Marine Hull and Associated Liabilities
27th March 2021
Instructions to candidates
Read the instructions below before answering any
questions
Three hours are allowed for this paper which carries a total of
160 marks, as follows:
Part I
1 compulsory question (case study) 80 marks
Part II
2 questions selected from 3 (scenarios) 40 marks each for a total of 80marks
• You should answer the question in Part I, and two out of the
three questions in Part II.
• You are advised to spend no more than 90 minutes on
Part I and 45 minutes on each question selected in Part II.
• It is recommended that you spend 15 minutes reading and
planning your answer to the case study and 75 minutes
answering it, and that you spend 10 minutes reading and
planning your answer to each scenario and 35 minutes
answering it.
• A case study tests extensively across syllabus learning
outcomes, whilst a scenario will be more focused on specific
learning outcomes.
• Read carefully all questions and information provided before
starting to answer. Your answer will be marked strictly in
accordance with the question set.
• You may find it helpful in some places to make rough notes in
the answer booklet. If you do this, you should cross through
these notes before you hand in the booklet.
• Answer each question on a new page. If a question has more
than one part, leave six lines blank after each part.
PART I
Case study
This question is worth 80 marks
You should include relevant examples and further reading in
your answer where applicable
QUESTION 1
CASE STUDY
The Marine Insurance Act 1906 (UK) is the single most important piece of
English legislation for those involved in insurance. It sets out the rights and
obligations of insurers and assureds and lays out the principles for dealing
with different types of claims. From the Marine Insurance Act 1906, stem
out various Institute Clauses that build upon the various provisions of the
Act.
The Marine Insurance Act 1906 is an invaluable guide for insurers to the
understanding of those elements related to underwriting of marine risks
and the adjustment of the ensuing claims. In this respect, contained within
the Act, one finds the application of insurance principles, types of policies,
claims calculations, settlement options and other rights and obligations on
the contacting parties.
QUESTION
You are assigned to deliver a talk on ten (10) aspects that are derived from
the several provisions contained in the Marine Insurance Act 1906 (UK)
which are widely used practices in marine underwriting and claims today.
Present your speech.
(80 marks)
PART II
Scenarios
Answer TWO of the following THREE questions.
Each question is worth 40 marks
_____________________________________________
QUESTION 2
SCENARIO
An oil tanker “Ocean Paradise” is on its voyage from Mexico to
Southampton. As it negotiates its way round the coast of Ireland, a severe
storm pushes her close to the shore scraping its hull along the Cape Clear
Island and develops a large crack severely straining the hull. The vessel
begins to leak oil and the captain sends out an SOS call. The captain decides
to head to Cork for refuge, but harbour authorities refuse entry to the
vessel which is forced back to sea. A sudden engine failure causes the
vessel to lose all power and she strands on Long Strand where it wedges
permanently between the rocks. No injury was caused to the crew, however
oil starts to leak heavily. Fearing a major pollution incident, the Irish
coastguards insist on the vessel being destroyed. Unfortunately, when this
action is taken, it results in a total loss with major oil pollution.
QUESTION
Identify the claims that would be paid by insurers under Institute Time
Clauses – Hulls 1/10/83 and any claims that might be payable by the
Protection and Indemnity (P&I) insurers. Also explain the international
conventions and agreements that allow a shipowner to limit liability for
pollution.
(40 marks)
QUESTION 3
SCENARIO
Having just released some if its cargo in Malta, the reefer “Golden Seas”
makes its way towards the Suez Canal. With civil unrest in the adjacent
countries, terrorists attack and block the canal from both ends trapping all
ships that happen to be in the area including the Golden Seas.
The canal locks are damaged and it is expected that repairs will take 13
months. The vessel has marine and war insurance placed in the London
Market. The hull is insured under the Institute Time Clauses – Hulls
1/10/83, with war cover provided by Institute War and Strikes Clauses Hulls
– Time 1/10/83. The owners claim for a constructive total loss as they have
been deprived of the use of the vessel. They have a full order for its use
and will suffer a major financial loss if they cannot use the vessel.
QUESTION
In the light of this scenario detail how a claim for a total loss is made and
how insurers would respond to the circumstances arising in this case.
(40 marks)
QUESTION 4
SCENARIO
Protection and Indemnity Clubs (P&I clubs) primarily were designed to
provide protection to shipowners against third party liabilities and
expenses.
The role and coverage of P&I clubs have changed drastically since the 20th
century as the clubs were under pressure to meet the challenges of the
new complex structure of shipping, evolution of ship sizes and
environmental impacts creating maritime disasters.
For the past 64 years, carriers had also to assume and cover liabilities for
the risk factors associated with the complete movement of container
shipments, both at sea and land due to containerisation.
All these have resulted in the shipowners demanding greater coverage from
the P&I Clubs which in turn felt the need to form The International Group
which brings together a number of clubs together providing liability cover
to approximately 90% of the world’s shipping tonnage.
QUESTION
In the light of the evolution of P and I Clubs into the International group
Clubs, explain the role, importance and the type of protection that these
clubs have offered to their respective customers. Give examples to support
your discussion.
(40 marks)
