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Wednesday, October 23, 2019

Maritime Logistics Professional

June 20, 2016

IUMI Position Paper on the Offshore Safety Directive

Photo: European Space Agency (ESA)

Photo: European Space Agency (ESA)

 Neil Roberts, Manager, Marine and Aviation, Lloyd’s Market Association (LMA), United Kingdom, and International Union of Marine Insurance (IUMI) Ocean Hull Committee Secretary and Political Forum Liaison discuses  about the position paper published by IUMI.

 
The paper is published in response to the recent Commission report on liability, compensation and financial security for offshore oil and gas operations, which raised some questions in relation to the implementation of the Offshore Safety Directive.
 
Whilst the report acknowledged that there has been no serious oil pollution incident due to offshore activity in the EU since 1988, it remains unclear where the EU believes that operators have not been able to respond effectively to claims with a combination of their own and insurance resources.
 
The EU “regrets the lack of uptake of financial security instruments” but does not appear to consider that this may be a function of commercial appetite. IUMI believes that any (further) investigation of such instruments would require a cost-benefit analysis crossreferred with insurance market capabilities, not least because “limiting liability is a practical necessity”.
 
IUMI has explained that offshore biodiversity damages are not quantifiable and thus not easily insurable. There is, so far, no market available. Moreover, in any offshore operation there are many different parties, with complex legal responsibilities to third parties and to each other. 
 
It would be very difficult to balance the interaction between existing convention(s) (including those dealing with the right to limit liability) and any proposed additional legislation.
 
Overall, IUMI is not convinced that a legislative compensation system over and above the existing provisions is needed and maintains its view that a voluntary financial security system is likely to be most effective. 
 
It would be better to enhance the management of offshore oil risks by the operators rather than mandate an insurance cover/compensation umbrella as such cover does not in itself improve behaviours.
 
European UnionInternational Union of Marine InsuranceMarine