Poor performance

A claim was made against a ship manager for alleged failure of their duty in the supervision of the crew leading to poor crew performance and a poor standard of maintenance. The claim brought forward was for US$ 1 million.

The claim was brought by subrogated Hull and Machinery insurers who had already paid out to the owner. The managers were, as per the management agreement, fully co-assured on the H&M policy. Therefore, the main defence was that one insured could not bring a claim against another insured if they had already recovered their loss from the policy. The claimant stated that as the manager had no proprietary interest in the ship they could not rely upon the co-assurance regime if negligence was shown.

ITIC sought the opinion of a KC who firmly rejected this, as although they may not have a proprietary interest in the ship, they do have an insurable interest. The claim was settled on a nuisance value of US$ 50,000. However, legal costs of nearly US$ 200,000 were incurred which were paid by ITIC.