Outbound from the Columbia River in 40 knots of wind, courtesy Columbia River Bar Pilots

(Bloomberg) — European Union regulators dropped an antitrust probe into marine-insurance agreements among groups of ship owners, saying there wasn’t conclusive evidence that they unfairly shut out commercial insurers.

“The market investigation was not sufficiently conclusive to confirm the Commission’s initial concerns,” the European Commission said in an e-mailed statement today.

The commission started a probe in 2010 to examine certain provisions accompanying claim-sharing and joint- reinsurance agreements. The protection and indemnity agreements previously had a 20-year antitrust exemption that expired in February 2009.

The 13 members of the International Group of P&I Clubs, based in London, cover 95 percent of the world’s tankers, according to Andrew Bardot, the group’s secretary and executive officer. Members follow EU law to access the reinsurance pool, he said in January.

Pilothouse of the NITC-owned tanker, Sarvestan. Image via Shipspotting.com

(Dow Jones) VIENNA–The European Union has no intention of halting or delaying the implementation of shipping insurance-related sanctions against Iran, due to come in on July 1, and could cope with any extra loss of Iranian crude exports stemming from these measures, EU Energy Commissioner Gunther Oettinger said Wednesday.

The support of key suppliers Russia and Saudi Arabia, in addition to oil inventories held within Europe, means that regional oil markets could cope with any loss of Iranian crude even if as some analysts predict the shipping sanctions make the impact of overall sanctions much larger than originally intended.

“We have confidence in our most relevant partners–take Russia, take Saudi Arabia. They are really flexible as they have been in the last months,” Mr. Oettinger said at the Organization of Petroleum Exporting Countries seminar in Vienna. “We have a huge storage capacity and we can lift it whenever we have to,” he added.

“We are sure we can organize a functioning level of security of supply in the next months and years,” and cope with any effects of sanctions on Iranian oil supply, he said.

The International Energy Agency estimates that the EU embargo on Iranian oil and U.S. sanctions against Iran’s central bank could take between 800,000 and 1 million barrels a day of Iranian crude off the market.

Other EU sanctions are affecting the ability of Asian importers to insure ships carrying cargoes of Iranian crude, over and above the original sanctions. Analysts at Barclays said these sanctions could take the total loss of Iranian exports to 1.5 million barrels a day, a level that could prompt an oil price spike.

Mr. Oettinger did not deny that the sanctions could impose some extra costs on oil consumers, but said they were still the right approach. “An oil ban, and to cut relations between financial institutions is the best, pragmatic approach to give some pressure to Tehran. Maybe this has some cost.”

Lower levels of economic growth in the U.S. and China, and lack of growth in Europe, mean oil import needs are likely to be lower than expected anyway, he said.

- By James Herron, Dow Jones Newswires

Aground on Mendenhall Bar By larryzou@

Mr. Soledano (not his real name), the owner of a Hatteras cabin cruiser in Miami, stared at me in horror. “What?” he demanded. “It’s going to cost $75,000 to fix my engines, and you’re going to pay me $10,000? Why the hell is that?”

I chose my words carefully. We were at a boatyard on the Miami River, and he was a big, dark man with a three o’clock shadow and a gold anchor-chain around his neck. He looked like a Colombian drug dealer, and the Miami River is a place where an insurance adjuster can end up in little pieces if he doesn’t watch out.

“I’m very sorry, sir,” I said, “but I have to go by your policy. You did read your policy, didn’t you?”

This was my standard ploy, and, as usual, it worked. He may have sent scores of co-conspirators to sleep with the fishes, but now his heavy face sagged in dismay. “No,” he muttered, “I’ve never seen it. The broker. . .”

Of course the broker hadn’t showed him the policy. Of the hundreds of assureds whose hearts I’ve broken, not a single one had ever read his policy.

“Your engines are fully depreciated,” I told him sadly. “We only have to pay 20% of the cost of repair.”

