IMU Marine Insurance and Vetting Inspections

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BNA - 051

SHIP MANOEUVRING

AND FUTURE ISSUES

Block

2ARINE INSURANCE AND VETTING INSPECTIONS

UNIT 5

Marine Insurance 5

UNIT 6

Vetting Inspections


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UNIT 5 MARINE INSURANCE

Structure

5.1 Introduction

Objectives

5.2 Preamble

5.3 Definitions

5.4 Hull and Machinery Insurance

5.5 Protection and Indemnity Insurance

5.6 Summary

5.1 INTRODUCTION

The general principles of marine insurance are the same as with other types of insurance

in that there are two parties: the assured and insurer (or carrier). The assured or insured

agrees to pay a premium and the insurer agrees that, if certain losses or damage occurs to

certain interests of the insured, the insurer will indemnify the insured. The similarities

pretty much end here. The complex circumstances involved in sea voyages require very

specific arrangements for the provision of marine insurance. The fixing of rates and special

conditions, for example, requires a vast knowledge of the nature of vessels and cargoes

and of the conditions of navigation.

No shipowner is legally obliged to insure neither his vessel nor a merchant to insure his

goods, but since the ship and/or the goods are invariably heavily financed by banks and

other financial institutions, it becomes essential that both are insured with reputed

insurers in fact it is demanded by these financiers. Most marine risks are underwritten by

Lloyd's underwriters, who in addition to marine risks underwrite other risks. (Lloyds is still

in the process of settling claims amounting to millions of dollars relating to the September

11, 2001 attack on the twin towers of the World Trade Centre in New York.) There areseveral other insurance companies all over the world, who deal exclusively with marine

insurance or have specialized departments for the same; but for the purpose of this study

we shall concentrate on Lloyd's.

The More Things Change, the More They Remain the Same

The Corporation of Lloyd's, universally known as Lloyd's of London does not itself

undertake insurance or issue policies, but provides facilities for its members to

transact their underwriting business. The story goes that Edward Lloyd operated a

Coffee Shop on Tower Street in London, where underwriters, brokers, agents

congregated and this has grown into the huge entity that now has an international

presence. In those days, clients sought insurance from an underwriter of some sort.These underwriters would pledge their own balance sheet in return for a premium,

using something called a slip system. The principles and the procedure remain

essentially the same today, except that the slips of paper and pencil stubs have

given way to plasma screens and computer keyboards and the messenger boys to

internet and telephone.

Objectives

The aim of the unit is to be give the student

give a brief overview of marine insurance,

state the salient features of Hull (and Machinery) insurance policies, describe the risks covered by P and I insurance and

distinguish between H & M and P & T5


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Marine Insurance and

Vetting Inspections5.2 PREAMBLE

The definition of marine insurance as given in the Marine Insurance Act 1906 (MIA) is "a

contract whereby the insurer undertakes to indemnify the assured, in the manner and to

the extent thereby agreed, against marine losses i.e. the losses incident to a marine

adventure". Marine insurance as branch of commerce existed although in a rudimentary

form from the early days of sailing ships. The laws relating

to marine insurance were

codified in Britain as the Marine Insurance Act 1906. They are still the basis of business all

over the world even today, of course, with certain amendments.

The operation of ships is a complex activity that takes place in an environment, which is

often unpredictable and sometimes hostile. Catastrophic losses due to cyclones,

hurricanes and tidal waves as well as risks due to human error necessitate a process to

identify and analyse such risks and evolve measures to counter or neutralize them. Risk

management may be defined as a systematic method of protecting resources against

losses so that the aims of the organization can be achieved without interruption. It is

based on the optimum utilization of resources, personnel, financial or material, in order to

achieve the objectives of the organization. It must not be confused with insurance, although

insurance does forma part of risk management.

The subject of Marine Insurance is a very complicated and complex one and not easy for

the average seafarer to understand. The business of marine insurance employs several

thousands of highly qualified professionals, financial experts, lawyers, etc The jargon

and the language used are very confusing and it is best left to the experts in the field. We

shall however deal with a few of these terms without

hour going into the details. Some of

these terms will be dealt with in greater detail in the syilabus for the Mate's/Master's

examinations.

5.3 DEFINITIONS

Before we proceed, it is necessary to be aware of a few definitions and terms.

Risk

Risk may be defined as the uncertainty or lack of knowledge concerning the

outcome of events. For example, the risk of a vessel becoming a total loss.

Hazard

Hazard is a condition that increases the likelihood of loss. For example, in poor

visibility conditions, the use of high speed is a hazard that may lead to a collision.

Peril

Peril is the cause of a loss. For example, fire is a peril which may cause extensive

damage to the ship and/or her cargo.

Risk Response

Risk response is the manner in

which an organization wishes to respond to the

assessed exposure to risk. The response may be acceptance or avoidance of the

risks and as a consequence decide on a way to treat the risks which are acceptable

(though they may be undesirable). This risk treatment is always at a cost and may

involve reducing the exposure, transferring the risk or retaining it, or a judicious

mix so that the organization achieves its aim of maximum profit at a minimum cost.

Transfer of risk is done by suitably worded provisions in the contract or by using

professional risks carriers like Insurance Companies and P and I clubs.

Policy

The document which embodies the contract of insurance is called a 'policy' and its

wording covers maritime perils on insurable property whilst afloat. But the MIA

provides for the insurance to extend to protecting the assured against losses on

inland waters or any land risk incidental to the sea voyage.


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Clauses Marine Insurance

Clauses because of the international nature of the business with huge sums of money

involved, fraud and other illegal acts has always been a feature of marine insurance.

To minimize this possibility certain conditions, warranties called clauses are included

in the policy which guard the interests of both the insurer and the insured.

Types of Policies

Though commonly in one form, marine policies are known by different names

according to their manner of execution and the nature of the risks covered. A fewof these policies are described below:

Voyage Policy

This is a policy in which the limits of the risk are determined by places or

termini (destinations) as, for example, Chennai to Rangoon, or Mumbai to

Dubai. Such policies are always used for goods insurance, sometimes for

freight insurance, but only rarely nowadays for hull insurance.

Time Policy

This is designed to give cover for some specified period of time, say, for

instance, from noon, 1st

January 1976 to noon, 1st

January 1977. Time

policies are usual in the case of hull insurance, though there may be caseswhere an owner prefers to insure his vessel for each separate voyage under a

voyage policy.

Voyage and Time Policy (or Mixed Policy)

Under such a policy the hull machinery, etc. of a vessel could be insured for a

named voyage and by agreement for some stipulated period after arrival at her

destination, for example, from Cardiff to Bahia Blanca and for sixty days after

arrival at Bahia Blanca.

Construction Policy or Builder's Policy

This is designed to cover the risks incidental to the building of a vessel,usually giving cover from the time of laying the keel until completion of

trials and handing over to owners. In the case of a very large vessel, the

period may extend over several years. While time policies for periods over

12 months were invalid, advantage was taken of the provision of the

Revenue Act, 1903 which allowed a construction policy to be stamped as a

"voyage policy". On account of the changes introduced by the Finance Act,

1959, there would now seem to be no reason for keeping up the fiction that

for insurance purposes, a ship under construction is making her "first

voyage". -

Port Policy

This is to cover a vessel during a period in port against the risks peculiar to a

port as distinguished from voyage risks. This kind of policy is probably very

rarely used nowadays, except possibly in the case of a vessel laid up out of

commission, as most vessels while employed are covered by time policies

which during their currency indicate whether the vessel is at sea or in port.

