For about ten years, and especially since 2010, Transport Canada has considered developing regulations that would require carriers of passengers by water in Canada to insure those passengers against the risks of personal injury and death. The Canadian Marine Advisory Council has studied this matter and marine and non-marine insurers, as well as the Canadian Board of Marine Underwriters and The Canadian Maritime Law Association, have discussed this issue on various technical matters.I
In January 2012, Transport Canada published a Discussion Paper that was revised in March, entitled “Proposed Regulations Respecting Compulsory Insurance for Ships Carrying Passengers.” This paper included a draft of the Regulations themselves and the proposed Certificate of Insurance. Following a sixty-day comment period, we anticipate that the draft Regulations will be published in the Canada Gazette, Part I, together with a Regulatory Impact Statement. Another sixty-day comment period will follow. The input received in that period will be reviewed, after which the final Regulations will be published in the Canada Gazette, Part II, thus determining their coming into force date.
The Discussion Paper highlights eight main issues that have emerged, and sets forth the solutions which Transport Canada has adopted and included in the draft Regulations. In brief, the major characteristics are as follows:
- In general, the Regulations will have the same scope of application as the underlying liability regime established by Part 4 of the Marine Liability Act (the “MLA”). They will apply to ships “operated for a commercial or public purpose” in the domestic carriage of persons by water under a contract of carriage (i.e. fare-paying passengers), and in some cases to the carriage of persons by water “otherwise than under a contract of carriage” (i.e. gratuitous passengers).
- The Regulations will not apply, however, to the carriage of the master, crewmembers or other persons employed or engaged aboard the ship on its business, or to persons carried aboard a ship “other than a ship operated for a commercial or public purpose”.
- Nor will the compulsory insurance obligation apply to shipwrecked or distressed or other persons whom the master is obliged to carry, or to persons carried by reason of circumstances that neither the master nor the owner could have prevented, or to stowaways, trespassers or others who board a ship without the knowledge or consent of the owner or the master.“
- Adventure tourism” activities as defined in the MLA will also be excluded from compulsory coverage, as well as sail trainees and persons of a class prescribed by regulation.
- The responsibility for maintaining insurance will apply to the person performing the carriage (not to any others, such as tour operators or travel agents, as had been feared).
- The amount of insurance required shall be not less than $250,000 multiplied by the passenger capacity of the ship. The contract of insurance must provide that that coverage is available exclusively to indemnify damages for death or personal injury of passengers.
- The passenger capacity of the ship will be fixed by reference to the ship’s Canadian maritime document (for a ship that can carry more than 12 passengers or is over 15 gross tons), or the vessel’s Canadian Compliance Notice required by the Small Vessels Regulations (for a ship that can carry up to 12 passengers or is of up to 15 gross tons), or as declared by the owner to the insurer in other cases.
- The Certificate of Insurance form prescribed by the proposed Regulations (which must be carried aboard the ship and shown to an enforcement officer on demand) stipulates that the Certificate is “subject to the terms and conditions of the policy”, thus preserving the insurers’ contractual defences regarding coverage.
- The Regulations as proposed feature a two-stage entry into force process. Existing insurance policies that are in effect when the Regulations come into force will continue to apply until the next policy renewal. New insurance policies (taking effect after the Regulations come into force) will have to comply with the Regulations sixty days after their coming into force.
It is believed that the necessary insurance capacity is available in the Canadian market to provide the insurance concerned, and that shipowners will be able to afford the premiums likely to be charged where they have not previously obtained such insurance. No major additional costs of coverage are expected for owners who are already insured against passenger death or injury claims.
Transport Canada advises that it will publicize the new Regulations in all sectors of Canada’s marine community, notably among shipowners and marine insurers, as well as among various associations. BLG’s Maritime Law Group will also be available to answer questions from clients on the subject as required once the final Regulations are published.
It is hoped that these Regulations, when they take effect, will provide marine passengers in Canada, at a cost affordable to ship owners and operators, with the same safeguards already enjoyed by passengers using other modes of transport, where compulsory insurance requirements have long been the norm.