to nontraditional shipping interests, often with no active interest or experience in shipping. The

19

Marine Insurance and Vetting Inspections

fleet size was also small, sometimes only a single ship representing the owner's stake in the oil industry. Ship managers began to play a growing and influential role in this changing world. The oil industry, now being a major spot charterer of all types of tonnage, began to be concerned with the quality of tankers. A number of member companies of an internationally well established organisation called the Oil Companies International Marine Forum (OCIMF) began the development of ship vetting systems in the late '70s and early'80s. Each scheme was unique to the individual company's needs. Recognising that different standards were sometimes being applied, with consequent confusion amongst shipowners, OCIMF members developed Inspection Guidelines for Oil Tankers in 1989, based on international conventions such as SOLAS, MARPOL, STOW, etc. and industry-accepted technical guidance such as ISGOTT (International Safety Guide for Oil Tankers and Terminals) and other standards. Individual in-house databases enabled the oil company to form a reliable view of a ship's suitability for charter. The number of major tanker accidents in 1989, ship quality and liability issues assumed an even greater prominence in the oil industry. Besides vessels, there was a realisation in the industry that shore-based management of the ship was important as well. Therefore, OCIMF members began to assess the quality of ship management agencies, operators, their policies and the implementation of those policies. There are at present mainly two initiatives working in this field Ship Inspection Report Pro g ramme (SIRE) is a project worked out by OCIMF and concerns the transport of oil by sea. Chemical Distribution Institute (CDI) is an independent or ganisation with its own statutes and it is also part of a bigger project, initiated under the 'Responsible Care Programme' of the European Community, concerning the distribution, transport and storage of chemicals and gas over the road, in the air and at sea.

Figure 6.1

Vetting inspections are carried out by qualified personnel, as per the OCIMF standards and guidelines to make it uniform. SIRE was introduced to ensure this uniformity. It is open to OCIMF members, bulk oil transport operators, oil, power industrial or oil trader companies which charter tankers as a normal part of their business and government bodies such as port, canal and flag state authorities. According to industry estimations, ships on average are subject to around 10 inspections 20 per year. This includes one to two CDI inspections every year, with two or three from oil

companies forming part of the OCIMF. Then there are three to four per year from terminals, two to three from independent vetting associations, one from the P & I club, one ISM audit every year, three to four Port State- Control audits, one annual flag state audit. eight surveys from class and an annual inspection from the United States Coast Gu rd USCG). These inspections cost about USD 3,000.00 each.

Vetting Inspections

a

C h o o s i n g

a

S h i p

The charterer's decision of whether or not to charter the vessel is made on a variety of different criteria, of which the inspection is just one element. Charterers review information from numerous sources, including the vessel's detention and casualty record, its past experience with the vessel and its management. They have their own complex systems (many automated) of actually assessing the ship from the data available and determining whether or not it is suitable. It is worth noting that charterers do not want to fail ships, or to set impossibly high standards. The more ships deemed suitable for charter, the keener is the competition, and the more likelihood a vessel will be available immediately when required. In some instances, charterers may be fully aware about problems on board Vessel 'A', but feel these problems to be less severe as compared to the problems on Vessel 'B' and will prefer their cargo to be given to Vessel 'A' inspire of the said problems. If two ships become available for the same price, but one of them has a minor deficiency, then the charterer may well choose the one without the deficiency with everything being equal. But having deficiencies reported does not necessarily blacklist the ship. But obviously, if the vessel is deemed too high a risk, then it will not be chartered. Part of the reason for the whole process is trying to reduce the chances of substandard ships being used to carry oil. Another consideration is that if a vessel is also detained by Port State Control, then while it may not be liable to charter costs (if the shipping company can be proved to be to at fault), it does mean that a very valuable asset, its cargo, is sitting idle, and will be late to arrive at its destination. Charterers want to avoid chartering a ship which might be detained. With spot charters, brokers typically present the charterer with a range of different options at different prices enabling the charterer to take the cost into account when making his chartering decision. Contrary to popular belief, charterers, especially OCIMF members, will often pay more for a ship they believe to be of superior quality.