If Mr. Soledano had been a really smart crook, he would’ve forsaken the drug trade and gone into yacht insurance. That way, he could’ve collect money as regularly as a Brooklyn hood taking vig from a candy store, and used the terms of the policies to pay pennies on claims. And since we’re free in this country to make any kind of bad bargain we want, there’s nothing illegal about it.

All yacht policies contain depreciation clauses. Most provide for a minimum depreciation of 10% per year up to 80% of the total claim, and for some items, such as engines, deck hardware and rigging, the depreciation is 20% per year. And it doesn’t matter if you bought the boat last year. . .the depreciation runs from the date of manufacture or the date of the item’s last replacement. The actual condition of the item doesn’t matter, even if it’s like brand new.

Another thing that works in the insurer’s favor is the requirement that the assured prove that the item has been replaced or rebuilt if he claims a lower depreciation. Most sellers of used boats don’t provide documentation on replaced or repaired items, and without that, the insurance company will depreciate the item from the boat’s original manufacture.

Let’s say our disappointed drug dealer bought the 1987 Hatteras three years ago—with excellent engines reportedly rebuilt a year earlier—for $120,000. He paid three years’ worth of premia on time before the boat ran aground and sucked sand into the intakes. The engines overheated off Government Cut and the boat ran up on Fisher Island, damaging both propellers and shafts. The total repair will come to $75,000.

However, since the seller never provided the Colombian with paperwork on the rebuilds, the engines will be depreciated from new, along with the shaft and props, so the insurer pays 20% of the cost. Even at that, the Colombian is lucky: if it’d happened during a hurricane—a  “named windstorm” in insurancespeak—the deductible would’ve been doubled, another detail brokers forget to mention while selling policies. The Colombian’s recovery would’ve been $5000 instead of $10,000.

So how can a prudent owner protect himself from this kind of chicanery? The first answer is to read the policy. Although you can’t negotiate with an insurance company, you can at least make a reasoned decision about whether to insure the boat at all. If you keep your boat in a marina, you only have to buy liability insurance, which can be very reasonable. For example, an online liability-only boat policy from Progressive Insurance (plug notice!) can cost as little as $80 per year.

Of course, if you finance the boat, the financer will require hull insurance, but if you avoid using the boat as collateral, you can self-insure it, perhaps putting a sum aside each month equal to what you would have paid in premia. After all, five years of premia can equal the cost of the boat.

Mr. Soledana finally turned toward his Mercedes with tears in his eyes. He was a sensitive man for a drug dealer, and he knew he’d been taken.

 About the Author

Max Hardberger has been a ship captain, a maritime lawyer, a high school English teacher, a writer, and a ship repossession specialist. His 1998 novel,Freighter Captain, was drawn from a series of voyages he made as a freighter captain in the Caribbean in the late 1980′s. His 2010 memoir, Seized: A Sea Captain’s Adventures, covers some of the ship extractions he’s made in his 20-year career as a ship-recovery specialist.

His adventures have been featured by NPR, The Learning Channel, the Los Angeles Times, gCaptain and numerous other publications. When not on the high seas, he lives in Louisiana. His website can be found at MaxHardberger.com

Tugboat pilot Matthew Devlin was sentenced earlier this month to one year in prison his role in the fatal collision with a tourist "duckboat" on the Delaware near Philadelphia. Devlin was apparently distracted by cellphone calls and his laptop due to a family emergency.

In its StopLoss Bulletin, the club notes that an alleged causative factor in a recent pollution incident involved the duty officer attempting to make a Skype call on his laptop during his watch. A VDR playback revealed that the officer of the watch (OOW) was listening to a news bulletin from his home country which was being streamed through a laptop computer. The officer appears to have missed a radar target and a VHF warning call while listening to the breaking news from home.

