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ACQ 2016-1

Real Case 4: Advising a Shipowner on Hull Insurance Conditions

Real Life Situation: Negotiating the renewal of a fleet of vessels with a well-known Hull insurer.

The Problem: The Hull market internationally was very tough indeed, and the existing Hull Insurer required some large premium rises in addition to increases in the level of deductibles. It was a period when all shipowners had to pay an increase in hull premium despite his clean claims record.

Action Taken: Andrew Liu & Co. Ltd, on behalf of the Shipowner, approached all the international Hull Insurer for quotations in order to better compare all the Hull insurers and ensure that the Shipowner was getting the absolute best deal.

After determining that the existing Insurer offered the most competitive quotation, we then proceeded to negotiate for rate reductions and eventually, we managed to shave-off the premium rises substantially, resulting in a smaller premium increase although there was still a premium rise. The existing Insurer was able to offer English ITC,Norwegian and Swedish Insurance conditions at the same premium, and the vessels were the insured on ITC conditions.

We investigated each of these different conditions in order to endeavour to obtain for the shipowner extra coverage at the same premium.

Settlement: We recommended the conditions which offered better coverage to the Shipowner on the whole. In addition, we drafted Owners’ supplementary clauses (Rider Clauses) to amend sections originally unfavourable to the Shipowner. We discussed and negotiated for these Rider Clauses to be included in the standard Hull policy, which the Insurers agreed to. As the conditions chosen included coverage of Fixed and Floating Objects and 4/4th RDC Collision claims, we also obtained a good refund in call premium from the P&I Club, as these risks are normally insured by them.

The result and effect from our actions in this case was that the Shipowner achieved no overall increase in Total Premiums, in view of the refund from the P&I Club. Without our assistance, the Shipowner would have to pay for a rise in hull premiums/rise in total premiums and furthermore would not have obtained as wide a Hull insurance coverage.