EFFECTIVE CLAIMS HANDLING BY OWNERSHIP MANAGER

The ISM Code

There has been considerable discussion in various quarters as to the impact of the ISM code on the question of due diligence in insurance policies. Practically speaking, only the Norwegian plan mentions the ISM code by name, and even then it appears that ISM cod is only considered to be a safety regulation . maintenance of the system of safety management is not an absolute condition to be complied with and it does not mean that if you breach your ISM accredited management system, your claim will necessarily fail.

Essentially, we think that the ISM code is only an indicator of safety management existing in any particular management operation. We would take a possible breach of the system as only part of the evidence concerning how the casualty occurred to see whether the proviso of due diligence has been met. English marine insurers are prepared for accidents to happen as a result of individuals, and this does not change because of the ISM code. The provision concerning due diligence is still one of their main defences that should have been avoided.

2.7 Extent of Damage

The Superintendent must make clear at survey the extent of the damage to the Underwriters’ Surveyor. If further damage is discovered during a repair, the Surveyor must be called back and specifically informed of this.

Failure to do this makes them very reluctant to agree to additional costs at the time when the repair bill is being finalised and they can no longer see the damage in question.

2.8 Cost of Repairs

Ship owners have to demonstrate that the cost of repairs is fair and reasonable.

2.8.1 Approval of Underwriters’ Survivor

It is essential that the Underwriters’ Surveyor agrees the cost and method of repairs, preferably before the repairs are carried out but certainly before the repair accounts are agreed and paid. After they are paid, it is difficult to get the Surveyor to change his mind.

It saves time in claim processing if the Superintendent can get all the accounts together for the attending Surveyor’s agreement on the spot. It also saves writing to the Surveyor at a subsequent stage. If a lot of spare parts are involved, this may not be possible.

A detailed record of parts, stores and other materials used is essential for justifying the claim.

2.8.2 Temporary Repairs

Temporary repairs are designed to save the Owners’ time but they have an Additional cost over and above the cost of damage repairs which Insurers may not Be liable to pay for. Hull Insurers only pay for temporary repairs where.

a) Permanent repairs are not possible at that port or the delay would be unreasonable (viz. Delivery of parts).

b) Vessel is on a liner service (in practice usually container vessels only).

c) Saving is effected to Hull Underwriters by enabling the vessel to effect repairs in a cheaper repair port or to defer repairs to a scheduled docking rather than undertake a special docking.

d) They are justified in General Average.

The separate cost of temporary repairs and the reason for which they are carried out should be made clear to the Surveyor.

Generator hire is often treated similarly to temporary repairs with one or two variations. Problems can arise where generators are hired for lengthy periods. Under the Scandinavian conditions, however, they are seldom treated as the cost of temporary repairs and could only be claimable from Loss of Hire Insurers.