Marina to implement mandatory P&I coverage in Feb. 2010

Source: Business mirror

Written by VG Cabuag / Reporter

THE government has allowed vessel owners to prepare for the mandatory marine insurance for pollution and wreck removal after it moved the implementation of the new measure to February 2010.

Shipping regulator Maritime Industry Authority (Marina), however, said the extension will be the last since it already has published the new measure that will take effect on February 20.

According to the new measure, tankers that carry and also ships using persistent oils will have to get a marine pollution and insurance coverage of between P5 million or its US dollar equivalent to P75 million or equivalent amount. For liabilities arising from wreck removal, owners must get an insurance cover of between P5 million to P20 million.

Marina Circular 2009-22 only covers vessels 500 gross tons (GT) and above, while nonmotorized ships, such as barges that are not used to transport oil, will only be required to get the wreck-removal insurance.

“Ship owners who are not able to secure the mandatory marine insurance… shall be obliged to post a cash bond equivalent to the limits of liabilities stated herein and shall be deposited in favor of the Marina with any reputable commercial bank,” the measure states.

Persistent oil refers to products that are usually slow into dissipate naturally when spilled into the marine environment such as crude oil, fuel oil, heavy diesel oil and lubricating oil.

In getting a cover, shipping firms, however, need to get the services of international insurers mainly composed of protection and indemnity (P&I) clubs as there’s no insurer available in the local market.

P&I clubs are associations of ship owners and owned by the insured ship owner-members. They operate on a nonprofit-making mutual basis, or the members pool their resources together in order to meet losses suffered by each individual member.

The country does not have its own club at the moment. An earlier proposal called for establishing a locally grown clubs which will be more convenient for the ship owners since it is very costly if they become a member from other clubs abroad.

The new measure was released after the sinking of Sulpicio Lines Inc.’s MV Princess of the Stars in June last year.

The implementation of the order has been deferred several times this year after shipping groups, such as Philippine Interisland Shipping Association and United Trampers Association of the Philippines, claimed that Marina’s policy is excessive and the market may not absorb the additional cost.

Marina, in its circular, has added penalties for those operating without the mandatory marine insurance. For first offense, it will face suspension until compliance and pay P1,000 per GT per vessel fine.

Second-time offenders are fined P1,500 per GT per vessel, while for third-time offenders, P2,000 per GT per vessel, aside from suspension until compliance.

Sanctions will also be imposed for those who submit fraudulent papers, who can face suspension, payments of penalties as well as filing of criminal charges.