Insurance Programs and Risks Management Recommendation for Port, Harbour and Terminal Operators in Indonesia

By L&G “All Risk Services”

Terminal operator is considered to be as high risk business from insurance point of view. Only a few insurance markets that can accept this sort of risk. It requires international reinsurance support to enable local insurers to provide insurance policy. A full and comprehensive risk profile is needed.

Since we do not have yet a comprehensive information about physical condition of each the ports, we are not ready to provide a comprehensive risk recommendation. At this stage we could only provide a brief insurance programs that are usually arranged for a large port.

The best insurance program is Port, Harbour and Terminiar operators Marine Package insurance. This insurance provides cover for the property, equipment, liabilities and financial exposures of port authorities, as well as the port, harbour and terminal operators who work there. Cover extensions are available for excess protection and indemnity, removal of wreck, and fines and penalties.

In brief please find below the highlight of each cover.

i. Property All Risks Insurance

For all properties belong to located at the yard, offsite storage such as office, workshop, warehouses, machines, cranes, stocks, property under control, consignees and others. The other type of insurance relate for this is Civil Engineering Completed Risks.

Risk exposures :

- Fire, lithning, explosion, falling aircarft

- Riot, Strike, Malicious damage, civil commotion

- Earthquake, volcanic eruption, tsunami,

- Flood, storm, tempest, tidal wave, water damage

- Impact, burglary and theft

ii. Heavy Equipment, Cranes, lift and others

To perform the works the operator always use cranes and equipments such as crawler crances, mobile cranes, excavators, dozers, heavy duty trucks and others. All those equipment are exposed to various risks and accident during the works.

- Overtunining

- collisons

- fire

- collapse

- explasion

- impact

- natural perils (earthquake, volcanic eruption, windstorm, tempest, tsunami)

- falling and other risks.

Construction Plant and Equipment (CPE) special program is the right type of insurance that can provide cover for such risks. It is “all risks” basis insurance. For insurance arrangement the insurers need the details of each equipment such as type, brand, capacity, engine number and year of manufacture.

iii. Custom Bond

Some times customers need urgent request costum bond document to complete the import documentation for special equipment. This is known as temporaty importation under the Indonesia custom regulation. To ensure that equipment is re exported, the importer must pay custom duties and a refundable payment guarantee. Instead of letting a certain amount money to be held by the customs, we can assist our customer by arranging Custom Bond either in the form of insurance certificate or contra bank guarantee as above.

iv. Marine Hull Insurance

All ports use tug boats to pilot every vessel to berth at the jetty. All vessels should be insured against loss or damage to Hull and Machinery.

v. Protection and Indemnity (P&I)

This insurance, usually referred to as "P&I," provides cover to shipowners, operators, and charterers for third-party liabilities encountered in the commercial operation of entered vessels. The main risks covered are liabilities, expenses, and costs for:

- Loss of life, injury and illness of crew, passengers and other person

- Cargo loss, shortage or damag

- Collision

- Damage to docks, buoys and other fixed and floating objects

- Wreck removal

- Pollution

- Fines and penalties

- Mutiny and misconduct by crew

- Crew repatriation and substitution

- Damage to property on board the insured vessel

- Quarantine

- Vessel Diversion Expenses

- Unrecoverable General Average contributions

- Vessel's proportion of General Average

vi. Marine Cargo Insurance

This type of insurance may need when company as port operator delivers goods or materials from or to any places in the world. An Marine Open Cover (MOC) insurance program is the most apporiate insurance program for such risks. It covers “all” material from anywhere in the world up to the job site using various modes of transportation. It is cost efficient and effective program because it provides insurance cover automatically since the good leaves the original warehouse up to the final destination even without notification. To enable us to arrange this program we need the estimated total value of goods in currency prefer in the original currency to avoid under insurance.

vii. Workmens Compensation Assurance (WCA) and BPJS-Ketenagakerjaan

This program protects all workers and employees from work related accidents, injuries and death during their imvolvement in the project. The basic and minimum program for such cover is BPJS-Ketenaga Kerjaan (Badan Penyelengara Jaminan Sosial). This is a compulsory cover by law.

BPJS-Ketenagakerjaan benefits may adequate for ordinary workers but not for staffs, managers, directors and as well as expatriates. Therefor we suggest our customer to provide an extra cover on top of BPJS-Ketenagakerjaan. There are some programs available. The benefits include immediate evacuation, critical covers and as well as repatriation expenses. To enable us to arrange this covers, we need the details of each parcipants such date of birth, sex, detail of jobs.

viii. Employer’s Liability

This type of insurance provides protection to the employers against all legal liability that can be arisen from the employees due to the wrong doing or failure to observed the adequate protection.

Insurance can be arranged by setting up the maximum exposure limit such as USD 1,000,000 in aggregate during the period of insurance.

ix. Health Insurance

Like WCA, there is also a compulsory program under the new regulation of Minister of Man Power known as BPJS-Kesehatan. Again, for staffs, managers, directors and expatriates there must a better program to be arranged. Cover can be arranged from insurance companies with various option of benefits.

x. Public Liability (CGL)

Usually port, requires an independent public liability policy which is known as General Liability Insurance This is to ensure that the owner is fully protected from financial loss due to the claim arised from surrounding property and community. In some international cases the amount of claim can be so huge.

To enable us to arrange this type cover, we need the details of the property, the value and the location of the risks.

xi. Money Insurance

If payment for salary and payment to suppliers are to be done at the work site, it is suggested that money insurance should be arranged. It covers money during transfit from bank to the site vice versa from any theft and burglary.

xii. Freight Services Liability

Comprehensive liability and physical damage insurance programmes for forwarders, NVOCCs and other logistics and distribution companies including liabilities to cargo and third parties, errors & omissions, and physical damage to owned or leased containers.

xiii. Charterers Liability

Insurance to protect charterers of vessels from a range of liabilities, either through contract or in tort. This can include liabilities resulting from damage to the vessel itself, or from third parties directly or by way of indemnity.

xiv. Ship Repairers Liability

Insurance that protects a ship repairer from liabilities whilst the vessel is under their care, custody and control.

xv. Designated Persons Ashore Personal Professional Indemnity

In an accident where pollution, damages or injury occur, the Designated Person can be held personally responsible. This insurance covers a DP’s liability from professional negligence, the “contingent liability” of a claim that would normally be covered by their employer’s P&I policy and legal expenses to defend a claim.

xvi. Marine Pilots Liability

This insurance provides cover against claims made against marine pilots. Cover extensions are available for third party liability and personal accident.

xvii. Ship Brokers, Ship Agents and Ship Managers Liability

Cover to protect transport intermediaries against claims for negligence and error or omission.

xviii. Marine Professional Indemnity

For marine surveyors, consultants, architects, ship managers and other marine professionals. The insurance covers claims arising from legal liability and errors & omissions in the exercise of the insured’s professional duties. Cover extensions include third party liability and liability for fines and duty.

xix. Stevedores Liability

Insurance against legal liabilities incurred for damage caused to vessels, to cargo being handled, to property (buildings, wharves, etc.) or for third party death or injury as a result of stevedoring operations.

We do hope that with this brief introduction would be enable you to have better understanding about the risks that are exposed to your business. As an independent and professional insurance broker and risk management consultant we are ready to assist you on arranging a hingh stand risk management and insurance programs in order to reduce and avoid risks.

To enable us to provide a comprehensive risk recommendation, we need more details about the properties, equiptments, operation manual and contractual liabilities.