APPENDIX 1 ACCIDENT STATISTICS

Contents APPENDIX 1... 2 ACCIDENT STATISTICS... 2 APPENDIX 2... 5 REGULATION OF PASSENGER VESSELS... 5 APPENDIX 3... 7 PROPOSED PROVISION ON CIVIL LIABILITY FOR PASSENGER CARRIAGE BY SEA... 7 APPENDIX 4... 14 MARITIME ACCIDENT FUND... 14 APPENDIX 5... 15 ATHENS CONVENTION relating to the carriage of passengers and their luggage by sea 1974 and Athens Protocol 2002... 15 PERSONAL INJURY AND COMPENSATION REGIME IN MALAYSIA... 17 APPENDIX 6... 20 PASSENGER AND THIRD PARTY LIABILITY INSURANCE... 20 APPENDIX 7... 21 INTERVIEWS WITH STAKEHOLDERS... 21 1

APPENDIX 1 ACCIDENT STATISTICS Figure 1 illustrates the total number of maritime accidents reported from 2008 to 2010, involving passenger ships/boats. The number of incidents involving passenger ships and boats has increased. In particular, incidents involving passenger licensed boats have increased 600% from 2 reported incidents to 12 reported incidents; and from 1 fatality to 12 fatalities in a span of one year. Source: Marine Department, 2011 Figure 1: Total number of reported maritime accidents involving passenger ships and licenced boats 2

Percentage The number of accidents involving passenger vessels is considered low compared to other types of vessels, as shown in Figure 2. 25% 20% 15% 10% 5% 0% Percentage of Passenger Licenced boat and Passenger vessel among other types of vessles; 2007-2010 Type of Vessel Source: Marine Department, 2011 Figure 2: Percentage of Passenger Licensed Boat and Passenger Vessel in Vessels involved in maritime accidents, 2007-2010 3

Total Number Total Number Figure 3 shows the breakdown of maritime accidents by vessel type, from 2007 2010. Passenger Licensed Boat has the highest number of accidents, with yachts and leisure ships, the least number of accidents. 14 12 Number of accident for passenger carrier; 2007-2010 10 8 6 4 2 0 Passenger Licenced Boat Passenger Vessel Ferry Yatch Yacht Leisure Ship Passenger Boat Type of passenger carrier Source: Marine Department, 2010 Figure 3: Number of accidents for passenger carrier, for 2007 2010, breakdown by vessel type Figure 4 shows the breakdown of maritime accidents by type of accident, for 2007-2010. Collision is the most common maritime accident. Passenger Licensed Boats and Passenger Boats are the type of vessels most frequently involved in collisions. 6 5 4 3 2 1 0 Collision Type of Accident per Type of Vessel; 2007-2010 Grounding M.O.B Loss of Anchors Distortion Fire Type of Accident Sunk Capsized Passenger Licenced Boat Passenger Vessel Ferry Yatch Yacht Leisure Ship Passenger Boat Source: Marine Department, 2011 Figure 4: Type of Accident per Type of Vessel, 2007-2010 4

APPENDIX 2 REGULATION OF PASSENGER VESSELS The Merchant Shipping Ordinance 1952 (MSO 1952) regulates passenger vessels and recreational vessels. Vessels carrying 12 or more passengers, and plying beyond 3NM of baselines must be registered and certified to carry passengers. Vessels carrying 12 or more passengers, and plying within 3NM of baselines must be licensed and certified to carry passengers. Vessel carrying less than 12 passengers need not be certified to carry passengers, but is either registered or licensed, depending on geographical extent of operations. The Langkawi International Yacht Registry Act 2003 (LIYRA 2003) provides for the optional registration of yachts for commercial and private use. Yachts not registered under the LIYRA 2003, are required to be licensed under the MSO 1952. Survey and certification requirement for vessels carrying 12 or more passengers are focused on safety aspects. Vessels carrying less than 12 passengers need not be certified to carry passengers, but must be licensed. Licensing prerequisites do not include survey. Only recreational fishing regulations mandate passenger insurance cover. Regulations for other vessels are silent on insurance cover. There are provisions in the MSO 1952 and LIYRA 2003 empowering the Minister to make rules relating to licensing and operations. Thus the legal provisions enabling the mandating of insurance cover as prerequisite to licensing, is already in place. Tables 1 2 summarise the regulatory provisions applicable to passenger vessels and recreational vessels. 5