6.3 CHEMICAL DISTRIBUTION INSTITUTE The Chemical Distribution Institute, based in the UK has its own inspection system which it harmonising with the OCIMF SIRE system. The form was originally intially by CEFIC, the European Chemical Industry Council. is

ct DI 15

c7 -PA-

harmonising its safety measures with OCIMF, so the two groups can

include Chevron, DOW, Lyondell, BP Norsk Shell, Du Pont, I locchst, Akzo Nobel, BASF, ConocoPhillips, Petrobras and Kuwait

Petroleum. The databases are available to all participating companies, accredited inspectors, shipowners (marine) and terminal operators (terminals). CDI produces report analysis software, which can, for example, show tables and reports of the number and percentage of nonconformances, inspector observations, comments and non-conformances by category. 21

Marine Insurance and Vetting Inspections

6.4 SHIP INSPECTION REPORT PROGRAMME With a significant increase in ship inspection activity, OCIMF members with ship vetting programmes recognised that duplication of ship inspections was occurring and occasionally several inspectors from oil companies, and indeed from other organisations such as Port State Control and insurance interests, had been on board the ship at the same time seeking to carry out inspections. Clearly, apart from the sheer inefficiency of this activity, ship staff was put under considerable stress at times when the ship was busy in port, probably loading or discharging. OCIMF members also recognised that it would be impossible for individual companies to maintain up-to-date inspection reports on every ship that was potentially of interest to them and that some system of sharing inspection reports was necessary. This combination of circumstances led to the development of the SIRE programme that was launched in November 1993. The original SIRE programme consisted of a database comprising OCIMF member company's inspection reports compiled according to each company's individual inspection procedures. The SIRE report itself contained only that information that had been submitted by the inspecting company and neither the report nor OCIMF provided any conclusion, rating or recommendation as to the suitability of the ship. A key feature of SIRE is that membership is entirely voluntary. SIRE's main objectives were to extend the availability of ship inspection information and data beyond the membership of OCIMF, to reduce the duplication of effort by inspecting companies and, as a consequence, to ease the inspection burden on ship's staff. Following OCIMF's mandate, the SIRE programme was, and remains, strictly non-commercial and it only considers issues concerned with ship safety and pollution prevention. While the SIRE programme was developed primarily to address the risk management needs of OCIMF members, it was recognised that there were considerable potential benefits to the tanker industry as a whole and to those other bodies who had an interest in managing the risks associated with ship quality. It was felt that shipowners would benefit from a more efficient inspection system and that non OCIN4F-member charterers could have access to SIRE. Importantly, recognising their crucial role in ship quality assurance, it was decided that port and flag States could become SIRE users. It is a fact that vetting inspections are becoming stricter and more demanding. Although most shipping companies are able to comply with the requirements of the major oil companies, they often lose track of the rapid changes of these requirements, which are recorded and kept in previous inspection records. Bearing in mind that these requirements vary from one oil company to another, the problem is compounded.

6.5 INSPECTOR ACCREDITATION To be accredited as a SIRE inspection. Inspection hive a Class 1 deck or engine certificate of competency and not less Chan five years ut sea service including not less than two years at a senior rank. They must pass a formal written examination, pass an onboard audit, and undergo periodic re-auditing. They must conduct a minimum number of inspections every year and periodically attend refresher courses. The Inspection Process Inspectors working for oil companies go on board ship and make a report based on quality of the vessel, its equipment and operational practices.

22

Under the SIRE programme, all the vetting inspections, which oil companies make on shipowners, are put into a standard format, so they can be shared between the oil companies. The SIRE inspection is geared around checking for items which can only be checked by physically having someone on the ship, checking that all the documents are there (logbooks, manuals, certification) and are correctly compiled, the necessary complement of seafarers is present, they can all speak a common language, there is a training policy all charts are tip to date, alarm systems are operational and tested, lifeboat drills are h e ld, hoses, gauges, mooring equipment and pipelines are in good condition, planned maintenance systems are being followed and the ship is clean and tidy. All the inspection questions are based upon IMO regulations and best-accepted industry practices. The inspector normally spends about 8 hours on board the ship carrying out the inspection, normally accompanied by a senior ships officer or in some cases the ship's superintendent. The inspector's report is sent to the shipping company, which has 14 days in which to make a comment on it (or explanation for any y deficiencies). The shipping company can comment at any time during which the report stays in the system. Once any comment has been received, or after 14 days (whichever is the earlier), the report is made available through the SIRE system. SIRE participants can access each report and the applicable comments. Government or g anisations, including port state control authorities, can access all the reports free of charge. The r eports are made available on the system for 12 months, after which they are put in an archive for 12 mo nths and then deleted. In most cases vessels are inspected 2-3 times a year ensuring that the most up to date condition of the ship is available. SIRE has put together a very large database of information about tankers. 45,000 inspection reports have been submitted to SIRE so far; currently there are over 10,000 repo r ts on over 6,300 vessels, with inspections conducted over the last 12 months. Over 1600 reports are pulled out of the database every month. There are 275 fully accredited SIRE inspectors around the world and 67 companies who can access reports from the database.