Marine Losses

Marine losses may be classified as follows

Total Loss

Actual, Presumed, Constructive.

Partial Loss 7


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Marine Insurance and Actual Total Loss

Vetting Inspections Actual total loss occurs when the subject matter is destroyed or is so

damaged as to cease to be what it was originally insured as or when the

assured is irretrievably deprived of it.

Presumed Total Loss

When the ship concerned in the adventure is missing, her total loss may, after

the lapse of a reasonable time, be presumed. Ordinarily, it will be presumed

that the loss arose from "perils of the sea" which is an ordinary marine risk.But if the ship was last known to have been in a war-infested area then, in the

absence of other evidence, the presumption will be that she was lost through

war risk.

Constructive Total Loss

This occurs when the subject matter is reasonably abandoned on account of

its actual total loss appearing to be unavoidable, or because it could not be

preserved from actual total loss without an expenditure that would exceed its

value after the expenditure had been incurred.

In case of constructive total loss, the assured may either treat the loss as a partial loss,or abandon the subject matter to the underwriters and claim for total loss. If he elects

to abandon, he must serve notice of abandonment on the underwriters, otherwise the

loss can be treated only as a partial loss. Notice may be given in any manner, but it

must indicate the intention of the assured to abandon his interest in the subject

matter to the insurer unconditionally. It must be given with reasonable diligence

after receipt of reliable information of the loss but the assured is entitled to a

reasonable time to make inquiry if his information is of a doubtful character.

Marine Policies

The marine policy may cover the risks of a single voyage, or may insure for a

certain period of time. Cargo is almost always insured by voyage. Vessels areusually insured fora certain duration of time, usually year by year. Cargo policies

may be on a single lot or may be open to cover cargo as shipped by the insured,

Hull insurance, or vessel insurance, may cover a ship or a whole fleet.

The principle that no contract of marine insurance is valid unless the insured has an

insurable interest in the subject matter at the time of loss is typical of marine

insurance The term insurable interest has been variously defined. According to the

EnglishMarine Insurance Actof 1906, "every person has an insurable interest who

is interested in a marine adventure.... a person is interested in a marine adventure

where he stands in any legal or equitable relation to the adventure or to any insurable

property at risk therein, in consequence of which he may benefit by the safety or due

arrival of insurable property, or may be prejudiced by its loss, or damage thereto, orby the detention thereof, or may incur liability in respect thereof '.

Another issue important in the marine insurance field is misrepresentation or

concealment. The marine insurance contract is one which requires the highest degree

of good faith. Any misrepresentation of a fact which is material to the underwriter

will render the policy null and void. In addition, a policy can be void for breach of

any of the warranties implied by law or expressed in the policy. The most common is

the implied warranty of seaworthiness of the insured vessel or of the vessel carrying

insured goods. Seaworthiness is a general term but has been narrowed by case law. A

ship which is seaworthy for a southern voyage may not be so fora transatlantic

crossing in winter. Similarly, in cargo policies, the warranty of

8 seaworthiness of the vessel includes fitness to carry a particular cargo.


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In voyage policies, the doctrine of deviation states that the underwriter is deemed

to have intended to accept only that risk which is involved in the expeditious

prosecution of the voyage by the usual commercial route. If, without justification,

the vessel departs from the route, or delays unreasonably in pursuing the voyage, the

policy will be voided. Once voided by a deviation, the insurance contract is canceled

for good and not restored by a return to the proper course. Whether or not a ship has

deviated is a question which is either settled by the policy or by usage.

Marine Insurance

The main risks insured against in a marine policy are stated in the "perils" clausewhich is often supplemented by the "specially to cover" clauses, or restricted by

provisions eliminating one or more of the insured risks. The traditional "perils"

clause is contained in the First Schedule of the British Marine Insurance Actof

1906 from Lloyd's policy. It reads as follows :

"Touching the adventures and perils, we the assurers are contended to bear and to

take upon us in this voyage: they are of the seas, men-of-war (warships), fire,

enemies, pirates, rovers (pirate or pirate vessel), thieves, jettisons, letters ofmart

(trade) and countermart (counter-trade), reprisals , takings at sea, arrests ,

restraints and detainments ofall kings, princes and people, ofwhat nation,

condition or quality so ever, barratry (an unlawful breach of dutyon the partofa

Ship's master or crew resulting in injury to the ship's owner) of the master and

mariners, andofall other perils, losses, and misfortunes, that have or shall come

to the hurt, detriment or damage of the said goods and merchandises, and ship, and

company, or any part thereof"

More recently, war risks have been removed from ordinary marine policies and are

covered by separate war risk policies. Ordinary marine policies no longer mean

what they state and only cover those risks which are not excluded by the FC and S

(Free of Capture and Seizure) clause (an insurance clause providing that loss is not

insured if due to capture, seizure, confiscation and like actions, whether legal or not

or from such acts as piracy, civil war, rebellion and civil strife). Among the perils

"of the seas" that are deemed to be covered under a marine policy are the

extraordinary action of the wind and waves, collision, foundering, stranding,

striking on rocks and icebergs. Not covered are ordinary wear and tear and losses

which can be anticipated as regular incidents of sea carriage or navigation.

Hull policies i.e. policies insuring ships, used to be quite specific as to the risks

they covered. Modern policies are written to cover most forms of liability. A

"collision and running down" provision is contained in the standard hull policy to

cower liability incurred for damage to another vessel or structure, and sometimes

even personal injuries incurred. The protection and Indemnity policy covers against

collision liability not covered by the "collision and running down" clause, as well

as against all other liability exposure.

Under a marine policy, a loss can be partial or total. Total losses can be actual or

constructive. Actual total loss can be defined as the situation in which a ship or itsgoods can no longer arrive at their destination in specie (in the same kind or

shape). Actual total loss can also be found where the goods are so damaged in the

course of the voyage that, while they still exist in specie at that time and can be

sold where they are, there is no reasonable possibility that they can be transported to

their destination without complete destruction or change. Constructive total loss is

distinguished from actual total loss in that no formal abandonment need be made in

respect of the actual total loss whereas the tender of abandonment is a

prerequisite of a claim under constructive loss.

Under the MIA 1906, a marine insurance policy covers the subject matter insuredagainst loss or damage during a definite period which may be statedagainst during

As a period of time (in a time policy); or 9


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Marine Insurance andVetting Inspections

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As the duration of a journey from one place to another (in a voyage

policy).

Figure 5.1: A Ship under Loss

5.4 HULL AND MACHINERY INSURANCE

Hull and machinery (H and M) policies are usually time policies, the maximum period of

insurance usually being 12 months, although the MIA does not restrict the period. Cover

usually attaches and expires at noon or midnight GMT. Consignments of goods may be

insured on voyage policies 'at and from" one place to another or simply "from" a place to

another. The former type gives cover whilst awaiting shipment. Mostgoods shipped are

usually insured on a warehouse to warehouse basis rather than for the sea voyage only.Some cargoes (e.g. FOB shipments) may be covered from the time of loading only. Time

policies are not normally used for goods insurance.

