Shipowners Secure Cut In Oil Pollution Insurance

Shipowners have secured a substantial reduction in the cost of excess oil pollution liability insurance, two major shipping organisations said last week.

The International Chamber of Shipping (ICS) and independent tanker owners organisation Intertanko said they had secured a substantial discount on the $200 million excess layer of oil pollution liability cover they are required to obtain. The two groups said in a statement: Negotiations culminated in further substantial savings being achieved in the cost of annual premium paid for this cover by shipowners and in additional premia payable for US trade.

P&I Club insurers provide oil pollution liability insurance up to $500 million but since the late 1980s most tanker charterers have required owners to provide evidence of cover up to $700 million.

 

Although not part of protection and indemnity cover, P&I Clubs often act as intermediaries in obtaining the extra $200 million insurance. Shipowners groups said that before making an informal approach to Lloyds brokers last year they had not been involved in placing the insurance.

This approach was formalised between the ICS, Inter-tanko and the International Group of P&I Clubs this year after making savings in 97, they said.

The shipowners added that an additional $50 million excess required by the US state of California from February 20 will require a separate premium.

The 1998 discount also follows a sizeable cut in the premium for the P&I Clubs main reinsurance programme announced last month, they said.