Table 1: Regulatory provisions for passenger vessels Registration (vessel) Licensing (activity) All Malaysian ships not exempted to be registered All Malaysian ships engaged in domestic shipping to be licensed (<EEZ) All boats (ships <500 tons) to be licensed (<coastal waters) All vessels carrying 12 or more passengers to be certified to carry passengers Regulation Registration Minister may prescribe anything required Domestic shipping prescribe conditions attached to licenses Yachts prescribe conditions for registration Licensed boats Rules on management and working of passenger boats Insurance requirement (not yet in effect) Financial guarantee for LLMC 1976/1996 Compulsory insurance for death, personal injury and abandonment of master and crew Compulsory insurance for wreck removal of any ship >300 tons Compulsory insurance for bunker oil pollution Table 2: Regulatory provisions for recreational vessels Registration (vessel) Only for yachts (Yacht Registry Act 2003) No requirement for recreational boats and fishing boats <500 tons licensed under fisheries law Licensing (activity) S474 MSO 1952 Boats for sports, leisure and recreational activity Fishing vessels are licensed under fisheries law Regulation Bareboat charter yachts prescribed conditions & such documents as may be required for registration Peraturan-peraturan Perikanan (Perikanan Rekreasi Kelautan) 2004 Insurance requirement Fishing boats for recreational fishing Yachts Compulsory insurance under MSO applies (when it comes into effect) 6

APPENDIX 3 PROPOSED PROVISION ON CIVIL LIABILITY FOR PASSENGER CARRIAGE BY SEA S 294A. Application PART IVA LIABILITY FOR CARRIAGE OF PASSENGERS BY SEA This Part shall apply to ships, boats, yachts and any description of vessel used in navigation engaged in the conveyance of passengers for commercial purposes. S 294B. Definitions (1) The definitions in this section apply in this Part. carrier means a person by or on behalf of whom a contract of carriage has been concluded, whether the carriage is actually performed by the person or by a performing carrier; contract of carriage means a contract made by or on behalf of a carrier for the carriage by sea of a passenger or of a passenger and his luggage, as the case may be; ship means only a seagoing vessel, excluding an air-cushion vehicle [This definition can be extended to cover riverine transportation] passenger means any person carried in a ship under a contract of carriage or who, with the consent of the carrier, is accompanying a vehicle or live animals which are covered by a contract for the carriage of goods. Luggage means any particle or vehicle carried by the carrier under a contract of carriage, excluding: (a) Articles and vehicles carried under a charter party, bill of lading or other contract primarily concerned with the carriage of goods, and (b) Live animals; cabin luggage means luggage which the passenger has in his cabin or is otherwise in his possession, custody or control including luggage which the passenger has in or on his vehicle; 7

loss of or damage to luggage includes pecuniary loss resulting from the luggage not having been re-delivered to the passenger within a reasonable time after the arrival of the ship on which the luggage has been or should have been carried, but does not include delays resulting from labour disputes; carriage covers the following periods: (a) With regard to the passenger and his cabin luggage, the period during which the passenger and/or his cabin luggage are on board the ship or in the course of embarkation or disembarkation, and the period during which the passenger and his cabin luggage are transported by water from land to the ship or vice-versa, if the cost of such transport is included in the fare or if the vessel used for this purpose of auxiliary transport has been put at the disposal of the passenger by the carrier. However, with regard to the passenger, carriage does not include the period during which he is in a marine terminal or station or on a quay or in or on any other port installation; (b) With regard to cabin luggage, also the period during which the passenger is in a marine terminal or station or on a quay or in or on any other port installation if that luggage has been taken over by the carrier or his servant or agent and has not been re-delivered to the passenger; (c) With regard to other luggage which is not cabin luggage, the period from the time of its taking over by the carrier or his servant or agent on shore or on board until the time of its re-delivery by the carrier or his servant or agent; S 294C. Liability of the carrier (1) For the loss suffered as a result of the death of or personal injury to a passenger caused by a shipping incident, the carrier shall be liable to the extent that such loss in respect of that passenger on each distinct occasion does not exceed 175,000 units of account. If and to the extent that the loss exceeds the above limit, the carrier shall be further liable unless the carrier proves that the incident which caused the loss occurred without the fault or neglect of the carrier. (2) For the loss suffered as a result of the death of or personal injury to a passenger not caused by a shipping incident, the carrier shall be liable if the incident which caused the loss was due to the fault or neglect of the carrier. The burden of proving fault or neglect shall lie with the claimant. (3) For the loss suffered as a result of the loss of or damage to cabin luggage, the carrier shall be liable if the incident which caused the loss was due to the fault or neglect of the carrier. The fault or neglect of the carrier shall be presumed for loss caused by a shipping incident. 8