Where a ship is the subject matter insured of a voyage policy, itis unnecessary for the

vessel to actually be at the place named in the policy at the time that the insurance

contract is made, hut there is an implied condition in the contract that the adventure will

commence within a reasonable time. If it does not, the insurer can avoid the contract.

The risk does not attach if :

The ship from a different place from that named in the policy.

The ship proceeds to a destination other than that named in the policy. Insurers

bind the policy holder to what the policy says, unless amended terms are agreed. How

Does a Shipowner Obtain H and M Cover?

In the London marine insurance market, hull and machinery (H and M) cover is

usually obtained by shipowners and managers from: Underwriters at Lloyd's and/or

Underwriters at the Institute of London Underwriters (ILU). The braking procedure is

similar in both Lloyd's and Companies markets. H and M cover is generally arranged

for owners and managers by brokers who act as the agents of assureds. Only Lloyd's

brokers may approach underwriters at Lloyd's; no non-broker may approach an

underwriter personally to obtain insurance. On instruction from the assured, the

broker prepares a slip for presentation of the subject matter details to underwriters.The ship is equivalent to a motor insurance proposal form. The broker

supplements the basic facts on the slip with all material information about the risk as

supplied by assured (under the principle of utmost good faith). The broker contracts

with one or more underwriters to pay an agreed premium for a


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Marine Insurancepolicy covering loss or damage, etc. Unless the assured value of the vessel is small,the broker takes the slip first to an influential ' lead" underwriter, then to a

succession of others, until the risk is comprehensively covered. Those who are ho are

interested will usually 'write a line' only on a small percentage of the insured value

of the ship. Each underwriter indicates acceptance of his share of the risk by

putting his signature or initials against the line on the slip bearing the percentage

he accepts on behalf of his syndicate or company. When the slip is complete, i.e. the

risk is 100% covered, the broker prepares details of the cover on a cover note and

sends this to the assured for approval.

If the assured approves the terms, a formal policy is drawn up. Some time will

elapse before the policy can be signed and contract legally made. In English

contract law, presentation of the slip by the broker constitutes an offer, and the

writing of each line constitutes acceptance. The contract is concluded when the

underwriter writes his initials or signature on the slip. The MIA 1906 requires the

contract to be embodied in a policy, so that the contract is not legally enforceable

until the policy is drawn up. However, under the code of ethics of the London

market, once an underwriter has initiated or signed he is honour -bound to pay any

claims on it.

Figure 5.2: Damaged Ship after an Accident

5.5 PROTECTION AND INDEMNITY INSURANCE

I origin of this policy came about in the early 1800's as a result of changes in hull

( physical damage to the vessel). Marine underwriters instituted a clause in the dull

policy, which limited their losses by collision to three-fourths of the shipowners collisions

liability. Believing shipowners would be more careful i f held liable for one fourth of the

damages, this limitation, which came to be known as the "British three running down clause", led

to the formation of shipowners associations for the pur po se of mut ual ly ins uri ng the ir

expos ure. These associ atio ns were known as Protection and Indemnity (P and 1) clubs

and as members, shipowners were able to pool their losses left uncovered by the hull

policies. Over time these P and I clubs have grown to represent approximately 95 per cent of

the world's maritime P and I insurance.

'Modern typical P and I policies provide for loss due to injury, illness and loss of life

(normally defined broadly enough to provide damages required under maintenance and

cure, Jones Act, and general maritime law) to which the Insured is legally obligated topay. P and I also extends benefits for hospital and medical expenses incurred by the

Insured beyond those he is legally obligated to pay as well as, repatriation and other 11


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Modern typical P and I policies provide for loss due to injury, illness and loss of life

(normally defined broadly enough to provide damages required under maintenance and

cure,Jones Act, and general maritime law) to which the Insured is legally obligated to pay.

P and I also extends benefits for hospital and medical expenses incurred by the Insured

beyond those he is legally obligated to pay as well as, repatriation and other medically

necessary transportation expenses; damage to other vessels caused by collision or other

non-collision losses such as the dropping of cargo on the deck of the vessel or for cin g

another vessel aground; damage to p roperty other than vessels; wreckage removal,

damage to cargo; fines and penalties; expenses related to the prosecution of mutiny or

misconduct; quarantine expenses and defense costs.

Crew cover, loosely and informally explained is an extension of the P and I to cover the

liability ofa vessel owner/operator to the crew; similar to the way that Workers' Compensation

covers employees in non-marine environments.

The Origins of the P and I Clubs

The present P and I Clubs are the remote descendants of the many small hull

insurance clubs that were formed by British shipowners in the 18th century. These

were set up by groups of shipowners, drawn in each case from a small geographical

area, who were dissatisfied with the scope and cost of the hull insurance then

provided by the two companies who had been granted in 1720 a s tatutory

monopoly which excluded other companies from such business, namely the Royal

Exchange Assurance and the London Assurance, and by individuals operating in

London from, for example, Lloyd's Coffee House. These hull clubs were essentially

unincorporated associations or co-operatives of shipowners who came together to

share with each other their hull risks on a mutual basis, each being at the same time

an insured and an insurer of others still the basic concept of the present P and I

Clubs, despite the fact that they are now incorporated so that in law it is the club and

not the individual members who provide the insurance.

Temporary Decline of the P and I Clubs

After the removal in 1824 of the company monopoly in favour of the Royal

Exchange and the London Assurance, greater competition had a salutary effect on

the rates, terms of cover and service offered by the commercial market and by

Lloyd's underwriters. The hull clubs became less necessary and went into decline. A

few exist today, but their share of the total market is not very significant.

Rebirth due to Growth of Third Party Liabilities

But as the hull clubs declined, shipowners found the need to create similar

associations for a different purpose. The need sprang partly from the steady

increase from the middle of the 19th century onwards in the burden upon British

shipowners of liabilities to third parties. It became more usual for injured crew

members to seek compensation from their employers, and claims by dependants of

crew members who were killed were facilitated by Lord Campbell's Act of 1846 (A nAct for compensating the families of persons killed by accidents). The

possibility of claims by passengers was greatly increased by the same Act and by the

vast numbers of passengers who constituted the flood of emigrants to North America

and Australia in the second half of the century. Shipowners needed cover against

these risks. They were also becoming increasingly aware of the inadequacy of the

insurance cover that they did have in respect of damage caused by their ships in

collisions with other ships. The usual cover for claims by other ships and their

cargo for damage caused in collision excluded altogether o ne fourth of such

damage and; more seriously, was limited in amount (apparently the maximum recovery under the policy, including both damage to the insured ship and liability for

the damage it had caused, was the insured value of the ship).

Eventually, in 1855, the first protection association was formed. T his was the

Shipowners' Mutual Protection Society, the predecessor of the Britannia P and I


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Marine Insurance

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Club. It was intended to operate like a mutual hull club, but to cover liabilities for

loss of life and personal injury and also the collision risks excluded from the

current marine policies, particularly the excess above the limits in those policies.

Other similar associations were formed.

In 1874, the risk of liability for loss of or damage to cargo carried on board the

insured ship was first added to the cover provided by a protection club. The values of

cargoes had risen and cargo underwriters had become keener on recovering their

losses from shipowners, in which they were encouraged by a somewhat more

sympathetic approach by the courts. After 1874, many clubs added an indemnityclass to provide the necessary cover. Subsequently, most of these separate classes

have been amalgamated with the class reserved for the original protection risks, and

today the distinction between the two classes has virtually disappeared within the P

and 1 Clubs.

