For shipowners, Marine insurance not a requirement

CEBU, Philippines - Shipping companies have the discretion to whether or not secure a marine insurance, the Marine Industry Authority said yesterday.

A marine insurance reportedly became optional in March 2010. In fact, the agency has issued a Cease and Desist Order, which took effect on March 1, 2010, against the implementation of its circulars, including the Protection and Indemnity Policy.

The P and I insurance, a non-profit marine insurance, covers shipowners and operators for indeterminate risks and third-party liabilities encountered in their commercial operation. Under the not-for-profit principle of mutuality, members of a P and I club are the insurers and the insured.

The said marine insurance may be secured through recognized international P and I providers or any locally registered insurance company.

Other circulars covered by the order were the revised schedule on fines and penalties, compensation for survivors of sea accidents, suspension of Certificate of Public Convenience, and vessel safety certificates, among others.

Marina-7 Director Nannette Villamor-Dinopol said there is already a draft on the amendment.

“I will check on the status of the draft tomorrow (today). Kinahanglan pa man gud i-finalize. But as of now, still in effect gihapon ang Order. We cannot compel (shipping) companies to secure a P and I insurance. Optional pa man kay tungod anang Order,” she told The FREEMAN, adding, there are really shipping companies who are not covered by marine insurance.

She, however, said it would be better for shipping companies to acquire marine insurance in order in the event of indeterminate risks.  The issue whether or not all shipping companies are covered by marine insurance surfaced after Cordova Mayor Adelino Sitoy said he suspects that the shipping companies involved in the collision in August last year may not have been covered by any insurance, which he said is compulsory under the law.

Representatives from 2GO refused to divulge the name of their insurance companies in a meeting last Monday while Sulpicio reportedly did not respond to the letters the town sent them.

Cordova is claiming P127 million from the insurance companies of 2GO Group Inc., owner of the sunken M/V ST. Thomas Aquinas (STA), and Philippine Span Asia Carrier Corp. (formerly Sulpicio Lines), which owns M/V Sulpicio Express Siete (SE-7), for the environmental damaged they have caused when the oil from the collision site reached the town.

2GO had said it will not compensate for the damage until liability as regards the incident is established.

Under P and I insurance, the third party or main risks covered are liabilities, expenses, and costs for loss of life, injury and illness of crew, passengers and other persons, cargo loss, shortage or damage, wreck removal, and environmental pollution.

Circular 2009-22

Before it was deferred, the Marina Circular No. 2009-22, which referred to the rules governing the mandatory marine insurance, cited that a vessel operating without marine insurance would be subjected to suspension until compliance and a fine of P2,000 per Gross Tonnage is paid.

Further, shipowners who fail to secure the mandatory insurance are obligated to post a cash bond equivalent to the limits of liabilities and shall be deposited to Marina with any ‘reputable’ commercial bank.

Government-owned ships that are not engaged in any commercial operation are not covered by the circular. However, shipowners who are not required to secure the marine insurance were encouraged to take measures that “they have the financial capacity to meet any responsibility for any liability arising from the pollution and wreck removal.”

‘Not us’

In its formal communication dated February 11, 2014, which demanded for the two shipping companies’ marine insurance, Cordova cited that the marine insurance proceeds derived from the protection and indemnity insurance coverage are collectible from Pioneer Insurance and Surety Corporation.

However, Sitoy reported that Pioneer responded in a letter that it is not the insurance company of 2GO and Sulpicio.

“Unya ingon man ang Pioneer nga ‘di kami’. Pioneer disclosed to us the insurance firm that covered both companies. According to Pioneer, the owners of both vessels are members of the P and I Clubs,” Sitoy said.

In a document showed by Sitoy, Pioneer said the clubs are represented in the Philippines by a certain Del Rosario and Del Rosario for 2GO and by Pandiman Philippines for Sulpicio.

“It would be best to take up your claims with these representatives of the P and I Clubs concerned,” part of Pioneer’s letter reads. — /JMO (FREEMAN)