Vetting and its Role in Client Relationships T here are many new factors in ship vetting that affect the profitability of a company. The proper and methodical handling of problems together with the wellinformed and effective relationships establish6d between shipping companies and their custo mer s ar e vital l y i mp o r tant facto r s fo r a co ntinued wo r ki ng relationship with clients, especially if these are major oil companies.

Figure 6.2

Vetting Inspections

Marine Insurance and Vetting Inspections

For example, after a vetting inspection, a major oil company may cause a record to be made of remedial actions to be carried out in the future. Shipping companies are expected not only to take remedial action, but also to show how similar impending occurrences will be eliminated. In some cases, it will be necessary to show how the methods used to implement remedial action were in accordance with safe practices. In other words, documentary evidence is required to show a full picture from a detected deficiency, its satisfactory repair conclusion, and measures taken to avoid reoccurrence. Getting Ready for Inspection

The SIRE Inspector will always use the VIQ (Vessel Inspection Questionnaire) as the base document for the inspection. If the Master/Superintendent makes a preinspection, shortcomings can be identified and corrected prior to the actual inspection. Generally the inspector comes on board and has a meeting with the captain. He discusses the vessel's schedule and tries to inspect the vessel with least possible interference to the cargo work. It is recommended that he be accompanied by a senior officer of the relevant department i.e. the Master or Chief Engineer. It helps if the vessel is prepared with the initial paper work such as all the trading certificates, crew certificates, etc. It is a good idea to keep all files, log books and other records ready in the ship's office prior to the inspector's arrival. Besides being convenient during the documentation review, it also creates a good impression about the professionalism and foresight of the vessel's officers. The Inspector will wish to sight the following, where applicable • The Certificate of Registry; •

• •

The vessel's trading certificates: Safety Equipment, Load Line, Safety Radio, IOPP, Safety Construction, International Tonnage, ISM Document of Compliance (certified copy), ISM Safety M-nagement Certificate, Certificate of Fitness or Noxious Liquids Certificate. Oil Record Books Parts I and 2 or Cargo Record Book; Certificates of Civil Liability for Oil Pollution; tr

• The USA Certificate of Financial Responsibility and the last Tank Vessel Examination Letter; • The Class Certificate, Enhanced Survey File with Condition Assessment Report and Quarterly Class reports; • Approved manuals: Stability, Damage Stability, Inert Gas, COW, CBI, and ODME; • An approved SOPEP and VRP Manual, • SOLAS Training Manual, SOLAS Maintenance Manual, life saving appliance and fire fighting equipment maintenance records; • The Procedures and Arrangements Manual (for chemical and gas carriers); • The Cargo Gear Register; • Officer and crew national Certificates of Competency, Continued Proficiency and Dangerous Cargo Endorsements; • Evidence of Administration acceptance of crew Certificates of Competency; • The Manager's Operating Instructions; • The Company Drug and Alcohol Policy and records of unannounced testing; 24

•

The Garbage Record Book and the Garbage Management Plan;

•

Records of testing of mooring winch brakes, mooring rope/wire manufacturer's certificates, bow stopper certificate;

•

The last Port State inspection certificate;

•

Hot work and enclosed space entry permits; and

•

Vetting Inspections

The technical publications listed in the OCIMF Vessel Inspection Questionnaire as applicable to the vessel.