The club says, “Onboard communication has improved significantly over the last few years, with technological advances enabling crew to use mobile phones and laptops to stay in contact with family and friends ashore. However, the use of such equipment at inappropriate moments may distract crew from the navigation or operation of the ship.

“Another issue is the risk of being exposed to excessive information and simply being unable to process it all. Bridge equipment is increasingly sophisticated and it can provide the crew with access to extensive information regarding the relative positions of other ships. But, unless it is used in a focused manner, it can confuse, rather than clarify, and ultimately prove counter-productive.”

In another case cited by the club, the OOW decided to use the Automatic Radar Plotting Aid to track 99 different ships whilst transiting a congested anchorage and to overlay the radar image with Automatic Identification System data. With so much information being displayed, he failed to notice that one of the targets had both a minimal closest point of approach (CPA) and time to CPA and, ultimately, there was a collision.

The club says, “It is worth giving careful thought to how such equipment can best be used without risking information overload. An important principle of keeping a safe navigational watch is that the OOW ensures that an efficient look-out is maintained at all times and the Collision Regulations are complied with. It is therefore essential that any distractions from those duties are as far as possible minimised or eliminated.”

Since the first tree was carved by our ancestors for the purpose of water borne transportation risk has been associated with our industry. Vessel build quality, the training of mariners, a culture supporting safety are all elements under the control of a shipping company but despite great strides being made in every element under our control, ship still happens.  To mitigate risk, shipping companies take out hull, P&I and various other types of Marine Insurance. They also insure their work force by purchasing health, dental and accident insurance from medical providers. Those looking to ship cargo take are also well protected against loss, if they fail to insure the cargo a shipper might accept the goods for transport but accepts little liability if, say, a container gets washed overboard.

With multiple types of insurance working together to protect every element of a voyage their is currently one looming gap; insuring the maritime officers against the revocation or suspensions of their license. To make matters worse some license holders are allowing the U.S.C.G. to serve as judge, jury and executioner by signing a “Settlement Agreement” in which they prematurely – and needlessly – surrender their licenses in the confusing moments following a marine casualty. This happened immediately after the Empress Of the North grounded on a rock near Juneu Alaska. The 3rd mate had been asked to cover the watch of the 2nd mate and, despite knowing a difficult turn would occur on his watch, the captain provided no direct supervision or guidance. This occurred 2 weeks after the mate had graduated from California Maritime Academy.  Luckily this individual had the foresight to ask our opinion in the matter and it was quickly resolved.  But if the USCG is making demands, you may not have time to find a lawyer and if you do the costs will be high.

Ralph  Mellusi is an admiralty lawyer specializing in this field and has represented a high number of mariners on behalf of MOPS, the leading provider of Marine License Insurance in the United States. We sat down with Ralph to ask a few questions.

A recent study in Tradewinds predicts a 20-30% increase in maritime casualties over the next 5 years. 2009 has been a banner year for accidents worldwide, how does the future look from your perspective?
The future trend is towards more aggressive administrative actions against licensed mariners. Heightened environmental vigilance, and awareness of the public create added pressures on the Coast Guard to maintain high levels of professional competence. Another contributing factor is the increase in ship size transiting pilotage routes. Dredging has not been able to maintain pace with deeper ship drafts.  Larger vessels, less underwater clearance and narrow channel widths at times stretch the safe limits of ship maneuverability. Technology is also moving rapidly. It is not unusual for pilots to encounter new propeller and rudder designs which have unique maneuvering characteristics which at times are not adequately described in the Pilots cards. Freshly minted Third Mates/Engrs from our maritime academies will assume watches and responsibility on vessels having technology which is often above and beyond what was taught at school. The schools do a great job but there are limits to what can be taught in a four year period which in part utilize training ships which are less than modern. The Coast Guard believes that one of the best ways to maintain minimum professional standards  is to conduct public hearings in which mariners are held accountable for their actions. In instances in which a mariner is determined to have acted negligently, appropriate remedial measures are taken to meet the circumstances. This could include license revocation, suspension, probation, required classroom instruction, simulator training or observer time in the wheel house.