While all the original P and I Clubs were based on various towns and cities within

the United Kingdom, clubs were subsequently established and today flourish in

Scandinavia, in the United States and in Japan. Most of the major clubs now belong

to the International Group for reinsurance and other purposes. Moreover, many clubs

originally based in the UK have comparatively recently been re-formed in such

placesas Bermuda and Luxembourg in order to secure, in respects of clubs' funds

representing calls or premiums paid by their Members but not yet used for thepayment of claims, freedom from exchange controls. Such freedom is demanded by

the shipowners from all parts of the developed and developing world who now make

up the truly international membership of the larger clubs. The popularity of the club

system of insuring liability risks can be judged from the fact that approximately nine

out of ten ocean-going ships are currently entered in a P and I Club.

Mutual Character

The P and I Clubs all operate on a mutual or non-profit basis aiming to call up only

sufficient move) in each year to meet costs, expenses and claims for that year. There

are no shareholders and the shipowner members of the association insure each other.

The thirteen P and I Clubs co-operate in two important areas. First the clubs

themselves share claims with each other and buy high levels of reinsurance on a

collective basis. This enables each club to provide much higher levels of cover than

are normally available in the commercial market. The second area of co-operation is

in matters of common interest, such as new legislation or discussions at the

International Maritime Organisation (IMO) or standard shipping contracts.

The Cover

The P and I Clubs provide cover for a shipowner's liabilities, not the fabric of the

ship itself. The risks covered will usually include:

(a) Death and personal injury of

Seamen

Passengers

T h i r d p a r t i e s

(b) Liabilities in respect of stowaways or persons saved at sea.

(c) Liabilities arising from collisions.

(d) Liabilities arising from groundings.

(e) Liabilities arising from damage to fixed and floating objects.

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Vetting Inspections

(f ) Liabilities arising from pollution.

(g) Liabilities arising from wreck removal.

(h) Liabilities arising from towage operations.

(i ) Liability to cargo, together with other legal and other costs

associated with dealing with these claims.

Figure 5.3 (a): P & I Covers Personal Injury to Figure 5.3 (h): P & I Covers Death and Personal

Seamen Injury to Seamen

The Service Given by P and I Clubs

A P and I Club operates as a combination of an insurance company, a law firm and

a loss adjuster. This means that a club should be able to assist a shipowner in

dealing with every aspect of a casualty from finding experts and contractors to deal

with the immediate casualty all the way through to providing legal advice and

paying

claims. The P and I Club exists in order to help the shipowner and pay his

liability claims. Almost always, the shipowner and his club will work together in

order to solve theproblems and it is very rare that a club will be in dispute with a

shipowner over cover.

The clubs are unique organisations in that they provide not only insurance cover,

but also claims handling (legal) advice and a casualty response service. In

managing a shipowner's liabilities, a club may have to deal with the loss of two

bags of rice or the total loss of a fully loaded VLCC. The club's reaction therefore

needs to be highly flexible and geared to the particular incident. The clubs have

access to a high quality network of specialist technical advisers, maritime lawyers

and local commercial correspondents. Correctly used, that network should ensure

that the shipowner and his club will be properly advised on the essential elements of

the claims which arise out of a casualty. The shipowner can expect to be told

whether or not he is liable for the claim, how much it may cost, whether he is

entitled to limit his liability and whether he may expect to recover all or part of his

loss from some other party who may also be to blame.

The Role of the P and I Clubs in Oil Spills

The International Group of P and I Clubs will between them insure almost all internationally

trading tankers. The clubs will therefore have a role to play in nearly 14every oil spil l of any consequence.

Although in Civil Liability Convention (CLC)


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Marine Insurancecountries, the clean-up operation will be conducted by government agencies and inthe USA by the shipowner, the club will almost always be closely involved, even if

only to approve expenditure.

Figure 5.4: Spill Over of Oil from Ship

Insurance Guarantor

In the context of an oil pollution incident, the club will almost always have

provided the insurance guarantee, the Civil Liability Convention Certificate. In the

USA, which has its own Oil Pollution Act (OPA 90), there are separate guarantors,

but they rely on the clubs to provide the actual cover and service. -

Liaison with International Oil Pollution Compensation Fund (IOPCF)

In larger oil spills where the IOPCF may be involved, the P and I Club will liaise

with the IOPCF, both so as to keep them informed and so as to ensure that there is a

smooth flow of funding without different views being taken on the recoverability of

expenditure at different levels. In practice the clean-up costs (which come at the

beginning) are usually the concern of the club and the IOPCF will only become

involved in payments at higher levels for third party claims.

C

Source of Funds

Very few shipowners can afford the cash flow needed to fight a major oil pollution

incident and even the oil companies do not like to be out of pocket for too long. The

club will therefore expect to act as banker for the clean-up operation and third party

compensation payments. This means that it is important to agree expenditure in

principle in advance of incurring it so that disputes can be avoided.

Legal Advice

This falls into two parts, the overall issues of liability and details o f particular

claims. In both areas the club (using outside legal advice where appropriate) would

expect to assist the shipowner.

Casualty Response

The club will not itself conduct a clean-up or salvage operation but it will be in a

position to find appropriate advisers. surveyors and through them contractors

capable of doing the work.

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Marine Insurance and Tanker CasualtiesVetting Inspections

Some aspects of a casualty are reasonably predictable. For example, a sizeable oil

spill is likely to involve a large clean-up operation. There will probably also be

third party claims from fishermen, boat owners and the owners of shore-side

property. There may be thousands of individual claimants. Each claim must be

sifted and assessed.

In other types of casualty, different considerations will apply. A collision could

involve death and injury claims, and probably salvage issues. Casualty response is

essentially about practicalities. It is based upon systems which can be adapted for

use in any type of casualty in any location.

Where Does the Club Fit in?

The club needs to be adaptable to deal with a casualty on any scale involving a ship

of any type in any place. To achieve this, the approach needs to be both flexibl e

and simple. For example, an oil company owner will have a highly developed

response plan which is driven and manned by the oil company often operating from

its own building with its own staff. In such a case, the club will usually interact

with the oil company, providing advice and comment. Only rarely will the club be

expected to take the lead.

At the other end of the scale is a shipowner who owns a few ships operated from a

remote corner of the world and who simply does not have the manpower or

resources to deal with a major casualty. In that case, the club will be expected to

play a prominent role in organising the response on behalf of the shipowner and

may be called upon to provide a response centre and staff. Many shipowners have

trained their own personnel to handle media enquiries but, for those owners who

have not, the club will be able to assist.

International Tanker Owners Pollution Federation (ITOPF) and the Clubs

The clubs rely heavily on ITOPF in many of these areas. ITOPF's technical

expertise and breadth of experience is unrivalled and ITOPF will normally be

asked to assist in any oil spill of significance, be it from a tanker or non-tanker,

wherever it may occur. The Federation's practical experience of oil spill clean-up

methods, environmental damage assessment and restoration techniques isinvaluable in delivering common sense advice based upon sound scientific principles

principles which, all too often, are not uppermost in the minds of government

authorities. ITOPF's ability to deliver objective and practical advice on pollution

issues is invaluable in two ways :

(a) In helping those responsible for clean-up and damage assessment to

respond more effectively and on a realistic scale.