(4) For the loss suffered as a result of the loss of or damage to luggage other than cabin luggage, the carrier shall be liable unless the carrier proves that the incident which caused the loss occurred without the fault or neglect of the carrier. (5) For the purposes of this section: (a) shipping incident means shipwreck, capsizing, collision or stranding of the ship, explosion or fire in the ship, or defect in the ship; (b) fault or neglect of the carrier includes the fault or neglect of the servants of the carrier, acting within the scope of their employment; (c) defect in the ship means any malfunction, a failure or non-compliance with applicable safety regulations in respect of any part of the ship or its equipment when used for the escape, evacuation, embarkation and disembarkation of passengers, or when used for the propulsion, steering, safe navigation, mooring, anchoring, arriving at or leaving berth or anchorage, or damage control after flooding or when used for the launching of life saving appliances; and (d) loss shall not include punitive or exemplary damages. (6) The liability of the carrier under this Part only relates to loss arising from incidents that occurred in the course of carriage. The burden of proving that the incident which caused the loss occurred in the course of the carriage, and the extent of the loss, shall lie with the claimant. (7) Nothing in this Part shall prejudice any right of recourse of the carrier against any third party, or defence of contributory negligence under Section XX of this Part. Nothing in this Section shall prejudice any right of limitation under Section XX of this Part. (8) Presumptions of fault or neglect of a party or the allocation of the burden of proof to a party shall not prevent evidence in favour of that party from being considered. S 294D. Compulsory Insurance (1) When passengers are carried on board a passenger ship or boat and this Part applies, the carrier shall maintain insurance or other financial security, such as the guarantee of a bank or similar financial institution, to cover liability under this Part in respect of the death of or personal injury to passengers. The limit of the compulsory insurance or other financial security shall not be less than 175,000 units of account per passenger multiplied by the number of passengers which the ship is authorized to carry according to ship s certificate. 9

(2) In the case of a ship for which there is in force a Passenger Ship Safety certificate or Passenger Certificate, as the case may be, issued under or recognized by safety regulations, the ship s certificate mention in para 1. (3) A certificate attesting that insurance or other financial security is in force in accordance with the provisions of this Part shall be issued to each vessel after the [appropriate authority] has determined that the requirements of paragraph 1 have been complied with. (4) The certificate shall be carried on board the ship, and a copy shall be deposited with the authorities who keep the record of the ship s registry or licence. (5) An insurance or other financial security shall not satisfy the requirements of this Section if it can cease, for reasons other than the expiry of the period of validity of the insurance or security specified in the certificate, before three months have elapsed from the date on which notice of its termination is given to the authorities referred to in paragraph 3, unless the certificate has been surrendered to these authorities or a new certificate has been issued within the same period. The foregoing provisions shall similarly apply to any modification which results in the insurance or other financial security no longer satisfying the requirements of this Section. (6) Any claim for compensation covered by insurance or other financial security pursuant to this Section may be brought directly against the insurer or other person providing financial security. In such case, the amount set out in paragraph 1 applies as the limit of liability of the insurer or other person providing financial security, even if the carrier is not entitled to limitation of liability. The defendant may further invoke the defences (other than the bankruptcy or winding up) which the carrier referred to in paragraph 1 would have been entitled to invoke in accordance with this Part. Furthermore, the defendant may invoke the defence that the damage resulted from the willful misconduct of the assured, but the defendant shall not invoke any other defence which the defendant might have been entitled to invoke in proceedings brought by the assured against the defendant. The defendant shall in any event have the right to require the carrier to be joined in the proceedings. (7) Any sums provided by insurance or by other financial security maintained in accordance with paragraph 1 shall be available exclusively for the satisfaction of claims under this Part, and any payments made of such sums shall discharge any liability under this Part to the extent of amounts paid. 10