Who are the most at risk of having their licenses revoked, the entry level 3rd mate, captain, Chief Engineer? Are premiums adjusted by experience and position?
Certainly the novice Mates and Engineers for the reasons I described above are particularly at risk until they reach the point where they have acquired a sufficient degree of familiarity with the vessel and their duties.

Taking over a watch on a ship you have never seen before is a frightening proposition.  It takes a few months to learn a power plant, i.e. to scope out the system  and to know where the key valves and components are located and how to start up and shut down pumps, systems etc.  You no sooner come up to speed and your tour is over.  The next ship may have a different power plant and you sweat out the process all over. The same is true on the bridge.  Beyond this point, those most at risk are the department heads because of the greater responsibility.   Location has a lot to do with this as well.   Have the misfortune to be involved in an incident in New York Harbor which is written up in the local papers more or less guarantees maximum Coast Guard, NTSB response.

Can you tell us a bit more about the trend of “Settlement Agreements” seen over the past few years?
Settlement agreements are relatively new in the area of Administrative License Procedures. This came about as a result of changes in the authority given to the Administrative Law Judges  (ALJs).  In past times, the ALJs had no authority to discuss or entertain settlement. This meant that the only opportunity for settlement discussions was before the CG filed the formal charges.  Now that the authority has been given to the ALJs,  settlement discussion are always available. This is a good thing for the mariner because once formal charges are presented, the mariner has a powerful weapon of “Discovery” which means he/her attorney can demand documents, statements and other relevant materials from the CG.  It is often the case that when all the information is made available through discovery that the mariner and the CG are in a better position to discuss a settlement. The strengths and weakness of the case are now exposed.  The issues become fine tuned.

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Click HERE to continue reading part 2 of this interview.

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The above comments are intended to provide a general overview of my experiences as a MOPS attorney and agent. Conditions and terms contained in the MOPS Policy control.

Ralph J. Mellusi Esq.
Tel: 212 962-1590 Fax 212 962-1590

Email  Rjmellusi@ Sealawyers.com
www.MarineLicenseInsurance.Com

What does the insurance provide the mariner? What is not covered by this type of insurance?
The amount and extent of coverage depends on what the Mariner selects. Mariners face multiple exposures, the first is to the license, the second is Civil liability and the third is Criminal Liability. In any one incident, one exposure or all three can be present.

Starting with Coverage for the first exposure, – the license- a mariner can purchase coverage which only pays for the legal expenses of an Admiralty Attorney. Under the Mops Policy which I am associated and familiar with, the coverage is unlimited which means there is no cap on the amount of attorney fees which the policy will cover. The premium cost increases with higher license grades.

The next level can be more accurately described as an expansion of the License Protection. This provides reimbursement for loss of income (in addition to payment of legal fees) if the license is suspended or revoked or reduced in grade. The limit here is 12 months. The premium varies with the grade of license and the level of monthly income insured.
The next level provides coverage outside the context of CG/NTSB hearings. This is the world of Civil Litigation. Mariners are held civilly liable and accountable for any harm resulting from negligence or violation of law. Mariners are not protected under the cover of the shipowners insurance policy. Shipowners have liability policies which protect the owner and the vessel but not the mariner. As a practical manner, a vessel owner will provide an attorney to represent a mariner because under tort law the vessel owner is vicariously responsible for the acts of its employees. So from a business viewpoint it makes sense in many instances for the vessel owner/operator to defend the mariner. But there are times when a mariner is working for a company that only has one vessel and perhaps is considering filing bankruptcy. In that case there is no incentive to provide a defense for the mariner. The mariner could find him/herself adrift. Ships are expensive items with potential for catastrophic damages. Pilots often face the greatest exposure and for this reason have the highest premiums for coverage. Recently (Sept 18, 2008) a Federal Court in Mississippi found a Bar Pilot Negligent and Personally Liable for Over $800,000 in Damages. The Court held that he failed to review the plans for the entire voyage and mistakenly relied on a floating buoy to fix his position allowing the ship to veer outside of the intended channel and strike a submerged submarine launch structure. The case is a reported decision,

