TO THE MEMBERS,
SPECIAL WAR RISKS P&I EXCESS COVER AND BIO-CHEM COVER AND US TERRORISM RISK INSURANCE ACT OF 2002, AS AMENDED BY THE TERRORISM RISK INSURANCE PROGRAM REAUTHORIZATION ACT OF 2015
War Risks P&I Excess Cover
At their meeting on 29th January 2018, the Directors reviewed the basis on which special war risks P&I cover could be made available to Members in accordance with the proviso to Rule 5E, and determined that this cover should be made available to Members for the 2018 policy year in accordance with the terms of the attached Directors’ Resolution of 29th January 2018.
The terms on which the War Risks P&I Excess Cover is provided remain the same as for the 2017 policy year, including the limit of cover of US$500 million. As for the 2017 policy year, the cover will only respond to claims in excess of the proper value of the entered ship as defined in Rule 5D or whatever sum is recoverable from war risk underwriters, whichever is the greater.
The Directors also decided to provide cover for “Bio-Chem” claims in respect of crew risks and legal costs relating to all P&I liabilities that are excluded from the War Risks P&I Excess Cover by virtue of the
“Bio- Chem” exclusion, on the same terms as for the 2017 policy year, including the limit of this cover, which is US$30 million.
Claims on this cover will again be pooled with the International Group clubs in excess of the Club retention of US$10 million for the 2018 policy year.
The detailed terms and conditions of the cover are set out in the attached Supplementary Directors’ Resolution of 29th January 2018. The principal provisions are that:
Notices of Coverage – US Terrorism Risk Insurance Act of 2002 (Act), as amended by the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) of 2015
On 12th January 2015, the Terrorism Risk Insurance Program Reauthorization Act of 2015 (Public Law 114 -1) (“TRIPRA”) was signed into law, extending the TRIA programme for six years through 31st December 2020.
A portion of the War Risks P&I Excess Cover and the “Bio-Chem” Cover afforded to Members pursuant to the Directors’ Resolutions are provided in accordance with the requirements of the US Terrorism Risk Insurance Act of 2002, as amended by the TRIPRA of 2015, and give coverage for losses arising out of “acts of terrorism,” as defined in Section 102(1) of the Act and as required by Section 103(c) of the Act.
Cover for losses caused by certified “acts of terrorism” can be partially reimbursed by the US government under a program established by the Federal Law. Under the program, the United States pays 82% of covered terrorism losses exceeding the statutory established deductible paid by the insurance company providing the cover in the 2018 calendar year, and 81% of such losses in the 2019 calendar year. The Act, as amended, also imposes a program trigger on the government’s compensation: i.e. insurers cannot have the benefit of the government’s compensation unless the aggregate industry insured losses from a certified act of terrorism exceed a certain insured loss or “trigger” amount. The trigger amount in the 2018 calendar year isUS$160 million, and in the 2019 calendar year is US$180 million. In addition, if the aggregate insured losses exceed US$100 billion during any program year, the government shall not make any payment for any portion of the amount of such losses that exceeds US$100 billion, and no insurer that has met its insurer deductible shall be liable for the payment of any portion of that amount that exceeds US$100 billion.
Although no additional premium is charged for coverage for “acts of terrorism”, a premium of US cents 0.25 per gross ton entered is deemed to be attributable to the US risk in accordance with the terms of the Act.
For more information
Members requiring further information should contact Dr. Chao Wu at firstname.lastname@example.org or telephone +44 20 7204 2157
WAR RISKS P&I EXCESS COVER
SPECIAL COVER UNDER PROVISO TO RULE 5E
DIRECTORS’ RESOLUTION OF 29th JANUARY 2018
WHEREAS, in accordance with Rule 5E of the Association’s Rules coverage for certain war and similar risks, including acts of terrorism, is excluded under the general mutual indemnity undertaking. Special cover is nevertheless provided for these same certain risks under the proviso to Rule 5E and in accordance with each individual Owner’s terms of entry; and
WHEREAS, the Terrorism Risk Insurance Act of 2002 (TRIA) (Public Law 107-297), as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and further amended by the Terrorism Risk Insurance Program Reauthorization Act of 2015, makes provision for a Federal quota share indemnification to participating insurers for insured losses resulting from certain acts of terrorism occurring through 31st December 2020; and
WHEREAS, this Association, meeting the definition of “insurer”, is required to make available coverage for “acts of terrorism” as defined in TRIA and is entitled under the program to an indemnification by the Secretary of the Treasury of 82% in 2018 calendar year and 81% in 2019 calendar year of losses resulting from certified acts of terrorism in excess of the insurer’s deductible, and
WHEREAS such indemnification will be available in the 2018 calendar year only if aggregate insured losses sustained by all insurers with respect to acts of terrorism exceed US$160 million and will be available in the 2019 calendar year only if such losses exceed US$180 million; and
WHEREAS, the Directors on behalf of the Association’s membership have considered whether coverage of TRIA-defined acts of terrorism could be removed from the special cover and made subject to the general mutual indemnity undertaking but have concluded that acts of terrorism, as the other perils subject to the special cover, remain unsuitable for a general mutual indemnity undertaking; and
WHEREAS, no Owner responded affirmatively to the initial offer made by this Association to provide cover of TRIA-defined acts of terrorism on the basis of additional premium rates designed to fund the TRIA deductible and retention without mutual indemnity or the reinsurance available to the special cover; and
WHEREAS, the Directors have determined to provide the Special War Risks P&I cover including cover for terrorism risks as for the current Policy Year and that the estimated cost for TRIA-defined coverage remains US cents 0.25 per entered ton.