Once the paper work is completed, the-inspector takes a round on deck to identify any deficiency. At the same time, he might ask few questions to the crew members on deck. On completion of the deck round, he goes down to inspect the engine room. It should be noted that the Emergency Fire Pump, Emergency Generator, Emergency Steering and the ODME will be expected to be operated by the officer or any other representative accompanying the inspector. It is also important to communicate tactfully with the inspector at all times. Loose talk about other ship staff, the company or other body or organisation will not be appreciated. Communication should be precise, professional and to-the-point always. The Master can expect that the inspection will take about six to eight hours and be performed in the following order, unless the order of inspection should be altered to fit the vessel's schedule: •

Review of documentation (preparatory for opening meeting).

•

Opening meeting, with Master, Chief Engineer and Chief Mate (if available).

•

Complete review of documentation.

•

Wheelhouse and navigation.

•

Communications (radio room or GMDSS station).

•

The exterior of the wheelhouse.

•

The exterior of the accommodations to the poop.

•

Up the main deck to the forecastle and forecastle spaces.

•

Back down the main deck and checking a ballast tank (as agreed in the opening meeting).

•

The pump room

•

to the Cargo Control Room with Chief Officer.

•

Discussion with Chief Engineer and into the engine room including review of PMS.

•

With the Master back through the internal areas of the accommodations.

•

Finally a period for the inspector to summarize his thoughts.

•

A final meeting with the Master and department heads.

Any variation necessary to avoid disruption of the ship's normal operation will be considered. The order of inspection can be varied as necessary. During the final meeting, a list of observations will be reviewed with the Master. This review is to ensure that there are no observations that can be cleared because of a simple misunderstanding. The Master is not expected to provide corrective 25

Marine Insurance and Vetting Inspections

actions or to indicate that he agrees with the observations. His signature is only an indication that he received the observations. The following area few points to be remembered prior to inspection : (a) Critical equipment or documentation normally placed at the first point of access:

26

•

Gangway to have a safety net correctly rigged. Most nets are rigged around the gangway itself. The correct procedure would be to rig the net between the shipside and the outboard side of the gangway. The condition of the net should be checked at regular intervals to ensure that its condition does not deteriorate to the extent that it may not be able to support the weight of an average person who may fall on it.

•

A lifebuoy with line and light must be placed near the point of access. The condition of the line must be checked especially at the point where it is made fast to the buoy. The buoy itself should be of the required weight. The light should be in working condition, secured correctly to the buoy and watertight.

•

The International Shore Connection with gasket, nuts and bolts should also be kept standby. The nuts and bolts should be greased and moving freely. The gasket should be in good condition. The threads or the coupling itself should be free from damage.

•

A visitor's helmet should be available at the gangway itself. This creates a very good impression about the safety culture on board the vessel. If many officials or visitors are expected, the appropriate number of helmets and visitor cards should be available.

•

The visitor's log should be available and appropriate entries made and endorsed in it. Common details that are normally required to be filled in would be the unique visitor card number, name of the person, rank, the person's name who the visitor desires to meet, the reason for the visit, the equipment/baggage/personal effects carried by the person along with him and the date and time.

•

Warning boards should be placed near the point of access. These boards should be of an appropriate size so as to be easily legible to the average individual. They should be well illuminated in all conditions of darkness. Commonly found entries on these boards could be such as but not limited to, 'No Unauthorised Access', 'No Smoking', 'No Mobile Phones', 'No Naked Lights' and 'Safety First'.

•

A Safety Plan which should include a crew list and cargo stowage plan. These are to assist shore personnel such as the fire brigade to take a head count and know about the vessel's structure and equipment in case of an emergency. Needless to say, the crew list and cargo stowage plan must be updated at all times.

(b)

The manifold watch keeper must check with all visitors on their business and enter it in the visitor's log. Personnel in the CCR must be informed so that inspector is escorted up to the Master's cabin and around the vessel as per the Ship Security Plan.

(c)

All watertight doors must be shut including the engine room skylight and the midship/forepeak stores. If there is a need to open any of these doors, any

staff member should be available at that point to ensure validity for the door to remain open.

