Mutual protection and indemnity insurers have agreed to communicate with London’s commercial marine insurance market on claims where there is a common interest.
The move is outlined in new casualty guidelines drawn up by the International Group of P&I Clubs’ salvage committee — which represents 12 mutual marine insurers — and the Joint Marine Claims Committee (JMCC), representing London commercial insurers.
The JMCC includes members of both the International Underwriting Association and the Lloyd’s Market Association.
The agreement is an attempt to overcome potential conflicts of interest and will involve establishing a direct line of communication at an early stage of a casualty.
The International Group’s members provide third-party liability insurance, which mainly covers pollution and other damage caused by marine casualties.
The commercial insurance market insures the shipowner’s property under hull and machinery policies as well as providing war risk, kidnap and ransom and cargo cover.
The two parties agreed to communicate on salvage situations.
Areas of cooperation could include the contracting of salvage to reduce salvage costs for hull insurers, and reduce the risk of a casualty situation developing into a costly wreck removal for P&I insurers.
“Understanding the concerns of the other insurer can help to avoid delays in reaching agreement over the contractor best placed to assist and the contractual terms,” the two parties said in a statement announcing the agreement.
The P&I clubs and commercial insurers will also work on clarifying the limits of cover, which is a critical element in how marine claims are processed.
The insured value of a vessel usually determines if it will be declared a constructive total loss in a casualty situation, but it is the P&I insurer which usually picks up the bill for wreck removal.
The two parties outlined that there are some potential disadvantages, including protecting information that the insured party may regard as sensitive.
There are also different layers to the agreement. Claims under $10m are handled by individual clubs, but those exceeding that amount are shared under the International Group’s claims pool system.
Claims of more than $100m enter the International Group’s reinsurance programme, which is underwritten by the commercial market.
