Insurance, Assistance and the Maritime Labour Convention 2006

With the upcoming Maritime and Offshore iPMI Strategies Round table fast approaching, we explore the market opportunities, health insurance coverage requirements, market challenges and how the MLC 2006 is critical for seafarers worldwide.

The MLC 2006 is a comprehensive international legal standard established by the International Labour Organization (ILO) to ensure fair working and living conditions for seafarers worldwide. Its main aims include providing a "bill of rights" for seafarers, establishing minimum standards for their employment and social protection, and creating a level playing field for shipowners by setting consistent requirements across the global maritime industry. The significance lies in its wide ratification, making it very difficult for ships from non-ratifying countries to trade without potential delays due to increased inspections in ratifying ports.

How has the implementation of the MLC 2006 impacted the insurance industry concerning seafarers?

The MLC 2006 has significantly impacted the insurance industry by necessitating a reconsideration of how insurance solutions are provided to seafarers. It raises questions about whether seafarers should primarily be beneficiaries of shipowners' liability policies or insured persons in their own right, advocating for the latter to align their benefits with those of onshore employees. This has spurred the development of specialized MLC-compliant insurance products which offer comprehensive coverage including medical benefits, personal accident, repatriation, loss of baggage, and even unpaid wages due to abandonment. The MLC also provides a more stable regulatory environment for insurers operating in the maritime sector, encouraging innovation in plan design.

What key insurance coverages are essential for the maritime and marine industry under the MLC 2006?

Under the MLC 2006, essential insurance coverages for the maritime and marine industry include:

• Medical Benefits: Covering necessary medical treatment for accidents and illnesses incurred during service, often including pre-existing conditions.
• Personal Accident: Providing compensation for permanent disability or death resulting from accidents.
• Repatriation: Covering the costs of returning seafarers to their home country under various circumstances, including abandonment.
• Loss or Delay of Baggage: Compensating for loss or delay of personal belongings.
• Unpaid Wages (in case of abandonment): Protecting seafarers against financial loss due to abandonment by the shipowner. Financial security to cover shipowners' liabilities regarding repatriation and compensation for death or long-term disability due to occupational injury, illness, or hazard is also a crucial element mandated by MLC amendments.

What are some of the unique challenges faced by insurance companies when operating in the maritime and marine sector?

Insurance companies face several unique challenges in the maritime and marine sector. The industry has historically been dominated by P&I Clubs, making it a conservative and traditional market. Understanding the distinct needs and culture of the maritime industry, which differs significantly from the expatriate market, is crucial. Claims patterns can be different and potentially larger, requiring specialized expertise in cost management, coordination, and communication. Ensuring compliance with the evolving MLC regulations and providing competitive and appropriate coverage in a geographically dispersed and mobile working environment are also significant hurdles.

How are medical assistance and repatriation of crew typically handled in the maritime industry, especially in emergencies?

Medical assistance and repatriation in the maritime industry often rely on specialized international assistance providers like SOS International, which offer 24-hour support, claims administration, and medical evacuation services tailored to the needs of seafarers. Repatriation processes involve a clearly defined procedure from initial notification to the completion of the return journey, with close monitoring and regular updates provided to the crew member, medical facilities, and relevant representatives. The complexity of repatriation can vary depending on factors such as communication infrastructure, geographical location, and weather conditions.

How does the mobile and culturally diverse nature of the maritime workforce influence the relevance and design of employee assistance programs (EAPs)?

The mobile and culturally diverse nature of the maritime workforce significantly influences the relevance and design of EAPs. Unlike onshore expatriates who are typically sent on assignment, many seafarers choose this profession and have different motivational factors and support needs. While EAPs are considered critical for the safety and well-being of seafarers due to the inherent challenges of working at sea and away from home, their utilization rates have been reported as low, potentially due to cultural factors or a perceived stigma associated with seeking assistance. Consequently, the focus in maritime insurance tends to be more on core health benefits covering serious injuries and convalescence, as well as efficient service delivery to a remote and nomadic workforce, rather than traditional EAP offerings.

What role can maritime insurance play in addressing the risks associated with piracy?

Maritime insurance plans, particularly Kidnap and Ransom (K&R) policies, can assist in mitigating the financial risks associated with piracy. While governments and naval patrols play a crucial role in combating piracy, insurance provides a financial safety net in the event of a piracy incident. Insurers can also work with their markets to offer bespoke solutions, such as special endorsements or excess coverage for transiting high-risk areas. Additionally, maritime insurance providers can consult with shipowners, sharing information and experiences to support their risk management practices aimed at preventing piracy. However, the primary responsibility for implementing robust anti-piracy measures lies with the ship owners, who must adhere to international guidelines and conduct thorough risk assessments.

What are the key considerations when designing effective health insurance plans for the maritime and marine industry?

Designing effective health insurance plans for the maritime and marine industry requires a deep understanding of the specific needs and working conditions of seafarers. Plans should be bespoke and directly address the requirements of the MLC 2006, ensuring comprehensive coverage relevant to a mobile and often remote workforce. Key considerations include:

• Providing coverage that seafarers actually need and can easily access, avoiding a one-size-fits-all approach.
• Accounting for the unique communication challenges inherent in the maritime environment, such as limited satellite coverage and smaller communication windows.
• Ensuring core components like medical treatment (including pre-existing conditions), personal accident coverage, and repatriation are adequately addressed.
• Understanding the objectives of the buyer, whether it's basic regulatory compliance or attracting and retaining qualified marine crew through enhanced benefits.
• Considering the specific needs of different segments within the maritime industry, such as cruise liner or charter yacht crews, who may have different health profiles and risks compared to cargo ship crews.

Conclusion

iPMI Global Analyst Christopher Knight concludes, “The implementation of the MLC 2006 presents both opportunities and challenges for insurers. Opportunities include developing specialized products for the maritime sector that meet or exceed MLC requirements, potentially offering employee benefits like medical insurance instead of solely relying on Shipowners’ Liability policies within P&I Clubs. Hybrid insurance covers combining offshore and onshore needs are also seen as an opportunity. Challenges include the traditional and conservative nature of the maritime insurance market dominated by P&I Clubs, the unique dynamics of insuring the maritime industry compared to the expatriate market, and the difficulties in communication and service delivery to a mobile and remote workforce. Ensuring plans are truly responsive to the specific needs of the maritime industry and not just marketed as "MLC compliant" is crucial.”