IT IS NOWTHEREFORE RESOLVED, that in accordance with the proviso to Rule 5E of the Association’s Rules, special cover be provided to the Members of the Association for the year commencing at 12 noon GMT on 20th February 2018 against risks, including TRIA-defined acts of terrorism, which are excluded from cover solely by virtue of the provisions of Rule 5E. Unless otherwise agreed in writing, such cover shall be subject to all other terms and conditions of an Owner’s entry in the Association and shall be provided upon and subject to the following terms and conditions:
(l) The risks covered shall be those set out in Rule 2 of the Association’s Rules in accordance with each individual Owner’s terms of entry as set out in the relevant Certificate of Entry and any Endorsement thereto, except loss, damage or expense arising from an act of terrorism which the Owner incurs, or for which he is liable, as a party to TOPIA.
(2) This special cover shall be subject to an excess of either:
whichever shall be the greater, provided that the Directors may authorise the payment, in whole or in part, of any claim or part of a claim which falls within such excess, if in their discretion and without having to give any reasons for their decision they decide that the Owner should recover from the Association.
(3) The limit applying to this special cover shall be the lesser of
PROVIDED ALWAYS that
where a ship entered in the Association by or on behalf of any person is also separately insured in the name of or on behalf of the same or any other person by the Association or by any other insurer which is a party to the Pooling Agreement in respect of the losses, liabilities or the costs and expenses incidental thereto which are covered pursuant to the terms of this Resolution and/or the equivalent policy provisions of such other insurer, the aggregate recovery in respect of all such losses, liabilities and the costs and expenses incidental thereto shall not exceed US$500 million or, the limit applicable to the claim under that person’s individual terms and conditions of entry if less, each ship, any one event, and the liability of the Association to each such person insured by the Association shall be limited to such proportion of US$500 million, or the limit applicable to the claim under that person’s individual terms and conditions of entry if less, as the maximum claim otherwise recoverable by such person from the Association bears to the aggregate of all such claims otherwise recoverable from the Association and all such insurers.
(4) All perils included in the special cover shall be subject to the following Chemical, Biological, Biochemical, Electromagnetic Weapons and Computer Virus Clause:
“This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith:
1. In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by or contributed to by or arising from
1.1 any chemical, biological, bio-chemical or electromagnetic weapon.
1.2 the use or operation, as a means for inflicting harm, of any computer virus.
1.3 Clause 1.2 shall not operate to exclude losses (which would otherwise be covered under the terms of this policy) arising from the use of any computer, computer system or computer software programme or any other electronic system in the launch and/or guidance system and/or firing mechanism of any weapon or missile.”
(5) At any time or times before, or at the commencement of, or during the currency of any Policy Year of the Association, the Directors may in their discretion determine that any ports, places, countries, zones or areas (whether of land or sea) be excluded from the insurance provided by this special cover. Save as otherwise provided by the Directors this special cover shall cease in respect of such ports, places, countries, zones or areas at midnight on the seventh day following the issue to the Members of notice of such determination in accordance with Rule 41 of the Association’s Rules. Unless and to the extent that the Directors in their discretion otherwise decide there shall be no recovery from the Association under this special cover in respect of any claim howsoever arising out of any event, accident or occurrence within the said area after such date.
(6) Whether or not notice has been given under Clause (5) above, this special cover shall terminate automatically:
(7) Notwithstanding any other term or condition of this insurance, the Directors may in their discretion cancel this special cover giving 7 days’ notice to the Members (such cancellation becoming effective on the expiry of 7 days from midnight of the day on which notice of cancellation is issued by the Association) and the Directors may at any time after the issue of notice of such cancellation resolve to reinstate special cover pursuant to the proviso to Rule 5E on such terms and conditions and subject to such limit as the Directors in their discretion may determine.