1. INTERNATIONAL MARINE CLAIMS CONFERENCE 2004 in Dublin Leader's Rights, Roles and Responsibilities A panel discussion

2. © Allianz Marine & Aviation, 30.09.2004 Introduction  Allianz Marine & Aviation is Allianz Group‘s European specialist for marine and aviation insurance business.  We currently write domestic and international business out of France, Germany and the United Kingdom.  470 people work for Allianz Marine & Aviation.  In each of our markets we commit to being leaders.

3. © Allianz Marine & Aviation, 30.09.2004 Leader‘s rights under German Hull Market Practice  The German Hull and Machinery Policies are regulated by the German General Rules of Marine Insurance (ADS) and the DTV Hull Clauses 1978.  According to § 13 ADS all parties concerned shall act in utmost good faith.  Clause 9 of the DTV Hull Clauses 1978 is paramount to the ADS and defines the relation between leadership and co-insurance.

4. © Allianz Marine & Aviation, 30.09.2004 Leader‘s rights under German Hull Market Practice Clause 9 of the DTV Hull Clauses 1978 :  Each individual Underwriter is liable only for his own share.  Agreements between the leading Underwriter and the Assured are binding for the co-insurers. This applies also to settlement of claims, recovery actions, legal proceedings etc.  The leading Underwriter is authorised to issue guarantees and to conduct legal proceedings on behalf of the co-insurers.  Notifications received by the leading Underwriter are deemed to have also been received by the co-insurers.

5. © Allianz Marine & Aviation, 30.09.2004 Information submitted to co-insurers under German Hull Market Practice  No legal obligation of the leading Underwriter to inform co- insurers exists under the ADS or the DTV Hull Clauses 1978.  The co-insurers are normally not known to the leading Underwriter only to the broker.  All claims are presented to and technically dealt with the VHT. All information will be submitted to the leading Underwriter, who handles the claim from the cover side and who steers all decisions and actions to be taken.

6. © Allianz Marine & Aviation, 30.09.2004 Information submitted to co-insurers under German Hull Market Practice  In cases of major casualties, e.g. a total loss, a co-insurers meeting is called by the leading Underwriter to inform co- insurers about the developments of the claim and the decisions made so far by the leading underwriter.  Claim reserves and changes thereto are set by the VHT in co-operation with the leading Underwriter. The figures are distributed to the co-insurers via the VHT.

7. © Allianz Marine & Aviation, 30.09.2004 Communication with co-insurers under German Hull Market Practice  Direct communications with co-insurers are rather seldom for the leading Underwriter. Information spread out by VHT via the broker.  However, if a direct request is received from a co-insurer the leading Underwriter will directly respond to it. It doesn’t make any difference whether the request comes from a local or an overseas co-insurer.  If the use of the broker is not wanted, e.g. in major casualties where it is uncertain whether the claim is covered under the policy or not, a co-insurers meeting is called by the leading Underwriter.

8. © Allianz Marine & Aviation, 30.09.2004 Duties of the leading Underwriter to the co-insurers under German Hull Market Practice  By signing clause 9 of the DTV Hull Clauses 1978 co-insur- ers agree to follow the leading Underwriter in every respect of the claims handling. They even authorise the leading Underwriter to conduct proceedings on their behalf.  Therefore the leading Underwriter carries a particular responsibility (moral burden) to handle the claim to the best of the whole policy and acts as having signed 100 % of the risk insured.

9. © Allianz Marine & Aviation, 30.09.2004 Funding for co-insurers under German Hull Market Practice  The leading Underwriter do not fund for co-insurers. According to clause 9.1 of the DTV Hull Clauses 1978 each individual Underwriter is always only liable for his own proportion and not jointly and severally.  Requested payments are collected by the broker from each individual Underwriter for his particular share and remitted to the Claimant.

10. © Allianz Marine & Aviation, 30.09.2004 Bail under German Hull Market Practice Bails are ruled by clause 24 of the DTV Hull Clauses 1978: “ If the Assured is under obligation to provide security for an insured loss... underwriters (leading Underwriter plus co- insurers) will undertake to issue a guarantee in accordance with the conditions of the policy... “  In practice the leading Underwriter provides a letter of undertaking for the whole German market share. Upon request it might possible that leading Underwriter issues a letter of undertaking for 100% of the policy, provided that co- insurers are A-rated and counter guarantees are submitted.

11. © Allianz Marine & Aviation, 30.09.2004 Fees for handling claims under German Hull Market Practice  To charge fees to the co-insurers for handling a claim by the leading Underwriter is not common under the German Hull Market practice.  However, it is known that some brokers do retain a claim commission of about 1% of the indemnification granted to the Assured by the leading Underwriter.

12. © Allianz Marine & Aviation, 30.09.2004 Interest under German Hull Market Practice  Generally no interest is paid under German Hull Market practice since a fast processing of claims is ensured.  However, the Assured is entitled to claim interests under the conditions of clause 26 of the DTV Hull Clauses 1978, i.e. “In the event of a dispute between the leading Underwriter and the Assured being settled by a legal or a court of arbitration the Assured is entitled to claim for interest as provided by law.”

13. © Allianz Marine & Aviation, 30.09.2004 German Hull Market Practice CONCLUSION  The leading Underwriter is provided with extensive authorisation to handle claims under the policy.  He acts with great responsibility to the best of all participating underwriters.  Generally no information are directly exchanged between the leading Underwriter and the co- insurers, except for major losses.  The leading Underwriter performs the claim’s lead for 100% of the policy, even if not 100% is covered in the German market, e.g. in cases of Third Party Liability with common 3/4 - 1/4 distribution