Aon is warning shipowners could be next in line to be hit by so-called “nuclear” or “thermonuclear” personal injury awards in the US.
Nuclear awards refer to jury awards amounting to tens of millions of US dollars while thermonuclear awards are in excess of $100m.
Thermonuclear awards in the US have been increasing from $4.9bn in 2020 to $18bn in 2022, according to Aon’s figures.
In one case the family of an East Texas man who was killed in a car accident received an award of $770m from a jury.
So far most of the awards have been against corporations and have mainly occurred in the states of Texas, Florida and California.
They are often based on skilled emotional pleas by the plaintiff’s lawyers to juries.
Shipping has not been affected yet, but that may change, Aon said.
“While nuclear and thermonuclear verdicts are less common in the marine industry at present, there is some concern that they could catch up with other industries in the future,” Aon wrote in a note to clients.
The broker is advising that shipowners adopt a thorough watertight safety-first culture throughout the organisation through factors such as crew training, robust maintenance and accident response and investigation.
“Companies are often portrayed as corporate entities who value profits over safety,” Aon advised. “Being able to demonstrate that the shipowner provided comprehensive training to crew, all necessary equipment and PPE for the job and carried out regular monitoring, maintenance and repair of all shipboard equipment/machinery can go a long way to showing a jury that such allegations are without merit.”
It also advises shipowners to be proactive in the event of an accident to provide support to the injured party and to show it is ready to handle the situation with compassion and empathy.
The US Limitation of Liability Act should also provide some protection for shipowners from nuclear awards.
The act was recently updated to exclude some small passenger boats and crew transfer vessels from the limitation of liability.
Settlements
Aon is concerned there could be further attempts to change the act which might affect the mainstream shipping industry.
But for now, it generally takes around two years for a US court to decide on a limitation ruling, which can buy time for shipowners to come to a settlement and prevent a jury case.
“The risk of receiving a small award if limitation is upheld may provide an incentive for claimants to settle before the limitation ruling is given,” Aon advised.
“Where there are multiple claimants, and some start settling, the ones remaining typically do not want to risk being left with a much smaller award if limitation is upheld,” it said.
