Circular No. 2/99 - OBOs and Clean Tankers
JANUARY 27, 1999
CIRCULAR NO. 2/99
TO MEMBERS OF THE ASSOCIATION
OBOs AND CLEAN TANKERS - 1999 POLICY YEAR AND BEYOND
Members will recall that a change of practice in the reinsurance treatment of the above types of vessel was advised for the 1998 policy year in Circular 4/98 of January 29, 1998. This practice will continue for 1999 and beyond, until further notice.
Previously, in the case of OBOs or clean tankers, terms of entry typically contained a warranty that the ship was trading dry (in the case of an OBO) or with clean products (in the case of a tanker). In the absence of such a warranty the ship attracted the full annual dirty tanker reinsurance cost. If an OBO or a tanker traded with dirty products at any time during a policy year the full annual dirty tanker reinsurance cost was payable.
As has been the case for 1998, such ships will for the 1999 policy year and thereafter be assessed on a quarterly rather than annual basis. This means that the full dirty tanker reinsurance cost will apply in any quarter unless a Member accepts a warranty that, for that quarter, the ship will trade dry in the case of an OBO or clean in the case of a tanker. If at any time during any quarter the ship trades with dirty products then the full dirty tanker reinsurance cost applies for that quarter. The applicable quarters are February 20 to May 20, May 20 to August 20, August 20 to November 20 and November 20 to February 20.
If any Member would like to discuss this matter further, the Managers will be pleased to respond.
Joseph E.M. Hughes, Chairman & CEO