(b) By providing government agencies and private contractors with help

in spill response planning.

SAQ 1(a) How does a marine insurance policy differ from a car insurance policy?

(b) How is a Hull and Machinery policy issued?

(c) What is the genesis of the P and I Clubs?

(d) What are the risks covered by P and I Insurance?

(e) Why is P and I Insurance cover important to oil tanker owners?

(f) What are the various types of marine policies?

(g) What is the difference between H and M and P and I?

16


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Marine Insurance(h) What is the collision clause that is meant to make shipowners moreresponsible?

(i) What are the types of marine losses?

0 ) What is your understanding of third party liability?

5 . 6 S U M M A R Y

The Operation of ships is a complex activity that takes place in an environment which is

often unpredictable and sometimes hostile.

Risk management may be defined as a systematic method of protecting resources against

losses so that the aims of the organization can be achieved without interruption.

The principles and the procedures of underwriting remain essentially the same today,except that the slips of paper and pencil stubs have given way to plasma screens and

computer keyboards and the messenger boys to internet and telephone.

Losses are de.. ,ed as Total loss: Actual, Presumed, Constructive. Partial loss : Particular

Average, General Average

Marine policies are known by different names according to their manner of executive and

the nature of the risks covered.

The main risks insured against in a marine policy are stated in the "perils" clause which is

often supplemented by the "specially to cover" clauses, or restricted by provisions

eliminating one or more of the insured risks.eliminating

Hull and machinery (H and M) policies are usually time policies, the maximum period ofinsurance usually being 12 months.

Protection and indemnity policies provide for loss due to injury, illness and loss of life to

which the insured is legally obligated to pay.obligate

: Some of the pictures/images used in this Unit have been sourced from theinternet. We wish to thank the creators/publishers for the usage of their material.

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UNIT 6 VETTING INSPECTIONS

Structure

6.1 Introduction

Objectives

6.2 Brief History

6.3 Chemical Distribution Institute

6.4 Ship Inspection Report Programme

6.5 Inspector Accreditation

6.6 Typical Deficiencies

6.7 Practical Issues within the Industry

6.8 Summary

6.1 INTRODUCTION

Ship vetting is an in-depth assessment of a ship with respect to its quality and that of itsowner, operator and manager, right from commissioning to current status.

Vetting enables the charterer to optimise vessel selection by matching available vessels tooperational requirements of the voyage and therefore maximisingefficiency.

Objectives

The overall aim is to increase safety at sea and to decrease pollution. The following issuesare part of the broader perspective of ship vetting:

check whether the ship complies in every respect with internationallegislation, with certain industrial standards and certain national laws (e.g.OPA 90 a ship which does not complyis not allowed to enter anyAmerican port),

avoid major oil pollution cases because it damages the reputation of oilcompanies and it involves enormous financial responsibilities. At the sametime, the environment is better protected,

increase safety on board as well as to better the safety management of acompany,

decrease the danger of explosion and/or fire and the ensuing damages for the

terminal installation and its surroundings, and

ensure that cargo is not c7arried on substandard ships. There are too manyimplications if the cargo is damaged or lost due to substandard vessels,owners, operators or managers,

6.2 BRIEF HISTORY

Tanker ownership was traditionally with oil companies. Long term time charters werebecoming increasingly rare with the spot charter market becoming very active.

In and around the '70s and '80s, the oil industry saw ownership of tankers gradually

moving from oil companies to independent shipowners. The pattern of tanker ownershipmoved from the well established independent shipowner with a substantial fleet to non-traditional shipping interests, often with no active interest or experience in shipping. The 19


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fleet size was also small, sometimes only a single ship representing the owner's stake in

the oil industry.

Ship managers began to play a growing and influential role in this changing world. The

oil industry, now being a major spot charterer of all types of tonnage, began to be

concerned with the quality of tankers.

A number of member companies of an internationally well established organisation called

the Oil Companies International Marine Forum (OCIMF) began the development of ship

vetting systems in the late '70s and early'80s. Each scheme was unique to the individual

company's needs.

Recognising that different standards were sometimes being applied, with consequent

confusion amongst shipowners, OCIMF members developed Inspection Guidelines for

Oil Tankers in 1989, based on international conventions such as SOLAS, MARPOL,

STOW, etc. and industry-accepted technical guidance such as ISGOTT (International

Safety Guide for Oil Tankers and Terminals) and other standards.

Individual in-house databases enabled the oil company to form a reliable view of a ship's

suitability for charter. The number of major tanker accidents in 1989, ship quality and

liability issues assumed an even greater prominence in the oil industry. Besides vessels,

there was a realisation in the industry that shore-based management of the ship was

important as well. Therefore, OCIMF members began to assess the quality of ship management

agencies, operators, their policies and the implementation of those policies.There are at present mainly two initiatives working in this field

Ship Inspection Report Programme (SIRE) is a project worked out by OCIMF and

concerns the transport of oil by sea.

Chemical Distribution Institute (CDI) is an independent organisation with its own statutes

and it is also part of a bigger project, initiated under the 'Responsible Care Programme' of

the European Community, concerning the distribution, transport and storage of chemicals

and gas over the road, in the air and at sea.

Figure 6.1

Vetting inspections are carried out by qualified personnel, as per the OCIMF standards

and guidelines to make it uniform. SIRE was introduced to ensure this uniformity. It is

open to OCIMF members, bulk oil transport operators, oil, power industrial or oil trader

companies which charter tankers as a normal part of their business and government

bodies such as port, canal and flag state authorities.

According to industry estimations, ships on average are subject to around 10 inspections 20

per year. This includes one to two CDI inspections every year, with two or three from oil


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Vetting Inspectionscompanies forming part of the OCIMF. Then there are three to four per year fromterminals, two to three from independent vetting associations, one from the P & I club,one ISM audit every year, three to four Port State- Control audits, one annual flag stateaudit. eight surveys from class and an annual inspection from the United States Coast GuardUSCG).These inspections cost about USD 3,000.00 each.

C h o o s i n g a S h i p

The charterer's decision of whether or not to charter the vessel is made on a varietyof different criteria, of which the inspection is just one element. Charterers review

information from numerous sources, including the vessel's detention and casualtyrecord, its past experience with the vessel and its management. They have their owncomplex systems (many automated) of actually assessing the ship from the dataavailable and determining whether or not it is suitable.

It is worth noting that charterers do not want to fail ships, or to set impossibly highstandards. The more ships deemed suitable for charter, the keener is thecompetition, and the more likelihood a vessel will be available immediately whenrequired.

In some instances, charterers may be fully aware about problems on board Vessel'A', but feel these problems to be less severe as compared to the problems on

Vessel 'B' and will prefer their cargo to be given to Vessel 'A' inspire of the saidproblems. If two ships become available for the same price, but one of them has aminor deficiency, then the charterer may well choose the one without thedeficiency with everything being equal. But having deficiencies reported does notnecessarily blacklist the ship. But obviously, if the vessel is deemed too high a risk,then it will not be chartered. Part of the reason for the whole process is trying toreduce the chances of substandard ships being used to carry oil.

Another consideration is that if a vessel is also detained by Port State Control, thenwhile it may not be liable to charter costs (if the shipping company can be proved tobe to at fault), it does mean that a very valuable asset, its cargo, is sitting idle, andwill be late to arrive at its destination. Charterers want to avoid chartering a ship

which might be detained.

