the nordic association of marine insurers marine builders’ risks – 08.11.13 knut m. finckenhagen...
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The Nordic Association of Marine Insurers
Marine Builders’ Risks – 08.11.13
Knut M. Finckenhagen
Vice President, Gard AS
The Nordic Association of Marine Insurers
Imaging waking up in the morning, putting on your slippers and walking out in the kitchen to put on the kettle ...
... then you look out the window to see what the weather is like ...
The Nordic Association of Marine Insurers
The Nordic Association of Marine Insurers
Today’s topics
A brief look at the international shipbuilding market
The need for buying Builders’ risks insurance
Builders’ risks insurance
◦ Cover
◦ NMIP, Chapter 19
Case study – Westland Shipyard vs. SMIL
A brief look at the shipbuilding market
Asia on the move
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Global orderbook by cgt – 2013(Sept. 2013)
0 %
5 %
10 %
15 %
20 %
25 %
30 %
35 %
40 %
Europe Japan South Korea China Other Asia Others
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World shipbuilding supply & demand
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The need for buying Builders Risks insurance
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Builders’ Risks Insurance
o Builders’ risks insurance which covers newbuildings,from “keel laying” to delivery, including sea trials.
o Insurance coverage of conversions and rebuilding
Wordings
Standard wordings on “all risk” basis
ICBR 1/6/88 - Institute Clauses for Builders’ Risks
The Nordic Marine Insurance Plan of 2013, Ch. 19
Local wordings:
− Dutch Bourse Policy for Construction Risks 1947 (1995)
− German Marine Insurance Conditions for Shipbuilding Risks 1998 (amended 2004)
− American Institute Builder’s Risk Clauses
Marcar 1/9/07 – “New” English builders risks clauses
We have a Plan!! Providing cover……….
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Place of insurance (19 – 5)
o In the builder’s yard
o Other premises?
o What about transports?
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What is included in the coverage (19 – 9)
o The ”subject matter insured” itself
o The cost of planning and drawings
o Components, equipment and materials delivered and while at the yard’s premises
o Buyers equipment/material delivered and while at the yard’s premises (OFE)
o Bunkers and lubricating oil on board (sea trials)o Bunkers Blue Card (BBC)
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Insurable value (19 – 10)
FCV – Final Contract Value
o Construction work
o Additional work (changes)
o Owner Furnished Equipment (OFE)
o Yard profit
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Insurance period (19 – 2)
When does the insurance really starts?
o Keel laying
o Signing of the contract
o ‘First cutting of steel’
o Value exposure at the yard
o Start of engineering work
o At launching
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Insurance period (19 – 2) cont.
When does the insurance stops?o Time of delivery as per the Shipbuilding Contracto Delivery to buyer at a specific agreed location
What about extensions?o Automatic extension at additional premium
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The cover – Nordic Plan
Perils covered (all risk basis)
◦ Physical loss & damage (19 - 14)-(ch. 12)
◦ Faulty design (19 – 15)
◦ Launching (19 – 18)
◦ Removal of wreck (19 – 19)
◦ Collision liability (19 – 20)
◦ Protection & Indemnity (19 – 20)
◦ Total loss (19 – 11)
◦ Sea trials (19 – 5)
◦ Escalation (19 – 7)
◦ Towage (19 – 27)
◦ War risk (19 – 30)
Additional premium creators
Value increase/decrease
Period extensions/early delivery
Tows
Delay insurance
Guarantee periods
Delivery voyages
War insurance (from waterborne)
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Let us hope the insurance will be a success!!!!
Launching at Niestern Sander - 2008
…….a success for whom???
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The Nordic Association of Marine Insurers
Case study – Westland Shipyard vs. SMIL
Situationo Westland subcontract paintwork of potable water tanks
to Goodpaint AS o Goodpaint AS is adding thinner to the painto Remove paint and repaint the potable water tankso Westland have builders risk policy in force with SMILo Newbuilding insured under NMIP 1996 (version 2010)o Claim submitted: NOK 5mill.
Evaluationo Claim recoverable (fully or partially) or not?o Refer to clauses in NMIP to support your answer
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Main issues to consider
o Damage?
o Peril - causation?
o Loss recoverable?
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