S 294E. Valuables The carrier shall not be liable for the loss of or damage to monies, negotiable securities, gold, silverware, jewellery, ornaments, works of art, or other valuables, except where such valuables have been deposited with the carrier for the agreed purpose of safe-keeping in which case the carrier shall be liable up to the limit provided in Section XX unless a higher limit is agreed upon in accordance with Section XX. S 294F. Contributory fault If the carrier proves that the death of or personal injury to a passenger or the loss of or damage to his luggage was caused or contributed to by the fault or neglect of the passenger, the Court seized of the case may exonerate the carrier wholly or partly from his liability in accordance with the provisions of the law of that court. S 294G. Limit of liability for loss of or damage to luggage and vehicles (1) The liability of the carrier for the loss of or damage to cabin luggage shall in no case exceed 1,800 units of account per passenger, per carriage. (2) The liability of the carrier for the loss of or damage to vehicles including all luggage carried in or on the vehicle shall in no case exceed 10,000 units of account per vehicle, per carriage. (3) The liability of the carrier for the loss of or damage to luggage other than that mentioned in paragraphs 1 and 2 shall in no case exceed 2,700 units of account per passenger per carriage. (4) The carrier and the passenger may agree that the liability of the carrier shall be subject to a deductible not exceeding 330 units of account in the case of damage to a vehicle and not exceeding 149 units of account per passenger in the case of loss of or damage to other luggage, such sum to be deducted from the loss or damage. S 294H. Unit of Account and conversion The Unit of Account referred to in Section XX is the special drawing right as defined by the International Monetary Fund. The amounts mentioned in Section XX shall be converted into RM, according to the value of that currency at the date the limitation fund shall have been constituted, payment is made or security is given which under the law of Malaysia is equivalent to such payment. S 294I. Supplementary provisions on limits of liability (1) The carrier and the passenger may agree, expressly and in writing, to higher limits of liability than those prescribed in Section XX. 11

(2) Interest on damages and legal costs shall not be included in the limits of liability prescribed in Section XX. S 294J. Defences and limits for carriers servants If an action is brought against a servant or agent of the carrier or of the performing carrier arising out of damage covered by this Part, such servant or agent, if he proves that he acted within the scope of his employment, shall be entitled to avail himself of the defences and limits of liability which the carrier or the performing carrier is entitled to invoke under this Part. S 294K. Loss of right to limit liability (1) The carrier shall not be entitled to the benefit of the limits of liability prescribed in Sections XX if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. (2) The servant or agent of the carrier or of the performing carrier shall not be entitled to the benefit of those limits if it is proved that the damage resulted from an act or omission of that servant or agent done with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. S 294L. Basis for claims No action for damages for the death of or personal injury to a passenger, or for the loss of or damage to luggage shall be brought against a carrier otherwise than in accordance with this Part. S 294M. Notice of loss or damage to luggage S 294N. Time-bar for actions S 294P. Invalidity of contractual provisions Any contractual provision concluded before the occurrence of the incident which has caused the death of or personal injury to a passenger or the loss of or damage to the passenger s luggage purporting to relieve any person liable under this Part of liability towards the passenger or to prescribe a lower limit of liability than that fixed in this Part, and any such provision purporting to shift the burden of proof which rests on the carrier or having the effect of restricting the competent jurisdiction of the court shall be null and void but the nullity of the provision shall not render void the contract of carriage which shall remain subject to the provisions of this Part. 12

S 294Q. Other conventions on limitation of liability This Convention shall not modify the rights or duties of the carrier and their servants or agents provided for in international conventions relating to the limitation of liability of owners of seagoing ships. S 294R. No liability shall arise under this Part for damage caused by a nuclear incident 13