With spot charters, brokers typically present the charterer with a range of differentoptions at different prices enabling the charterer to take the cost into account whenmaking his chartering decision. Contrary to popular belief, charterers, especiallyOCIMF members, will often pay more for a ship they believe to be of superior quality.

6.3 CHEMICAL DISTRIBUTION INSTITUTE

The Chemical Distribution Institute, based in the UK has its own inspection systemwhich

itis

harmonising with the OCIMF SIRE system. The form was originallyintiallyby CEFIC, the European Chemical Industry Council.

ct DI 15 harmonising its safety measures with OCIMF, so the two groups can

c7 -PA- include Chevron, DOW, Lyondell, BP Norsk Shell, Du Pont,

I locchst, Akzo Nobel, BASF, ConocoPhillips, Petrobras and KuwaitPetroleum.

The databases are available to all participating companies, accredited inspectors, shipowners(marine) and terminal operators (terminals). CDI produces report analysis software, whichcan, for example, show tables and reports of the number and percentage of non-

conformances, inspector observations, comments and non-conformances by category.

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Marine Insurance andVetting Inspections 6.4 SHIP INSPECTION REPORT PROGRAMME

With a significant increase in ship inspection activity, OCIMF members with ship vettingprogrammes recognised that duplication of ship inspections was occurring andoccasionally several inspectors from oil companies, and indeed from other organisations suchas Port State Control and insurance interests, had been on board the ship at the same timeseeking to carry out inspections. Clearly, apart from the sheer inefficiency of this activity, shipstaff was put under considerable stress at times when the ship was busy in port, probablyloading or discharging. OCIMF members also recognised that it would be impossible forindividual companies to maintain up-to-date inspection reports on every ship that waspotentially of interest to them and that some system of sharing inspection reports wasnecessary. This combination of circumstances led to the development of the SIREprogramme that was launched in November 1993.

The original SIRE programme consisted of a database comprising OCIMF membercompany's inspection reports compiled according to each company's individual inspectionprocedures. The SIRE report itself contained only that information that had beensubmitted by the inspecting company and neither the report nor OCIMF provided anyconclusion, rating or recommendation as to the suitability of the ship. A key feature of SIREis that membership is entirely voluntary.

SIRE's main objectives were to extend the availability of ship inspection information and databeyond the membership of OCIMF, to reduce the duplication of effort by inspectingcompanies and, as a consequence, to ease the inspection burden on ship's staff. FollowingOCIMF's mandate, the SIRE programme was, and remains, strictly non-commercial and itonly considers issues concerned with ship safety and pollution prevention.

While the SIRE programme was developed primarily to address the risk management needs ofOCIMF members, it was recognised that there were considerable potential benefits to thetanker industry as a whole and to those other bodies who had an interest in managing therisks associated with ship quality. It was felt that shipowners would benefit from a moreefficient inspection system and that non OCIN4F-member charterers could have access to

SIRE. Importantly, recognising their crucial role in ship quality assurance, it was decidedthat port and flag States could become SIRE users.

It is a fact that vetting inspections are becoming stricter and more demanding. Although mostshipping companies are able to comply with the requirements of the major oil companies,they often lose track of the rapid changes of these requirements, which are recorded and keptin previous inspection records. Bearing in mind that these requirements vary from one oilcompany to another, the problem is compounded.

6.5 INSPECTOR ACCREDITATION

To be accredited as a SIRE inspection. Inspectionhive a Class 1 deck or enginecertificate of competency and not less Chan five years ut sea service including not lessthan two years at a senior rank.

They must pass a formal written examination, pass an onboard audit, and undergoperiodic re-auditing. They must conduct a minimum number of inspections every yearand periodically attend refresher courses.

The Inspection Process

Inspectors working for oil companies go on board ship and make a report based onquality of the vessel, its equipment and operational practices.

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Vetting InspectionsUnder the SIRE programme, all the vetting inspections, which oil companies makeon shipowners, are put into a standard format, so they can be shared between the

oil companies.

The SIRE inspection is geared around checking for items which can only be checked

by physically having someone on the ship, checking that all the documents ar e

there (logbooks, manuals, certification) and are correctly co mpiled, the

necessary complement of seafarers is present, they can all speak a common

language, there is a training policy all charts are tip to date, alarm systems are operational

and tested, lifeboat drills are he

ld, hoses, gauges, mooring equipment and pipelinesare in good condition, planned maintenance systems are being followed and the ship

is clean and tidy. All the inspection questions are based upon IMO regulations and

best-accepted industry practices.

The inspector normally spends about 8hours on board the ship carrying out the

inspection, normally accompanied by a senior ships officer or in some cases the

ship's superintendent.

The inspector's report is sent to the shipping company, which has 14 days in which

to make a comment on it (or explanation for any y deficiencies). The shipping company can

comment at any time during which the report stays in the system.

Once any comment has been received, or after 14 days (whichever is the earlier), thereport is made available through the SIRE system. SIRE participants can access each

report and the applicable comments. Government organisations, including port state

control authorities, can access all the reports free of charge.

The reports are made available on the system for 12 months, after which they are pu t

in an archive for 12 months and then deleted. In most cases vessels are

inspected 2-3 times a year ensuring that the most up to date condition of th e ship is

available.

SIRE has put together a very large database of information about tankers.

45,000 inspection reports have been submitted to SIRE so far; currently there are

over 10,000 reports on over 6,300 vessels, with inspections conducted over the last

12 months. Over 1600 reports are pulled out of the database every month.

There are 275 fully accredited SIRE inspectors around the world and 67 companies

who can access reports from the database.

Vetting and its Role in Client Relationships

There are many new factors in ship vetting that affect the profitability of a

company. The proper and methodical handling of problems together with the well-

informed and effective relationships establish6d between shipping companies an d

their customers are vitall y important factors for a continued working

relationship with clients, especially if these are major oil companies.

Figure 6.2


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Vetting Inspections

24

For example, after a vetting inspection, a major oil company may cause a record to

be made of remedial actions to be carried out in the future. Shipping companies are

expected not only to take remedial action, but also to show how similar impending

occurrences will be eliminated. In some cases, it will be necessary to show how the

methods used to implement remedial action were in accordance with safe practices.

In other words, documentary evidence is required to show a full picture from a

detected deficiency, its satisfactory repair conclusion, and measures taken to avoid

reoccurrence.

Getting Ready for Inspection

The SIRE Inspector will always use the VIQ (Vessel Inspection Questionnaire) as

the base document for the inspection. If the Master/Superintendent makes a pre-

inspection, shortcomings can be identified and corrected prior to the actual

inspection.

Generally the inspector comes on board and has a meeting with the captain. He

discusses the vessel's schedule and tries to inspect the vessel with least possible

interference to the cargo work. It is recommended that he be accompanied by a

senior officer of the relevant department i.e. the Master or Chief Engineer.

It helps if the vessel is prepared with the initial paper work such as all the trading

certificates, crew certificates, etc. It is a good idea to keep all files, log books and

other records ready in the ship's office prior to the inspector's arrival. Besides

being convenient during the documentation review, it also creates a good

impression about the professionalism and foresight of the vessel's officers. The

Inspector will wish to sight the following, where applicable

The Certificate of Registry;

The vessel's trading certificates: Safety Equipment, Load Line, SafetyRadio, IOPP, Safety Construction, International Tonnage, ISM

Document of Compliance (certified copy), ISM Safety M-nagement

Certificate, Certificate of Fitness or Noxious Liquids Certificate.