(e)

Vetting Inspections

All scuppers must be plugged. Pre-arrival checks should be made to ensure that scupper plugs are in good condition, bellows are not cracked and bolts are free of corrosion and/or damage. If in doubt, scuppers should be plugged and tested with water to ensure water-tightness. Anti-pollution gear must always be in readiness. No metallic shovels/ equipment should be used as part of anti-pollution gear. Operation of Wilden pumps or other pumps should be checked each watch. Any leakage of liquid or compressed air should be made good prior to arrival port. Pump bodies should be correctly earthed to ensure that electrical charges do not develop in or around the equipment, which may be placed in or very near a hazardous area. All personnel must be aware of the fact that Oil Spill Dispersant should be used over side in case of oil pollution only after obtaining the requisite tl

permission from shore authorities. (f)

All drip trays to be cleaned and dry. No extraneous material or debris should be found in these trays. The height of the tray should not be greater than the height of ventilators or sounding pipes inside the tray. If soundin g pipes are shorter than the height of the tray, they should always be capped shut to ensure water tightness. All trays must have plugs in place, including the drip trays of winches. The appropriate flags/lights should be displayed. Condition of flags should be inspected and the necessary action taken prior to arrival port. A fla g in tatters or one which is dirty, with grease stains or faded will not create a very good impression about the vessel in the mind of the inspector. If the vessel has just arrived in port, it may happen that the vessel's navigation lights are inadvertently left on. The designated officer or a responsible person nominated by the officer should ensure that these lights are switched off as soon as the vessel ceases to be underway.

(h)

Sledgehammers should be placed in position near the bitter end release mechanism of both port and starboard anchor cables. It is not uncommon to find that only one hammer has been kept for releasing both cables. Instructions that are simple and clearly legible should be posted at both chain lockers. Sounding pipes should be clearly marked with caps in place. Arrangements for draining the chain lockers should be in working condition and the date of last test should be stencilled in the vicinity.

(1)

All loose gear on deck and engine room to be secured. Gear should be secured to strong points of the vessel and not to fixtures such as piping, ventilators, sounding pipes or cable trays. Gear stowed on the freeboard deck or other decks exposed to the weather should be elevated and secured on wooden/fibre palettes. Fire hoses should be connected to hydrants. Hoses should be in good condition, with no cracks or pinholes that could reduce water pressure and consequently effectiveness. Couplings should not be secured with hose clamps or other temporary means. Copper wire should be used to secure couplings to the hoses. Washers should be in good condition and not hard or cracked. Hoses should also be connected to the foam line on either side of the manifold. Foam monitors should be pointed towards the manifold and the cargo area in general. Personnel sho uld be aware that the initial discharge from the monitor should be pointed away from a fire. This is to ensure that water or a mixture of foam and water does not make direct contact with fire, which could lead to boil over and generation of an enormous amount of steam. Personnel in the vicinity of the fire could be injured by this occurrence.

27

Marin e In su ran ce an d vetting Inspections

(k)

Brake testing of mooring winches must be carried out annually. Results of the test should be stencilled along with the holding capacity, slack and heave directions and date of testing. Pins of the clutch levers should be in place and secured with either chain or wire. Brake spindles should have some marking arrangement to ensure that all personnel tighten the brake to the desired tightness only. Grease nipples should be operable, gears should be greased and all moving parts should be free.

(1)

Oxygen and acetylene bottles should be stored in lockers separate from each other. The cylinder valves should be kept shut. Lines should be depressurised and gauges should show zero pressure. Access to these lockers should be available only to authorised personnel. Flame arrestors should be in position and working correctly.

(m) Excessive black smoke from the funnel should be enough cause to notify the personnel in the engine room to take appropriate action. There are quite a few ports globally where fines may be imposed on vessels or the vessel blacklisted.

6.6 TYPICAL DEFICIENCIES Below are some of the deficiencies pointed out by a British Petroleum (oil major) inspector during an actual inspection :

Figure 6.3

28

(a)

The aft Emergency Towing Arrangement (ETA) was not connected to the pick-up rope for deployment in 15 minutes by one crew member. The pickup rope was later connected up by crew (the ETA has to be kept ready at all times and all components have to be connected and in working condition).

(b)

Material safety data sheets (MSDS) were not available for chemicals stored in the steering gear compartment (MSDS must be available for all chemicals, paints and other compounds that might give rise to an undesired event in case of accident or personal injury).

