Processing of claims 30/

The ease with which the processing of claims takes place will depend greatly on the organisation of the company and the insurance department's place within that organisation.

Insurance claims cannot be satisfactorily put forward without systems being in place to handle the provision of necessary documentation and information. Considerable extra work can be saved by a few simple procedures.

(a) Ship

Information collection starts with the ship and this is really the most vital stage. The following matters require attention:

(1) The maintenance of log books, and reports dealing with particular events, for subsequent submission to the insurance department for filing. It is wise for such files to be retained as a source of reference even after the vessel has been sold, until such time as all pending claims, or claims which may only become apparent sometime after the vessel has changed hands, are finalised. It is also worth again noting that under the Institute Time Clauses - Hulls - 1.11.95 the provisions of notification of claims are more stringent and care needs to be taken to ensure a proper system is in place for transfer of information relating to incidents which might give rise to claims.

(2) The retention of damaged parts onboard the vessel where practical - important evidence is frequently lost because a tidy-minded Chief Engineer has disposed of a damaged part rather than keep it for proper examination.

Obviously, some kind of balance has to be struck since the crew members have a ship to run and cannot spend all their time filling in forms to record every action or event on a minute-by-minute basis. However, it is possible to draw up clear standing instructions and simple forms that facilitate the recording of significant events, and Richards Hogg Lindley have assisted many shipowners in doing just this.

(b) Technical department

During each stage of processing a claim, close liaison with superintendents is vital. Firstly, the correct documents and information, etc. will need to be assembled, to

enable questions of cause and costs to be determined. The superintendent's role is important in this process.

Procedures and Information Required in Support of Claims

The superintendents are also usually responsible for coding repair invoices into different categories. They therefore play a major part in collating the costs relating to any particular claim.

Also, as previously stated, the question now arises under Institute Time Clauses - Hulls - 1.11.95 of any lack of due diligence by a superintendent forming a potential defence open to underwriters to resist a claim. Increased vigilance is therefore required to ensure appropriate systems are in place.

Additionally, the superintendents will be the company's main point of contact with the insurers' surveyors and will therefore advise on important matters such as agreeing cause of damage/costs of repair. Where large amounts are involved, it is generally prudent for the superintendent to go through the repairers' accounts with the insurers' surveyor before a final price is agreed or any settlement made. The insurers' surveyors will usually have a detailed knowledge of local repair practices and prices and can provide valuable assistance to the superintendent.

Lack of communication causes innumerable problems and it is important that the technical and insurance departments recognise and make use of their respective areas of expertise.

(c) Accounts department

The accounts department is an important source of information, particularly in respect of disbursements which may not be routed via the superintendent.

Final settlements are often delayed for relatively minor items of information, for example payment dates for exchange rate purposes, which are nonetheless essential for the case to be completed. The insurance department can help to avoid this kind of problem by letting their accounting colleagues know what is required from the outset so that the information is traced while it is still current - nobody likes being asked to go back through three year old files or records.

(d) Operations/commercial department

On a day-to-day basis the operations department must keep their insurance department colleagues informed of the movements of the vessel so that any insurance implications, such as breaches of warranty can be dealt with.

When a casualty occurs, the operations department must liaise with the insurance department in order to assess the ramifications of any proposed action. Often commercial considerations must rule the day, but in accepting this the operations manager must anticipate any harmful consequences that considerations of commercial expediency may have on insurance or third party recoveries. Acting as a prudent uninsured owner is a splendid maxim in many respects but it has one important drawback: by definition the uninsured owner is not expecting anybody else to pay his bills, whereas the insured owner has to remember that a particular choice of action may affect his insurance position.

Procedures and Information Required in Support of Claims (e) Damage ledger

The insurance and claims departments of many companies keep a damage ledge which is a useful exercise in showing the costs relating to a particular casualty, the anticipated recovery from insurance and/or third parties and any shortfall that the company will have to bear including, for example, the policy deductible.

However, the operation of such a ledger and of the insurance department in general can become difficult if the various departments of the shipowning company involved do not work closely together and accept the need for co-operation. Team work is vital in responding successfully to major casualties. It is therefore desirable that the insurance department manager is given sufficient status within the company so that he commands an immediate place on the front line team.