WHY IS ISM IMPORTANT TO AN INSURER? MARK HARRINGTON, HEAD OF UNDERWRITING

To Protect & Indemnify the assured against their legal liabilities which arise in connection with the operation of the vessel

or the assureds interest in the vessel

THE P&I PRODUCT

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Rule 33.8 The Member must comply with all statutory requirements of the flag state relating to safety management and must at all times maintain the validity of ISM certificates, ISPS certificates, and other certificates issued by or on behalf of the flag state in relation to such requirements.

THE CLUB RULES

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Sharing liabilities with like minded individuals Pool Resources to provide highest limits of cover for shipowners/operators Share claims between the 13 IG Clubs to US$ 80m Assist in identifying the cause of negligent acts Controlling of risks Premium payable depends on claims made

FEATURES OF MUTUAL INSURANCE

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Vessel: The Herald of Free Enterprise

Date: 6th March 1987

Cause: Boson's Failure to close the bow doors, C/O failure to check the bow doors had been closed

Root Cause: Poor workplace communication and stand-off relationship between ship operators and shore-based managers was the root cause of the sinking and identified a “disease of sloppiness” and negligence at every level of the corporation's hierarchy

Loss: 193 Deaths, Total Loss of the vessel

P&I Claims Cost: US$ 51,000,000

HISTORY

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WHO PICKS UP THE BILL?

P&I Club (Standard) = US$ 1,600,000

Other Group Clubs = US$ 10,400,000

Lloyds of London = US$ 39,000,000 (Hull value not included)

P&I Claims Cost: US$ 51,000,000

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25

Perc

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GROUP CLUB AVERAGE PERCENTAGE PREMIUM INCREASES POST ISM

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Highest standards in maritime safety =

Less operating costs &

Reduced Insurance Premiums

ISM EQUATION

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CASE STUDIES RELATING TO THE ISM CODE BEN HARRIS, HEAD OF CLAIMS ǀ LOUISE HALL, HEAD OF LOSS PREVENTION

ANALYSIS OF RISK

Learning from incidents and near misses – an important part of an operation Two year ‘causation’ project – Result continual

analysis Aim: ‒ Identification of regional and sector trends ‒ Targeted loss prevention initiatives ‒ Assist Members in reducing their specific

claims exposure

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LOSS PREVENTION INCIDENTS ON HARBOUR CRAFT (UK)

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DREDGER MISC HARBOUR TUGS/PUSH UTILITY HARBOUR

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Vessel Category

Results of the Two Year Causation Study showing Number of Incidents on Harbour Craft by Claim Type

Pollution

Personal Injury

Navigation

Miscellaneous

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LOSS PREVENTION INCIDENTS ON HARBOUR CRAFT (UK)

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100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

DREDGER MISC HARBOUR TUGS/PUSH UTILITY HARBOUR

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im (U

S)

Vessel Category

Results of the Two Year Causation Study showing the Cost (US$) of the Incidents on Harbour Craft by Claim Type

Pollution

Personal Injury

Navigation

Miscellaneous

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Since the initial two year study the Club is finding the type of claim and contributing factors are consistent

LOSS PREVENTION INCIDENTS ON HARBOUR CRAFT

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LOSS PREVENTION INCIDENTS ON HARBOUR CRAFT (2014 POLICY YEAR)

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40

60

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1,000,000

2,000,000

3,000,000

4,000,000

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Cargo Navigation Crew Injury / Illness

Environmental Liabilities (Passengers)

Liabilities (3rd parties)

Towage

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S$)

Claim Type

The Cost (US$) and Number of Incidents on Harbour Craft by Claim Type during the 2014 Policy Year

Sum of Gross Incurred (USD) Number of Incidents

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LOSS PREVENTION NAVIGATIONAL INCIDENTS

Navigational and Towage claims, indicative of the operation: • Congested waterways • Manoeuvre close to other vessels, infrastructures and navigational hazards • Assisting 3rd party vessels

Is there any connection to the ISM code?

