Underwriting the Skuld offshore way

Potential assured

Skuld Offshore offers a suite of P&I and additional liability covers tailored to protect our assureds when deploying vessels to work in the offshore arena.

Depending on the operation, vessel type, contractual arrangements and several other factors, the underwriting team will work closely with our assureds to ensure that an appropriate and suitable insurance solution is offered; a product that will respond to our assureds' needs.

Skuld Offshore's clients represent the whole span in the industry and vary from shipowners to oil majors, contractors, managers and charterers.

Review

Before a quote can be produced, the underwriter will need to do a broad review of the risk. This will include getting to know the assured and their risk appetite and to get an overview of the covers required, loss statistics from their previous insurers (if any) and specimen contracts for the work in which the vessels or units are to be engaged.

As all offshore vessels and units will be performing work of a specialist nature, information detailing the assureds' experience from previous, similar projects is also extremely useful for the underwriter to consider.

The first element assessed is the type of operations that will be performed. Offshore operations are of varying complexity ranging from straight forward and repeated marine-type tasks through to extremely advanced installations, construction, drilling or production.

To properly review the risk, the underwriter will need to get a fundamental understanding of the operations, and only in this way will the underwriting team be able to offer an adequate insurance solution.

Once the assured has submitted their details, the underwriter will start the review, working through the information provided and consulting various databases to build up a thorough picture of the potential assured and their risk profile.

Once this assessment has been completed, the underwriter will decide whether to offer terms.

Contracts

A key feature for offshore operations is that the projects will be carried out under specific and often bespoke contracts, with the liabilities distributed therein.

The offshore industry is based around assigning risk contractually in advance, so for the underwriter to be able to fully understand the exposures and the structure of an insurance package that properly responds, a review of the contracts is essential. This means that the underwriting process must have a strong pre-risk orientation.

For the underwriter to obtain a full understanding of the contractual exposures, the underwriter will consult with the specialist offshore contract lawyers in the Skuld Offshore team, who will review and assess the contracts. The purpose of this exercise is to highlight the risk exposures and identify any deviations from standard contracting principles.

The combined comments of the underwriter and the legal team are then prepared in an easily digestible review, which will be shared with the assured for him for him to consider.

This way, the assured will be able to decide whether, and to what extent, they want to transfer the exposures to their liability insurer.

Calculate

Skuld Offshores' initial assessment of the assured, the operational data combined with the review of the contractual exposures, will form the basis of the risk assessment which contributes to the calculation of the premium to be charged. The substantial statistical base Skuld has built up allows Skuld to benchmark the proposed premium against the overall statistical base, and to look at how the assured's loss record compares to Skuld's.

The main difference between traditional shipping (transportation of goods) and offshore projects is the complexity of the work to be performed. The exposures faced working within large oil fields or wind-farms, where there are risks of damaging infrastructure such as pipelines or cables on the seabed, are potentially extremely significant and the effects of assuming liabilities for the wrong elements of the operations could be enormous.

Although there are many standard form contracts designed on knock for knock terms for the offshore sector, at Skuld we often receive contracts which have been altered from the standard form or are drafted specifically with a project in mind. These contracts often deviate from standard terms too.

To respond to the additional exposures, Skuld can offer an Extended Contractual Liability cover which can be bought either for a specific contract or can be taken out on a yearly basis. For each contract, the underwriter will help clarify what contractual liabilities could be included within the cover.

It is always Skuld Offshore's priority to minimise gaps in our assureds' insurance cover setup and therefore Skuld has worked out a suite of additional covers that can assist and protect the assured against liability arising from offshore-related risks. Some examples of these buy-back covers are specialist operations (work of specialist nature) and subsea activities (liabilities arising when being engaged in diving activities or use of ROVs amongst others).

Quote

Following the full review and calculation, Skuld Offshore will put together the insurance quote setting out the basis for the offer, range of cover, appropriate cover limit options and retention levels, terms on which the offer is predicated and the price payable. The offer then forms the basis for a discussion between Skuld and the assured to ensure that all insurance needs have been catered for or whether the offer requires clarification.

Once the quote is accepted, Skuld will issue required insurance certificates evidencing covers offered along with other documents needed for the operation or trade. A continuous dialogue will be kept between Skuld and the assured and their broker to ensure a swift and effective communication throughout the duration of entry.

In the June 2017 issue of The Field, Elling Magnussen, Skuld Offshore, takes us through the underwriting process from inquiry to cover.

 

Skuld's success has been based, in part, on a philosophy of carefully selecting our assureds, rather than underwriting on a volume basis. This underwriting philosophy applies for all lines of business written by Skuld, Offshore P&I included. It holds equally true when the market is good as it does when the market is tough, but it is often drawn into more stark contrast in difficult times as parties further up the contractual chain seek to incorporate more favourable terms.

The underwriters at Skuld Offshore are frequently met with requests for cover solutions for an evolving variety of additional liabilities, meaning that the product portfolio is therefore in constant development to meet the ever-changing market. That said, the way in which risk is assessed is consistent and in this article we look at the processes followed by underwriters when approached to provide offshore liability covers.