The third area of exposure is Criminal Liability. Here environmental activities comprises the majority of litigation. The federal government and the coastal states have numerous laws and regulations which unfortunately impose a strict liability for harm resulting from mishaps which allow oil products and other contaminants into navigable waters. The Exxon Valdez grounding is the classic example of the issues involved. Mops has coverage to provide payment for a Criminal Attorney to work with Admiralty Counsel on matters of this nature.

Lets say a mariner with MOPS insurance runs aground, what steps should he take?
The first concern is for the safety of the vessel. The Master must use good and proper seamanship principles to do what must be done to minimize damage and properly secure the vessel.  The circumstances will dictate what must be done. The next step would be to report the incident to the Coast Guard, or VTS etc. and to follow instructions. In reporting the incident, the mariner should  provide factual information that will assist the authorities in the immediate safety of the vessel, personnel and the environment.  It should not be necessary to provide opinions or speculations as to why or how the incident occurred. Once vessel and environmental safety considerations are under control, the Mariner assuming he is a MOPS insured, should contact Mops to report the incident. One this is done, a Mops  attorney will contact the mariner and provide specific instructions.

Is insurance offered by MOPS to non-US licensed mariners and does a US licensed mariner working aboard a foreign flagged vessel need your insurance?
MOPS does not insure foreign licenses.  MOPS does provide a certain level of legal assistance to US mariners who are required to appear in foreign courts and tribunals inquiring into vessel mishaps occurring in their waters. Today, many US Mariners are sailing on foreign flag vessels.  Mariners working under the authority of their US license on a foreign flag vessel, are still subject to Coast Guard oversight.  A mariner’s license is at all times subject to the mariner’s ability to demonstrate his/her fitness to retain the license.  The Coast Guard has the same authority to investigate an “incident” on a foreign vessel which raises the issue as to the competence of the mariner as it does on US flag vessels.

Who is the most at risk? (e.g. tanker mates, cruise ship, those on short domestic runs…)?
I would say that environmental and cruise ship incidents present the greatest exposure.  Environmental mishaps trigger criminal liability and have the greatest potential for long term harm.  There are not  many cruise ships under US flag and there has not been a major cruise ship incident in many years, but the catastrophic potential for loss of human life is obvious given the numbers carried on these megaships. Apart from those categories, there is also a greater risk of collision and allision associated with the inland as opposed to deep sea transits because of traffic, and congested waterways and complexity of piloting in inclement weather.

Any final comments to add?
Yes, there are several misconceptions among mariners about License Insurance which I would like to put to rest;

The first misconception is that the Policy Coverage is voided if a mariner is negligent.  Quite the contrary, the precise reason one buys this policy is to protect themselves when they are in fact negligent.

The second misconception  is that License Insurance is really  for mediocre or less-than- average mariners.   This is totally false. Highly competent, top of the class, stellar mariners need it just as much.  I have seen this demonstrated numerous times. One story that stands out was the allision of the container ship Jean Lykes with a fuel barge that occurred in New York  Harbor in the mid 1990.s  The Jean was under the command of  a docking pilot and was making a turn into the Kill Van Kull which developed into a ” white- knuckles” situation. The master who was on the bridge, agonized as to whether or not to relieve the pilot or trust in his judgment to save the day with the tugs under his command. That did not happen.  The Jean’s bow glanced off the stern of the barge.  Both the master and pilot were charged with numerous counts of negligence.  The case went to trial. There was media present because the incident occurred in New York Harbor and was written up in the papers. When he testified, it soon became evident to everyone in the court room that the master was the brightest guy there and that he knew more than the experts who were called to testify by both sides.  This came as no surprise to me because I got to know him very well in pre-trial preparation. He graduated No 1 from a State maritime college and  whenever he took professional courses at MITAG, he was always No 1. Etc. etc.   I could go on.  To make a long story short, the judge dismissed all eight specifications charged against him.  The point to be made here is very simple, location, location, location.  The point being made is that you can be the brightest of the brightest but if you are involved in a high profile incident, you will likely be needing legal talent.

