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El Faro shows need for D&O cover, Standard syndicate argues

El Faro shows need for D&O cover, Standard syndicate argues

29 October 2015

Gillian Musgrave, Head of Claims, was featured in an article in Lloyd's List. The full article is reproduced below, with kind permission. It is also available on the Lloyd's List website


SHIPPING companies' executives need to consider directors’ and officers’ liability insurance — known as D&O — in the wake of three-figure million dollar compensation claims launched by families of El Faro victims, according to a marine insurance expert.

Gillian Musgrave, head of claims at The Standard Syndicate 1884, was speaking at the Shipping & The Law conference in Naples earlier this month.

Ms Musgrave said that the for-profit marine and energy syndicate had written £19m ($29.1m) premiums since its launch on April 1.

The current Volkswagen emissions software scandal highlights what D&O cover does, she said.

The case will likely result in a catastrophe-size claim, going through all excess layers into the reinsurance layer.

Liability for directors and officers has no limit in this instance, in contrast to shipping casualties, which are governed by the Limitation of Liability Convention 1976.

Moreover, directors are often indemnified by their companies, but sometimes companies may be legally barred from doing so, or cannot afford to do so, or may just be unwilling to do so.

But at the time Ms Musgrove spoke, the directors of the operator of El Faro had already seen a $100m liability claim.

With 33 dead after the ro-ro sank during Hurricane Joaquin at the start of October, more were likely in the offing.

According to subsequent media reports, three actions have now been brought.

Giannicola Forte of Studio Legale Lauro examined the practicalities of maritime rescue, a particularly topical issue for Italian shipping right now.

Rescue is not only a matter of morality or legal obligation, he pointed out. Rescue co-ordination centres can order masters to assist.

The only applicable considerations are the capability of a ship to undertake such action, and safety of ship and crew.

Masters should follow industry measures and suggestions, including those published by the International Chamber of Shipping.

After a rescue operation, vessels should be searched for stowaways after disembarkation and the parts of the ship the migrants occupied should be disinfected.

However, all of these things are costly and owners should be looking for strong political intervention, said Mr Forte.

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The Standard Syndicate D&O cover