Maritime business needs a «literate» insurance

Insurance of cargoes in shipping is an integral part of any trade deal.

Evgenii Stukachev, Member of the Maritime Law Bar Association ad Senior Partner of BLACK SEA LAW COMPANY, told how active the insurance market in Ukraine is, what peculiarities of marine insurance are, and how meetings of experts at the discussion platforms assist in increasing the level of quality of cargo transportations.

– Evgenii, is there an active insurance market today in Ukraine? – Quite a young and perspective market of insurance exists in Ukraine today. The market development is caused by the entry of new companies of the international level and by the increase of the most active economic sectors of Ukraine.

Despite the periodical market downfalls, the maritime sector is always loaded with orders for export and import of goods as Ukraine is an attractive transit zone for suppliers.

– Why is marine insurance more often distinguished among other types of insurance?

– As a rule, the marine insurance branch grows in tandem with the maritime sector. In connection with technical and legal peculiarities of the maritime business, specialists discriminate marine insurance among other types of insurance.

Any proprietary interests related to the marine and water transports belong to the objects of relations at the market of marine insurance.

The main concepts, traditions and even approaches were borrowed from the birthplace of marine insurance – Great Britain. On the model of the western colleagues, marine insurance is performed by virtue of the treaty or by the mutual liability insurance.

– Who are the main players of the marine insurance market?

– The senior western insurance companies and Protection and Indemnity Clubs, which are dislocated in Great Britain and Europe, retain a certain natural monopoly. Clients are attracted not just with a considerable experience and history of such companies, but with their impeccable reputation as well because credibility remains the greatest value of insurance.

The main clients were and are companies-ship-owners as well as managers, cargo owners, port operators and other actors in the maritime sector.

– Do such companies use services rendered by the Ukrainian insurers?

– We did not have such cases in our practice. The Ukrainian companies try to provide such services to national clients, but most ship-owners prefer insuring their risks with the insurers in Great Britain, Luxemburg, Germany, France, Norway.

We should note that an older fleet, which does not conform to the requirements of the western companies in view of its long lifetime, insures risks with smaller insurance companies located in Eastern Europe. Hence, the Ukrainian companies are not rivals at the global market in respect of the marine insurance services, and should tend to the international standards of services provision by increasing appropriate capital funds and financial capacities.

– What obstacles do the Ukrainian companies have?

– First, there is no general sustainability of economy and stability at the domestic insurance market. The Ukrainian companies have to compete with large international insurance clubs having great financial capacities, experienced personnel and excellent reputation.

Second, the associated offices and headquarters existing in different countries around the world are a valuable resource for international insurance companies. A ship-owner needs to be supported by an insurer`s agent directly at a ship`s mooring port.

Third, our legislation does not have any regulatory framework in principle, which prescribes a procedure of operations for protection and indemnity clubs. Despite the fact that Article 14 of the Law of Ukraine «On Insurance» envisages an opportunity for citizens and legal entities to align into protection and indemnity associations, the legislature is still on the fence if such organisations are profit-making or non-for-profit, what prevents their due registration in the territory of Ukraine.

– What documents are important in merchant shipping?

– Letters of commitment issued by protection and indemnity clubs have an important role in the practice of merchant shipping. Such letters warrant a third party with debt redemptions on behalf of the insurance society in favour of the assured. This warranty does not require banks engaged or transfer of actual funds to the collateral account. However, such a letter is a reasonable assurance for distinguishing duties for any actor of the maritime shipping market in consideration of the reputation of insurance companies.

Unfortunately, using such a good instrument as a letter of commitment from the Protection and Indemnity Club is not regulated in the national legislation. Along with other legal gaps, this need be augmented as soon as possible; some statutory and regulatory enactments need be amended; and new laws should be adopted.

Our team is involved in some of such processes; and we hope to get a positive result in the near future.

– How do the Ukrainian companies learn new approaches to the services provision from their western colleagues?

– International seminars and conferences have a significant role in upgrading the qualification of active professionals at the insurance market.

For example, the International Seminar will take place on 29th May, 2019; this seminar sponsored by the company «Black Sea Law Company» with the support of the Ukrainian Maritime Bar Association and some foreign partners is dedicated to marine insurance. This event will be attended by the experienced speakers including: European insurance brokers, agents of protection and indemnity clubs, and solicitors and barristers from Ukraine, Great Britain and the European Union. They will share their experience and information about the states of the modern European and British insurance markets and development prospects for the Black Sea regional market.

Furthermore, the International Conference «Marine & Cargo Insurance» (MCI): Marine cargo insurance at the intersection of East-West and South-North will be held in Antwerp from 8th to 9 May, 2019. The conference is arranged by the company «MediaCompass Ukraine» and Ukrainian Maritime Bar Association. The conference participants will discuss the questions of cargo insurance and insurance of liability of cargo owners and carriers. By this token, the participants will make a point on the question of development of new technologies in marine insurance.

The aforesaid events are purposed for and will be very insightful for cargo owners, marine carriers, freight forwarders and other entities in the maritime business.

We have been working closely with many European insurance companies, Protection and Indemnity Clubs and international insurance brokers for many years, what enables us to render first-rate legal services to our clients and promptly react to all the changes of the insurance market.

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