The third point is the misconception that License Insurance is very expensive. In reality, a bare bones policy costs less than a dollar a day, so don’t lose sleep as to whether you not you can afford it.
The fourth and last point is that MOPS really has the best product out there. They deliver what they say and they have an excellent network of fine Admiralty attorneys around the country who meet yearly in New York to discuss strategy and cases of interest.  When a call for legal assistance comes, Mops attorneys act immediately.  In the case of the Jean Lykes, which was assigned to me for defense, I was up the pilot ladder before the Coast Guard boarded the ship.

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Did you read Marine License Insurance -Part 1?

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The above comments are intended to provide a general overview of my experiences as a MOPS attorney and agent. Conditions and terms contained in the MOPS Policy control.

Ralph J. Mellusi Esq.
Tel: 212 962-1590 Fax 212 962-1590

Email  Rjmellusi@ Sealawyers.com
www.MarineLicenseInsurance.Com

Last week we brought you information on marine license insurance and in our continuing quest to look at non-traditional protection available to mariners we bring you Global Rescue – Maritime!

Mariners work in conditions that make getting immediate medical treatment extremely difficult. Most mariners and shipping companies do not have the assets to quickly and smoothly move injured or ill mariners off the ship and to qualified medical facilities much less to a hospital of their choice. When they do, Aeromedical transports can cost well over $100,000US and are rarely covered by insurance.

Even when a shipping company has a track record of evacuating injured mariners they rarely offer the level of service a good third party company can provide. For example:  Will your company send you to a hospital in the nearest country or get you home fast? Will they provide a qualified medivac team at the closest point of land? Will the patient and their family’s concerns remain top priority?  With Global Rescue the answer is YES!  They also are discrete, important if you worry about your company’s reaction to a medical concern.

Global Rescue tells us:

Through its ability to provide real-time medical consulting anywhere in the world from its specialists at Johns Hopkins Medicine, Global Rescue is able to relay critical medical support to sick or injured mariners while they are thousands of miles from a hospital or out of the range of a medivac aircraft. Since most ocean-going vessels do not possess medically trained and equipped crews, Global Rescue provides ship captains the confidence and peace of mind needed to be sure injured sailors will be well cared for until rescue teams can reach the vessel.

In addition to its medical consultation services, the Boston-based crisis response company has a network of medically equipped, fixed and rotary-wing aircraft on every continent, thousands of vetted hospitals worldwide who can provide treatment in any patient’s language, and a selection of Centers of Excellence around the globe that offer medical care on par with that available in the United States. Its deployable paramedics routinely respond to emergencies in the most remote reaches of the planet.

When a shipmate is injured off an unfamiliar coast, Global Rescue will give you the confidence to stabilize him on board and the knowledge that first-rate medical providers are deployed to the closest point of land. Family members will be comforted in the knowledge that Global Rescue will keep them informed and expedite his return to a hospital of their choice.

While many of us think insurance is an unneccessary expense, it’s important to note that like a firefighting or personal survival training… when ship hits the fan it too late to start preparing.

If your ship travels to unusual places or you simply want a cost effective back up to your company’s medical plan visit their maritime website or call them at +1.800.381.9754. Be sure to mention you are a mariner or shipping company as this is a specialty service they provide to seafarers at no additional cost.

Also be sure to download their Mission Summaries pdf for some truly amazing stories of rescue.