Oil Record Books Parts I and 2 or Cargo Record Book; tr

Certificates of Civil Liability for Oil Pollution;

The USA Certificate of Financial Responsibility and the last TankVessel Examination Letter;

The Class Certificate, Enhanced Survey File with ConditionAssessment Report and Quarterly Class reports;

Approved manuals: Stability, Damage Stability, Inert Gas, COW, CBI,and ODME;

An approved SOPEP and VRP Manual,

SOLAS Training Manual, SOLAS Maintenance Manual, life savingappliance and fire fighting equipment maintenance records;

The Procedures and Arrangements Manual (for chemical and gascarriers);

The Cargo Gear Register;

Officer and crew national Certificates of Competency, ContinuedProficiency and Dangerous Cargo Endorsements;

Evidence of Administration acceptance of crew Certificates ofCompetency;

The Manager's Operating Instructions;The Company Drug and Alcohol Policy and records of unannounced

testing;


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The Garbage Record Book and the Garbage Management Plan; Vetting Inspections

Records of testing of mooring winch brakes, mooring rope/wiremanufacturer's certificates, bow stopper certificate;

The last Port State inspection certificate;

Hot work and enclosed space entry permits; and

The technical publications listed in the OCIMF Vessel InspectionQuestionnaire as applicable to the vessel.

Once the paper work is completed, the-inspector takes a round on deck to identifyany deficiency. At the same time, he might ask few questions to the crew members

on deck. On completion of the deck round, he goes down to inspect the engine

room.

It should be noted that the Emergency Fire Pump, Emergency Generator,

Emergency Steering and the ODME will be expected to be operated by the officer

or any other representative accompanying the inspector.

It is also important to communicate tactfully with the inspector at all times. Loose

talk about other ship staff, the company or other body or organisation will not be

appreciated. Communication should be precise, professional and to-the-point

always.The Master can expect that the inspection will take about six to eight hours and be

performed in the following order, unless the order of inspection should be altered

to fit the vessel's schedule:

Review of documentation (preparatory for opening meeting).

Opening meeting, with Master, Chief Engineer and Chief Mate(if available).

Complete review of documentation.

Wheelhouse and navigation.

Communications (radio room or GMDSS station). The exterior of the wheelhouse.

The exterior of the accommodations to the poop.

Up the main deck to the forecastle and forecastle spaces.

Back down the main deck and checking a ballast tank (as agreed inthe opening meeting).

The pump room

to the Cargo Control Room with Chief Officer.

Discussion with Chief Engineer and into the engine room

including review of PMS.

With the Master back through the internal areas ofthe accommodations.

Finally a period for the inspector to summarize his thoughts.

A final meeting with the Master and department heads.

Any variation necessary to avoid disruption of the ship's normal operation will be

considered. The order of inspection can be varied as necessary.

During the final meeting, a list of observations will be reviewed with the Master.

This review is to ensure that there are no observations that can be cleared because

of a simple misunderstanding. The Master is not expected to provide corrective

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Marine Insurance and actions or to indicate that he agrees with the observations. His signature is only an Vetting Inspections indication that he received the observations.

The following area few points to be remembered prior to inspection :

(a) Critical equipment or documentation normally placed at the first pointof access:

Gangway to have a safety net correctly rigged. Most nets are riggedaround the gangway itself. The correct procedure would be to rigthe net between the shipside and the outboard side of the

gangway. The condition of the net should be checked at regularintervals to ensure that its condition does not deteriorate to theextent that it may not be able to support the weight of an averageperson who may fall on it.

A lifebuoy with line and light must be placed near the point ofaccess. The condition of the line must be checked especially at thepoint where it is made fast to the buoy. The buoy itself should beof the required we ight. The light should be in workingcondition, secured correctly to the buoy and watertight.

The International Shore Connection with gasket, nuts and boltsshould also be kept standby. The nuts and bolts should be greased

and moving freely. The gasket should be in good condition. Thethreads or the coupling itself should be free from damage.

A visitor's helmet should be available at the gangway itself. Thiscreates a very good impression about the safety culture on boardthe vessel. If many officials or visitors are expected, theappropriate number of helmets and visitor cards should beavailable.

The visitor's log should be available and appropriate entries madeand endorsed in it. Common details that are normally required tobe fil led in would be the uni que v isitor card number, nameof the person, rank, the person's name who the visitor desires tomeet, the reason for the visit, the equipment/baggage/personaleffects carried by the person along with him and the date and time.

Warning boards should be placed near the point of access.These boards should be of an appropriate size so as to be easilylegible to the average individual. They s hould be wellilluminated in all conditions of darkness. Commonly found entrieson these boards could be such as but not limited to, 'NoUnauthorised Access', 'No Smoking', 'No Mobile Phones','No Naked Lights' and 'Safety First'.

A Safety Plan which should include a crew list and cargo stowage

plan. These are to assist shore personnel such as the fire brigade totake a head count and know about the vessel's structure andequipment in case of an emergency. Needless to say, the crew listand cargo stowage plan must be updated at all times.

(b) The manifold watch keeper must check with all visitors on their business andenter it in the visitor's log. Personnel in the CCR must be informed so thatinspector is escorted up to the Master's cabin and around the vessel as per theShip Security Plan.

(c) All watertight doors must be shut including the engine room skylight and themidship/forepeak stores. If there is a need to open any of these doors, any

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Vetting Inspectionsstaff member should be available at that point to ensure validity for the doorto remain open.

All scuppers must be plugged. Pre-arrival checks should be made to ensure

that scupper plugs are in good condition, bellows are not cracked and bolts are

free of corrosion and/or damage. If in doubt, scuppers should be plugged and

tested with water to ensure water-tightness.

(e) Anti-pollution gear must always be in readiness. No metallic shovels/ equipment

should be used as part of anti-pollution gear. Operation of Wilden pumps or

other pumps should be checked each watch. Any leakage of liquid orcompressed air should be made good prior to arrival port. Pump bodies should

be correctly earthed to ensure that electrical charges do not develop

in or around the equipment, which may be placed in or very near a hazardous

area. All personnel must be aware of the fact that Oil Spill Dispersant should

be used over side in case of oil pollution only after obtaining the requisitetl

permission from shore authorities.

(f) All drip trays to be cleaned and dry. No extraneous material or debris should

be found in these trays. The height of the tray should not be greater than the

height of ventilators or sounding pipes inside the tray. If sounding

pipes are

shorter than the height of the tray, they should always be capped shut to ensure

water tightness. All trays must have plugs in place, including the drip trays ofwinches.

The appropriate flags/lights should be displayed. Condition of flags should be

inspected and the necessary action taken prior to arrival port. A flag

in tatters

or one which is dirty, with grease stains or faded will not create a very good

impression about the vessel in the mind of the inspector. If the vessel has just

arrived in port, it may happen that the vessel's navigation lights are inadvertently left

on. The designated officer or a responsible person nominated by the officer should

ensure that these lights are switched off as soon as the vessel ceases to be

underway.

