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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