SHELL PUTS COVER CLAUSES IN TANKER CHARTER CONTRACTS

SHELL PUTS COVER CLAUSES IN TANKER CHARTER CONTRACTS

Shell International Marine Ltd. will introduce an insurance clause in its tanker charter contract, requiring shipowners to confirm they have their tankers insured through "reputable" commercial insurance brokers, and not via self-insurance.

The tanker charter contract is an agreement between the chartering oil company and the shipowner.The letter sent out to shipbrokers here on March 6 said the company was concerned by "reported instances" that some owners and operators may be resorting to self insurance, whereby insureds develop their own programs to fund losses.

The letter said Shell had yet to assess the ramifications of self insuring for hull and machinery coverage, suggesting that this may result in inadequate insurance protection.

And this may be particularly true at a time when marine underwriters are firming up their pricing and policy conditions, a Shell representative indicated.

"We are worried that with the rise in insurance premiums some less reliable operators may not be able to renew their insurance cover," Barry Cox of Shell International Marine Ltd. said.

Shell's new clause should not pose any problem for reputable shipowners and operators, he added.

Mr. Cox said Shell was taking the action as a precautionary measure and the company had no evidence of chartering any tanker that was not fully insured. It is part of their continuing policy to charter only "quality" tonnage, he said.