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LOSS PREVENTION NAVIGATIONAL INCIDENTS AND ISM CODE

Due to: Weather conditions Failure to follow Colregs and

misjudgement when manoeuvring Technology

70% Failures in the Navigation Process

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A vessel developed an engine fault which was reported to shore management, who subsequently arranged for the company fitter to attend.

The following morning, before the fitter had attended and carried out repairs, a new crewman took the boat out on the water.

Whilst manoeuvring alongside another vessel the engine went astern instead of ahead, contrary to the control lever, and the boat landed heavily against the vessel causing the crewman to fall.

The crewman suffered multiple fractures and a broken arm.

This incident would have been avoided if procedures had been in place to deal with the reported fault, in particular ensuring that the boat could not be operated prior to the fault being rectified.

The shore side manager reportedly gave verbal instructions not to use the boat but this was not sufficient. Written action and procedure required.

When any item of machinery is known to be defective, positive action must be taken to prevent further use until the problem has been rectified. This applies to all equipment on board.

Cost of claim: US$ 527,151

CLAIMS CASE STUDY ONE

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Passengers were disembarking. To do so they had to negotiate a change in level on the upper deck where there was a 27 cm step. In doing so a lady stumbled and fell, severely breaking her ankle.

The raised section of the upper deck was covered to within 6 cm of the step by a black plastic mat. The lower level and the 6 cm strip along the edge of the higher level was painted with white non-skid paint.

The result was that the edge of the step was difficult to detect visually. There were no handrails and there were no warning notices or other visual warnings.

Although crew members had been assigned to assist passengers at the gangway close by, none were assigned to assist passengers who negotiated the step.

Investigations revealed that crew assigned to the gangway had observed passengers stumbling on the step on numerous occasions. There were no procedures in place for crew to report observations and therefore no appropriate measures could be taken to minimise the risk e.g. painting the edge of the step in high visibility paint, placing appropriate warning notices in the vicinity, fitting a handrail and stationing crew members to assist passengers in negotiating the change in level.

Cost of claim US$ 46,000.

CLAIMS CASE STUDY TWO

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A passenger excursion vessel collided with the river bank in good conditions and broad daylight. Fortunately little damage was suffered and passenger injuries were limited to a few cuts

and bruises. Subsequent investigation revealed that the Mate was not paying attention to his duties.

He was trying to catch up with his paperwork and was not looking where he was going. Demonstrates that it is important to ensure that crews' attention is not distracted from

their principal responsibilities in relation to the safe navigation of the ship and safety of life on board. Any procedural system installed on board must be appropriate to the operations and

naturally fit and enhance safety on board, not create a forced and cumbersome environment. Cost of claim: Although no claims arose from this occurrence, the costs for a precautionary

investigation to protect the owners from potential injury claims from passengers and any possible inquiry by the regulatory authorities exceeded US$ 5,000.

CLAIMS CASE STUDY THREE

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High speed passenger ferry collided with unlit private pleasure craft at night in harbour resulting in multiple deaths and serious injury.

Our Member’s ferry was navigating correctly and not travelling beyond the prescribed speed limit or for the prevailing weather conditions.

Did our Member/the ferry share responsibility for the collision?

If so, what action or inaction attracted liability?

CLAIMS CASE STUDY FOUR

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To protect your interests the collection and preserving of evidence should be independent of the severity of the incident.

Claims may be presented many months or years after the alleged incident.

Contemporaneous evidence has greater importance as opposed to evidence collected long after the event.

Collected and preserved evidence also assists in establishing procedures and methods to prevent similar incidents from happening in the future and can be a good source for training materials (ISM Code requirement).

IS ISM RELEVANT TO LIABILITY AFTER AN INCIDENT?

