In 2014, the International Maritime Organization’s (IMO) Legal Committee adopted Guidelines for accepting insurance companies, financial security providers and International Group of P&I Clubs (IG) to verify the compulsory insurance requirements. With a reference to these guidelines, IMO member states suggested in March 2020 a further consideration regarding problems encountered in some oil pollution incidents involving insurers that are not members of the IG.
The issue is also being examined by the governing bodies of the International Oil Pollution Compensation Funds (the IOPC Funds). During the 108th session of the IMO Legal Committee in July 2021, the IOPC Funds provided an update on the problems encountered in some oil pollution incidents involving ‘non-IG insurers’. 147 incidents were identified of which 44 incidents either had no insurer or the insurer was unidentified. Of the remaining 103 incidents, 20 incidents were found to be insured by non-IG insurers and six of these resulted in the IOPC Funds providing compensation before the shipowner’s limit of liability had been reached.
Challenges can be grouped into three categories:
- Proper implementation of international conventions: State Parties to the Conventions have an obligation to ensure that they have properly implemented the Conventions, including any subsequent amendments.
- Proper understanding of international convention requirements: Not all parties involved in the international conventions may have a proper understanding of the requirements. For example, non-IG insurers may not be aware that the conventions provide a right to direct-action against an insurer.
- Proper application/enforcement of international conventions: For international conventions with compulsory insurance requirements, States are required to ensure that ships flying their flag do not operate without having the appropriate State issued certificate validating that insurance or other finances are in place. States are also required to ensure that ships entering or leaving ports in their States have a valid State issued certificate.
In preparation for the 109th session of the IMO Legal Committee, Canada submitted a proposal for a “new output” in discussing these insurance problems at LEG 109 in March 2022. The purpose is to develop guidance for the proper implementation and application of IMO liability and compensation conventions. Potential fields of action could be:
- The review of the Guidelines for accepting insurance companies (Circ. No. 3464),
- The development of educational and practical information sources,
- Awareness training for both Flag and Port state controls on the compulsory insurance requirements of the IMO liability conventions.
A group of Flag States under the leadership of Canada, the International Group of P&I Clubs and IUMI cooperated in the preparation of the paper inviting the Legal Committee to agree on a new output for the 2022-2023 biennial agenda with a target completion date of 2024.