Shipping news: Regulations for mandatory insurance fall a little short

  • February 23, 2017

After the Titanic sank in 1912, survivors and families of the victims sued the unsinkable ship’s owner for more than $16 million in total. In the end, the company paid $664,000.

It would be a much different story for passengers aboard today’s ocean liners. Ensuring the proper insurance for passenger-carrying vessels is the topic of a submission by the CBA National Maritime Law Section.

Writing to Transport Canada, the Section says proposed Regulations Respecting Compulsory Insurance for Ships Carrying Passengers under the Marine Liability Act are an important step forward in terms of protecting the public.

The Section has, however, three areas of concern where they believe the proposed regulations should be amended.

First of all, the minimum insurance limit of $250,000 multiplied by the ship’s passenger capacity would fall short of obligations under the Athens Convention on Passenger Carriage. That obligation is stated as 175,000 Special Drawing Rights at the International Monetary Fund, which currently amount to about $310,000 CDN. The Section recommends that the government address the issue by rewording the regulations “to require carriers to procure insurance at an amount in Canadian Currency, equivalent to 175,000 SDRs on the day of issuance of the policy or its renewal.”

Since the purpose of the regulations is to provide a safety net for passeners, the Section would also like to see provisions for absolute liability to further protect passengers in cases where the shipping company is in breach of its insurance policy. “In such situations, where the policy may have been breached, the innocent injured victims would be unable to recover financial recompense from the insurer. This defeats the purpose of having mandatory insurance in place.”

Similarly, the Section recommends that the regulations be amended to “prohibit the operative effect of ‘pay to be paid’ clauses … or otherwise provide a right of direct action against the insurer in these situations.”

Finally, there are many recreational or pleasure craft plying the country’s waterways which are not required to carry insurance for passengers – meaning that passengers have no financial recourse if something goes wrong. The Section notes that now, as the regulations are being reviewed, would be a good time to deal with that concern.

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