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QUESTIONS

Chris Livett Managing Director

29th October 2015

ISM Compliance Case Study - Rationale & Process

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QUALITY

• World Class River

• World Class Assets

• World Class People

ISM Compliance

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ASSETS

• People • Training

• Assets

ISM Compliance

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THE PROCESS SO FAR

ISM Compliance Livett’s completed

ISM Lead Auditors Course

(3 Months)

(3 Months)

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CULTURE

• Make a difference, change the cultural approach to

safety and its management

ISM Compliance

Please feel free to ask any questions

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CTRL MARINE SOLUTIONS LTD AND THE ISM CODE LOUISE HALL, DIRECTOR ǀ BRITT PICKERING, DIRECTOR

An identified industry need for access to quality Claims, Technical, Risk and Legal (CTRL) advice and services at reasonable and affordable rates with flexible terms. CTRL: Manages Claims, Technical, Risk and Legal matters,

allowing you to concentrate on the day to day running of your core business Supports your over stretched in-house technical and

legal teams. Works within your team Keeps you abreast of the ever changing legal

framework and marine regulations Has the unique benefit of having no ongoing

subscription or commitment (all services) Provides excellent value. With no equity partners to

satisfy, CTRL can offer services at very competitive rates.

CTRL – THE CONCEPT

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For Members of the Club… Do you want access to legal expertise for your covered and non covered claims at a reduced cost?

Not a Member of the Club... Do you want access to our full claims handling service?

Unsure of the detail within a contract? – We can carry out an in depth contract review and assist with drafting

Have a debt that is not being settled – We can enforce that for you

A trend of claims? – We can undertake claims risk investigations including causation analysis

New regulation being implemented? – We can perform an impact assessment bespoke to your fleet

Increase in passenger incidents? – We can provide ‘Secret shopper’ assessments

Need to comply with ISM standards? We can formulate your safety management systems

Require an audit external of the company and/or certifying authority – CTRL can assist

CTRL – THE CONCEPT

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ISM compliance: A difficult and arduous process? Would take a long time to implement? Is too expensive? Not appropriate to the smaller vessel operator?

“Where the ISM Code is embraced as a positive step toward efficiency through a safety culture, tangible positive benefits are evident”

International Maritime Organisation (IMO)

CTRL – THE ISM MYTHS

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Important to note for Safety Management Systems: One size does not fit all Each system must be bespoke Must be practical

All services are quoted in stages and to your individual requirements.

No tie in for further assignments… ‘pay as you go’

CTRL – THE SOLUTION

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Ensure the key areas are included Encourages efficient reporting of accidents

and near-misses Analysis of incidents Processes in place to show that a

‘closed loop’ exists

CTRL – ISM – THE SAFETY MANAGEMENT SYSTEM

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CTRL – ISM – THE PROCESS

1 month’s notice given to the MCA for Document of

Compliance (DOC) Audit

Safety Management System (SMS)

Developed

+3 months - Internal Audit

Audit undertaken and Interim DOC

obtained for a specific vessel type (valid for

6 months)

+ 6 months - MCA Audit.

Full DOC issued

Same Process for Vessel’s Safety Management Certificates (SMC) based on Vessel Specific

Operational Manuals

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Important to gain accreditation in manageable portions During the provisional DOC assessment,

non-conformities are to be expected and can be dealt with Engagement from ship’s crew Provides an audit trail

CTRL – ISM – USEFUL POINTS

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Our mission is to provide the best Claims, Technical, Risk and Legal service for our Clients. We are committed to understanding our Client’s unique needs and utilise our commercial experience to deliver bespoke solutions. We will work hard to tailor our services to exceed our Client’s expectations. At its core, CTRL aims to seamlessly become part of our Client’s teams. We will listen to our Clients, providing them with the service they want and need. We will deliver flexibility, transparency and cost-efficiency in all our actions to foster mutual respect and trust.

CTRL MARINE SOLUTION LTD – OUR MISSION STATEMENT

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