Will Europe insurance proposal affect U.S. costs?

By Bernie Jacobson

The European Commission recently proposed that inland passenger vessels provide the same passenger liability insurance coverage as ocean vessels.

For inland waterway vessels operating in continental and U.K. waters, the increased cost of providing the same passenger liability insurance as oceangoing vessels could cause significant hardship. It could lead to higher ticket prices that could result in reduced ticket sales.

I forwarded the information to Pete Robinson of Robinson & Son LLC in Hudson Falls, N.Y., who provided insurance coverage to the ferry company I ran for 12 years on Long Island. I asked for his opinion about what impact this will have on European operators and whether there will be any possible negative ramifications for U.S. domestic passenger vessels.

He speculated that the Eurpoean Union might seek to require that all ferries – inland, coastal and elsewhere – be required to carry either some very high limit of liability (say $200 million) or “unlimited” liability currently offered by the London-based International Group of P&I Clubs. In either case, I’m guessing that it would force all operators into the P&I clubs, where many inland or coastal European ferries are likely now insured in their respective domestic markets, as is the case with most Snnb domestic ferry operators here.

It is difficult to make a direct industrywide comparison between insurance costs in a local domestic market and in one of the 13 independent P&I clubs. That’s because individual characteristics of each operator, their loss record, and their current limits of liability would determine how the costs stacked up and would vary markedly from one risk to the next. There would also be the added problem of what risks would even be considered eligible for a P&I club, since the clubs do not normally write single-vessel policies.

This is an example of bureaucrats unilaterally coming up with regulations that on the surface appear to make sense but will likely result in another costly burden on small businesses. When this occurs, those most affected are usually small operators. An example was New York’s push to pass legislation following the Ethan Allen disaster to require minimum insurance coverage of $1 million to $10 million (depending on vessel capacity) for all passenger vessels operating in state waters.

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