Occupational Disability and Box Terminals

There is a common confusion in the minds of lay people when it comes to insurance matters. Said people are inclined to confuse first party risks with third party risks. An example of the former is cargo insurance which pays the owners of cargoes upon simple proof of accidental loss or damage; an example of the latter is when cargo insurance pays those concerned in cargo compensation for loss or damage upon usually rather more convoluted proof that the carrier or one of the carrier’s servants was at fault for the claim.

Another example of this dichotomy concerns workman’s compensation paid to the staff of stevedores and terminal operators for on the job injuries and occupational disabilities. These payments are usually made monthly according to a tariff direct to the employee concerned and are payable upon proof of illness or injury. Third party liability insurance on the other hand will only compensate a claimant when it can be shown that the stevedore or terminal operator owed a duty of care to the claimant and caused the damage either by intention, recklessness or negligence. Third party liability does not usually include the staff of the assured, so it is rare for employees to succeed against their employers under this kind of insurance, but not impossible.

There are many countries where the health and disability insurance plans of terminals are very large ticket items indeed, the most notorious of which is the United States. In the jargon of the business, a workman’s compensation claim made against a third party liability insurer is called an “action over” and the species of claim is called a “misdirected arrow”.

A modern container terminal is a world away from the old injuryplagued general cargo waterfront. The safety culture which is espoused by the industry has made the workplace accident or the unsafe work environment less and less common. All the same, those of us who work in this particular field of insurance see “misdirected arrow” claims relatively often. They appear from the industry’s propensities.

The first of these is the habit terminal operators have in ports to share or borrow labour. My berths are full, yours are slack-I borrow staff from you to tide me over. When one of these is injured or later falls ill-which workmen’s compensation insurer will pay? A good question in the absence of a clear understanding between the various parties concerned, especially if one of them has neglected to remain solvent.

It may also be that the workman’s compensation insurer has grounds to sue the operator because of the circumstances of the case. It may well be that the cause of the injury is so outrageous a breech of the safety regime in place that the workmen’s compensation insurer can make a claim that his losses incurred should be compensated by the terminal operator.

It will rarely be so if the operator concerned is the same so far as the workmen’s compensation and third party liability underwriters are concerned. But in a world where the major operational functions are outsourced by terminal operators to labour and service contractors, the identity of interest is far from common. I am global terminal operator Maximus and you are the puny supplier of reachstacker services Minimus. When my shoddy tarmac collapses under your drivers’ wheels and he becomes paralysed from the waste down, what will stop the workmen’s compensation insurer from suing me in liability for neglecting safe practice?

This tendency of action between classes of insurer has grown more common on the continent of Europe where the traditionally government backed employee disability insurers are more minded to go after employers who have been grossly negligent in the provision of a safe workplace. This tendency varies from country to country. In Holland, where privatisation of disability insurance is a widespread fact, terminal operators are likely to face a third party liability action from this quarter. In Germany this kind of action is still a rarity on the waterfront. The rest of the countries of Europe who apply civil law fall somewhere between this Germano-Dutch spectrum of risk.

You need to understand the law, language and industrial practices of the various countries to get a handle on this kind of problem. Which is only one of several reasons why the London insurance market has claimed so little of the Continental insurance market and has booked so many losses in the United States.