(c)

The starboard aft and forward main deck mooring winch clutch levers were not properly secured rendering the clutching arrangements ineffective

(d) The port side navigation light was with partly detached holding bracket and was not bolted down at the base (this could have serious implications towards the visibility of the light itself).

o

lT

Figure 6.4

(e) The bitter end release arrangements for port and starboard anchor cables outside the chain lockers were covered with steel boxes and secured with 24 bolts thus hampering quick release (the arrangement has to be such that the cable can be released in the quickest possible manner in the simplest possible way. The typical arrangement is a large L-shaped pin connected to the last link within the locker secured with a smaller pin. The small pin is supposed to be removed and the L-shaped pin knocked out with a sledge hammer, a process that should take 30 seconds). The foam compound in two drums for portable applicator in the engine room was labelled with last test date that was six years from the date of inspection (foam compound is normally tested at intervals of one year). The incinerator was used for burning of oily rags in the engine room but there were no entries in the garbage record book to reflect these activities (this could imply that the oily rags might have been disposed of by other illegal means or that there is a failure on part of the vessel's staff towards completion of documentation). (h)

(j)

The fixed combustible gas detector for cargo pump room was fitted with a single sensor head sited above the bottom platform and at the port side away from the cargo pump casings (detectors need to be placed at all sensitive locations and in good number to ensure early detection). The local inert gas main manometer was indicating zero pressure and reported to be defective while discharging operation was in progress (SOLAS requires a minimum of 100 mm water gauge pressure in the cargo tanks during discharging. A defective manometer will provide no indication

if pressure falls below the requirement or in case the tanks actually go into vacuum).

Marine Insurance and Vetting Inspections

The brake holding test of all self storing mooring winches had exceeded 12 months interval (12 month intervals may not be exceeded unless the vessel can justify non-performance due to an unintentionally long voyage because of machinery failure or due to failure of equipment required for testing).

6.7 PRACTICAL ISSUES WITHIN THE INDUSTRY Many tanker companies are reaching the conclusion that shipping has a real image problem i.e. most oil companies don't trust them, politicians don't trust them, and so they get subject to so many rounds of vetting inspections and new regulations. The problem with vetting inspections and regulations is that they are not a very good way of ensuring the quality of the ship i.e. they generally give shipping companies a bunch of hoops to jump through, and reward the shipping companies who manage to figure out what the hoops are and jump through them. The result is that shipping does not genuinely get much safer, oil companies continue to distrust shipping companies, shipping companies have a bad image and the problem gets worse. There is plenty of data available about shipping companies in various databases, including data about their casualty record, costs, decision making processes, detentions, casualties and surveys. If this data was better shared, everybody would know who the bad ships are, and would not give them any business, and everybody would know who the good ships are, so they would not need to be subjected to continuous inspections and seafarers could get more rest. The overall safety of shipping would be much improved.

SAQ 1 (a)

When and why was ship vetting introduced?

(b)

What is overall aim of vetting?

(c)

What are the practical issues faced by personnel within the industry?

(d)

What is the role of the Chemical Distribution Institute?

(e)

What is the SIRE programme?

(f)

What is the process of inspector accreditation?

(g)

What do VIQ and VPQ stand for?

(h)

Name at least five common deficiencies that could be easily rectified.

(i)

Name at least ten documents that an inspector would like see. Would vetting be a good idea for vessels other than tankers also? Give your own reason.

6.8 SUMMARY Ship vetting is an in-depth assessment of a ship with respect to its quality and that of its 30 operator, and manager, right from commissioning to current status. Vetting enables the

character to optimise vessel selection by matching available vessel to operational requirements of the voyage and, therefore, maximising efficiency.

Vetting Inspections

A number of member companies of the OCIMF began the development of ship vetting systems in the late 70's and early 80's. The overall aim of tanker vetting is to increase safety at sea and to decrease pollution. CDI is an independent organization concerning the distribution transport and storage of chemicals and gas over the road, in the air and at sea. It is worth noting that chatterers do not want to fall ships, or to set impossible high Standards. The more ships deemed suitable for charter, the keener is the competition, and the more likehood a vessel will be available immediately when required.SIRE inspectors must have a class l deck or engine certificate of competency and not less than five years of sea service including not less than two years at a senior rank.

Note:

Some of the pictures/images used in this Unit have been sourced from the internet. We wish to thank the creators/publishers for the usage of their material.

31

NOTES