RECENT DEVELOPMENTS IN P&I COVER FOR POLLUTION: TERRORISM, PIRACY AND SANCTIONS

INTRODUCTION

In this paper, I will look at the ways in which the P&I Clubs have adapted the insurance cover which they provide to their shipowner members for oil pollution liabilities in the light of changes to the risk environment in which shipowners and their Clubs now operate. I will look at three developments in this environment, all of which have had an impact on the P&I Clubs, both on their own exposure to risk as well as on the liability of the shipowners whom they insure. Each of these three risks has become more prominent in recent years and, as a result, the P&I Clubs have had to consider whether they can continue to provide cover to the full extent of the shipowner’s potential liability. In the case of terrorism, the tragic events of 9/11 almost exactly ten years ago caused a radical reassessment of insurance risk in the context of a terrorist attack. More recently, the growth of piracy, especially in the Gulf of Aden now spreading into the Indian Ocean, has raised questions of “What if?” which had not previously seemed relevant in the context of oil pollution liability. Lastly, sanctions legislation and regulation would not appear to have much impact on oil pollution issues but the recent tendency to extend sanctions to financial services, including insurers, has created a new area of risk for the P&I Clubs with potentially far reaching consequences.