4 News Friday February 15, 2013 Lloyds List

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Howto
survive a
casualty
Standard Club claims
chief shares advice
LIZ MCMAHON
ITIS vital to get the response to a
casualty right because wreck removal
costs are anincreasingly significant
feature of maritime casualties andit is
ultimately shipowners that bear the
burdenthroughincreasedinsurance
costs, StandardClubsyndicate
claims director SamKendall-Marsden
says.
While some cost drivers suchas
locationare matters of fortuity and
cannot be controlled, Mr Kendall-
Marsdensays others canbe andit is
important to focus onthese to
mitigate the overall costs. For
example, he says the plan, timing,
contract selectionandchoosing the
right contractor canall be managed.
It is important to have a clear
picture of true facts as quickly as
possible andbefore youmake a
decision. Youwill findthat youare
bombardedwithinformation
immediately after the casualty, and
not all of it will be accurate, he
advises.
At this point, anexperiencedP&I
clubclaims handler may, if
appropriate, deploy to the scene
without delay to evaluate the
situationandassist the member on
site. Mr Kendall-Marsdensays this
may include liaising withthe
authorities andnegotiating with
salvors.
It is vital to make contact withthe
authorities at anearly stage andoffer
thema credible strategy. It is also
useful to have knowledge of third-
party experts, like the International
Tanker Owners PollutionFederation,
who have a database of local
resources inmany areas, he says.
Mr Kendall-Marsdensays
tendering is a triedandtestedmethod
of arriving at the best solutionat a
competitive cost but aneffective
tender process depends onthe
bidders being providedwithsufficient
informationandbeing allowed
sufficient time to prepare bids.
Be aware that if anLOF[Lloyds
OpenForm] is signed, the salvors may
invoke Special CompensationP&I
ClubClause andthis couldmake it
harder to terminate the contract and
switchto the next phase of the
response (possibly withalternative
contractors) thanmay otherwise be
the case, he warns.
This is because clause nine of
Scopic prevents terminationif the
relevant authorities prevent the salvor
fromdemobilising its equipment.
Inany event, it is critical to have a
viable planfor the following phase of
the response that the authorities will
accept, Mr Kendall-Marsdensays.
This planmay include a caretaking
phase withvisible signs of progress to
satisfy the authorities that progress is
being made.
Consider a lumpsumcontract to
control costs, facilitate accurate
reserving andshare risk withthe
salvors. Bonuses andpenalties
canalso be usedto incentivise
timely contractual performance, he
says.
Pinpoint all the major players in
the casualty andtheir importance and
howthey caninfluence the process,
Mr Kendall-Marsdensays.
These include: the insurance
manager andother relevant
shipowner staff; P&I clubclaims
manager; hull andmachinery
underwriters; the authorities (which
will vary fromcase to case but which
wouldinvariably include the local
coastguard); salvors; correspondents;
lawyers; andpollutionresponders or
advisers.
Do not take any big decisions
without your insurers andensure that
the insurance manager has strong
relations withtheir club, he says.
Also ensure that individual
masters andshoreside staff are
sufficiently educatedinhowto
respondso that they do not, for
example, signa contract presentedto
themby a salvor without first seeking
advice.
Ignoring local authorities or
appearing not to understandtheir
needs canmake for a very unhappy
experience. Challenging
unreasonable requirements may be
anoptioninappropriate cases. n
www.lloydslist.com/insurance
Astep by step guide to dealingwithdisaster
STANDARDClubsyndicate claims
director SamKendall-Marsden
advises ensuring the emergency
response planis upto date andis
testedona regular basis, involving
underwriters andother advisers.
This is primarily a desk exercise
designedto ensure that everything
has beenthought through, that
people understandtheir roles
inthe event of a casualty andhave
clear lines of communication, he
says.
Ensure all key relationships are in
goodorder withauthorities at ports
that youuse regularly andpotential
service providers suchas salvors,
correspondents, lawyers andanti-
pollutioncompanies.
Mr Kendall-Marsdensays media
relations are animportant element of
planning a response to anemergency
andmedia advisers shouldensure
youhave the trust of key publications.
P&I Clubs play a support andadvisory
role here.
THEkey decisions immediately
after a casualty are the nature of
the response, choice of salvor and
the type of contract that youuse
e.g. Lloyds OpenFormversus time
andmaterials (for example, BIMCO
Wreckhire) or LOFversus a towage
contract (for example, BIMCO
Towhire).
Getting it right means saving a
lot of money andina salvage or
wreck removal time, andallows
for a large amount of flexibility,
says Mr Kendall-Marsden.
Agoldenrule is to work in
tandemwithyour insurers and
consult them. Decisions sometimes
get takeninthe heat of the moment
without proper considerationand
consultation. This canwaste a lot
of money because youhave the
wrong plan, contract and/or the
wrong salvor, he advises.
This is anarea where the P&I
Clubshouldhave a leading role.
Also, howyouhandle andrespond
to the media inthe immediate
aftermathof anincident is crucial.
THIS wouldtypically involve
bunker removal andother steps to
minimise the danger of
environmental damage, andthen
starting remedial work.
Mr Kendall-Marsdensays that at
this point, relations withthe
authorities canbe critical.
At best, your partnershipwith
themwill formthe basis of a
successful response; at worst,
they couldmake your life very
difficult, addsubstantially to
the cost andthe media fallout, he
says.
This couldinclude making
unreasonable demands inrelationto
bunker removal, for example, where a
wreck is locatedat depth. The harder
andmore time-consuming the
operation, the higher the cost.
Mr Kendall-Marsdensays it is
important to remember the
authorities may well be under
political pressure to be seento
be doing something andthere have
beenoccasions where their demands
have beenunreasonable andthe
potential benefits of the actions
they have requiredhave been
outweighedby operational
difficulties andcost.
The onus is onyouto come up
witha viable planwhichthe relevant
authorities will agree to, so that you
canremainincontrol andhave a
better chance of controlling costs.
Ignoring their orders, as sometimes
happens, is fraught withdanger, he
says.
Youwill be inthe firing line if
something goes wrong or they
couldjust get someone else to do the
work andsendyouthe bill.
Your P&I Clubshouldnowbe
at the front line, directing the
response inconsultationwiththe
shipowner.
ATTHIS point, everything shouldbe
under control, says Mr Kendall-
Marsden.
The shipshouldbe stable
andthe environmental threat
eliminated.
The next task is to keepthings in
goodorder while responsibility for
removal of vessel or wreck andother
work is decidedupon.
Prepare for constant pressure
fromauthorities to get things done.
It is essential to make the
right decisions insteadof rushing
things, or the eventual outcome
may be a lot more expensive
thannecessary, plus there is
the risk of possible badpublicity,
he says.
The shipowner, the club
andtheir technical advisers
shouldwork together inthe
preparationof aninvitationto
tender, the evaluationof the bids
andthe selectionof a preferred
contractor.
MRKENDALL-Marsdensays while
the contractors will be doing the
work, the shipowner andits club
shouldbe actively managing
contractual performance, keeping
the authorities updatedand
obtaining necessary permits and
permissions onanongoing basis,
so the operationcanrunsmoothly.
Different casualties bring different problems, but it is important to have a plan in place to mitigate overall costs. AP
Pre-casualty
Phase one:
emergency
response
Phase two: addressing environmental concerns
Phase three: caretaking
Phase four:
removal
This is primarily a desk
exercise designed to ensure
that everything has been
thought through
Sam Kendall-Marsden