(h) Sledgehammers should be placed in position near the bitter end release mechanism

of both port and starboard anchor cables. It is not uncommon to find that only

one hammer has been kept for releasing both cables. Instructions that are

simple and clearl y leg ible shoul d be posted at both chain lockers. Sounding

pipes should be clearly marked with caps in place. Arrangements for draining the

chain lockers should be in working condition and the date of last test should be

stencilled in the vicinity.

(1) All loose gear on deck and engine room to be secured. Gear should be secured

to strong points of the vessel and not to fixtures such as piping, ventilators,

sounding pipes or cable trays. Gear stowed on the freeboard deck or other decks

exposed to the weather should be elevated and secured on wooden/fibre palettes.

Fire hoses should be connected to hydrants. Hoses should be in good condition, withno cracks or pinholes that could reduce water pressure and consequently

effectiveness. Couplings should not be secured with hose clamps or other

temporary means. Copper wire should be used to secure couplings to the

hoses. Washers should be in good condition and not hard or cracked. Hoses

should also be connected to the foam line on either side of the manifo ld.

Foam monitors should be pointed towards the manifold and the cargo

area in gener al. Personnel should be a ware that the initial discharge

from the monitor should be pointed away from a fire. This is to ensure tha t

water or a mixture of foam and water does not make direct contact with

fire, which could lead to boil over and generation of an enormous amount of

steam. Personnel in the vicinity of the fi re could be injured by this occurrence.

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vetting Inspections(k) Brake testing of mooring winches must be carried out annually. Results of the

test should be stencilled along with the holding capacity, slack and heave

directions and date of testing. Pins of the clutch levers should be in place

and secured with either chain or wire. Brake spindles should have some

marking arrangement to ensure that all personnel tighten the brake to the

desired tightness only. Grease nipples should be operable, gears should be

greased and all moving parts should be free.

(1) Oxygen and acetylene bottles should be stored in lockers separate from each

other. The cylinder valves should be kept shut. Lines should bedepressurised and gauges should show zero pressure. Access to these lockers

should be available only to authorised personnel. Flame arrestors should be in

position and working correctly.

(m) Excessive black smoke from the funnel should be enough cause to notify the

personnel in the engine room to take appropriate action. There are quite a few

ports globally where fines may be imposed on vessels or the vessel blacklisted.

6.6 TYPICAL DEFICIENCIES

Below are some of the deficiencies pointed out by a British Petroleum (oil major)

inspector during an actual inspection :

Figure 6.3

(a) The aft Emergency Towing Arrangement (ETA) was not connected to the

pick-up rope for deployment in 15 minutes by one crew member. The pick-

up rope was later connected up by crew (the ETA has to be kept ready at all

times and all components have to be connected and in working condition).

(b) Material safety data sheets (MSDS) were not available for chemicals stored in

the steering gear compartment (MSDS must be available for all chemicals,

paints and other compounds that might give rise to an undesired event in

case of accident or personal injury).

(c) The starboard aft and forward main deck mooring winch clutch levers were

not properly secured rendering the clutching arrangements ineffective

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(d) The port side navigation light was with partly detached holding bracket andwas not bolted down at the base (this could have serious implications

towards the visibility of the light itself).

o

l T

Figure 6.4

(e) The bitter end release arrangements for port and starboard anchor cables outside

the chain lockers were covered with steel boxes and secured with 24 bolts

thus hampering quick release (the arrangement has to be such that the cable

can be released in the quickest possible manner in the simplest possible way.

The typical arrangement is a large L-shaped pin connected to the last link

within the locker secured with a smaller pin. The small pin is supposed to be

removed and the L-shaped pin knocked out with a sledge hammer, a process

that should take 30 seconds).

The foam compound in two drums for portable applicator in the engine room

was labelled with last test date that was six years from the date of inspection (foam

compound is normally tested at intervals of one year).

The incinerator was used for burning of oily rags in the engine room but

there were no entries in the garbage record book to reflect these activities

(this could imply that the oily rags might have been disposed of by other

illegal means or that there is a failure on part of the vessel's staff towards

completion of documentation).

(h) The fixed combustible gas detector for cargo pump room was fitted with a

single sensor head sited above the bottom platform and at the port side away

from the cargo pump casings (detectors need to be placed at all sensitive

locations and in good number to ensure early detection).

The local inert gas main manometer was indicating zero pressure and reported

to be defective while discharging operation was in progress (SOLAS requires

a minimum of 100 mm water gauge pressure in the cargo tanks during

discharging. A defective manometer will provide no indication

( j )


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if pressure falls below the requirement or in case the tanks actually go intovacuum).

The brake holding test of all self storing mooring winches had exceeded 12months interval (12 month intervals may not be exceeded unless the vesselcan justify non-performance due to an unintentionally long voyage becauseof machinery failure or due to failure of equipment required for testing).

6.7 PRACTICAL ISSUES WITHIN THE INDUSTRYMany tanker companies are reaching the conclusion that shipping has a real image problemi.e. most oil companies don't trust them, politicians don't trust them, and so they get subjectto so many rounds of vetting inspections and new regulations.

The problem with vetting inspections and regulations is that they are not a very good wayof ensuring the quality of the ship i.e. they generally give shipping companies a bunch ofhoops to jump through, and reward the shipping companies who manage to figure out whatthe hoops are and jump through them.

The result is that shipping does not genuinely get much safer, oil companies continue todistrust shipping companies, shipping companies have a bad image and the problem getsworse.

There is plenty of data available about shipping companies in various databases,including data about their casualty record, costs, decision making processes, detentions,casualties and surveys.

If this data was better shared, everybody would know who the bad ships are, and wouldnot give them any business, and everybody would know who the good ships are, so theywould not need to be subjected to continuous inspections and seafarers could get morerest. The overall safety of shipping would be much improved.

SAQ 1

(a) When and why was ship vetting introduced?

(b) What is overall aim of vetting?

(c) What are the practical issues faced by personnel within the industry?

(d) What is the role of the Chemical Distribution Institute?

(e) What is the SIRE programme?

(f) What is the process of inspector accreditation?

(g) What do VIQ and VPQ stand for?

(h) Name at least five common deficiencies that could be easily rectified.

(i) Name at least ten documents that an inspector would like see.

Would vetting be a good idea for vessels other than tankers also? Give yourown reason.

6.8 SUMMARY

Ship vetting is an in-depth assessment of a ship with respect to its quality and that of its 30operator, and manager, right from commissioning to current status. Vetting enables the


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Vetting Inspectionscharacter to optimise vessel selection by matching available vessel to operationalrequirements of the voyage and, therefore, maximising efficiency.

A number of member companies of the OCIMF began the development of ship vetting

systems in the late 70's and early 80's. The overall aim of tanker vetting is to increase

safety at sea and to decrease pollution. CDI is an independent organization concerning the

distribution transport and storage of chemicals and gas over the road, in the air and at sea.

It is worth noting that chatterers do not want to fall ships, or to set impossible high

Standards. The more ships deemed suitable for charter, the keener is the competition, and

the more likehood a vessel will be available immediately when required.SIRE inspectorsmust have a class l deck or engine certificate of competency and not less than five years of

sea service including not less than two years at a senior rank.

Note: Some of the pictures/images used in this Unit have been sourced from the

internet. We wish to thank the creators/publishers for the usage oftheir material.

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NOTES

Documents

IMU Marine Insurance and Vetting Inspections