APPENDIX 4 MARITIME ACCIDENT FUND Figure 5 illustrates the concept behind a Maritime Accident Fund. Figure 5: Maritime Accident Fund Personal Accident Insurance (Passenger) Third Party Liability Insurance (Carrier) Maritime Accident Fund (Marine Department & Insurers) Claims No-fault * No fault liability for shipping incidents (Athens Convention) involving commercial or public purpose vessels. Sales & Service Tax Model for collection of contribution SOCSO Model for payment of claims Key features of the Maritime Accident Fund as follows. - Funded by contribution from passengers and carriers - Based upon personal accident insurance rates and third party liability insurance rates - Fund managed by the Marine Department - Claims processed by the insurers - Collection for contribution to fund based on Sales and Service Tax Model - Payment of claims based on SOCSO Model - Waiver of future claims with payment from fund - No-fault liability for shipping incidents as defined in Athens Convention - Applies only to domestic carriage involving commercial or public purpose vessels The report for Transport Canada, Marine Policy on Recommendations on Regulations on Compulsory Passenger Insurance Pursuant to Marine Liability Act and Programs 1 observes that China s compulsory passenger insurance program is a combination of personal accident and liability insurances. The cost of losses and damages is borne by both passenger and carrier. 1 Recommendations on Regulations on Compulsory Passenger Insurance Pursuant to Marine Liability Act and Programs, prepared by The Mariport Group Ltd for Transport Canada, Marine Policy, October 2002 14

APPENDIX 5 ATHENS CONVENTION relating to the carriage of passengers and their luggage by sea 1974 and Athens Protocol 2002 The following section discusses the application of the Athens Convention, its key elements, and compares it to the personal injury and compensation regime in Malaysia. Athens Convention 1974 & Protocol 2002 An international regime that deals with the civil liability of carriers to passengers for losses incurred due to loss of life or personal injury or loss of or damage to their property and the provisions concerning limitation of liability Combination of no-fault (Tier 1) and fault (Tier 2) liability + direct action against insurer + compulsory insurance The Athens Convention 1974 came into force on 30 April 1989 with 25 members representing 40.46% of world tonnage 2. The Athens Protocol 2002 has only 6 signatories 3 representing 0.30% of world tonnage and is not yet in force. The Athens Convention establishes a regime of liability for damage suffered by passengers carried on a seagoing vessel. It declares a carrier liable for loss suffered by a passenger if the incident causing the damage occurred in the course of the carriage and was due to the fault or neglect of the carrier. However, unless the carrier acted with intent to cause such damage, or recklessly and with knowledge that such damage would probably result, he can limit his liability 4. For the death of, or personal injury to, a passenger, the Convention sets the limit of liability at 46, 666 Special Drawing Rights (SDR) per carriage (approx. RM231, 463 5 ). The 1990 Protocol 6 sets the limit at 175, 000 SDR per carriage (approx. RM868, 000 7 ). The 2002 Protocol, when it enters into force, will introduce compulsory insurance to cover passengers on ships and substantially raise those limits to 250, 000 SDR per passenger on each distinct 2 International Maritime Organisation statistics updated 31/8/2011. 3 Albania, Croatia, Egypt, Luxembourg, Spain and Tonga 4 Article 13.1 Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 and Protocol of 2002 5 Based on Bank Negara Malaysia s exchange rate of RM4.96 per Unit of Account as at 26/9/2011 6 The 1990 Protocol did not enter into force and is superseded by the 2002 Protocol. 7 Based on Bank Negara Malaysia s exchange rate of RM4.96 per Unit of Account as at 26/9/2011 15

occasion (aprox.rm1.24 Million 8 ). These limits are maximum limits. National courts are not obliged to award the maximum in compensating for death, injury or damage. For shipping related incidents 9, the carrier is liable, unless the carrier proves that the incident resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or was wholly caused by an act or omission done with the intent to cause such incident by a third party 10. If the loss exceeds the limit, the carrier is further liable, up to a limit of 400,000 SDR per passenger (approx. RM1.98 Million) on each distinct occasion, unless the carrier proves that the incident which caused the loss occurred without the fault or neglect of the carrier 11. For loss not caused by a shipping incident, the carrier is liable if the incident which caused the loss was due to the fault or neglect of the carrier. The burden of proving fault or neglect lies with the claimant 12. The liability of the carrier only includes loss arising from incidents which occurred in the course of the carriage. The burden of proving that the incident which caused the loss occurred in the course of the carriage, and the extent of loss, lies with the claimant 13. Action for damages arising out of death or personal injury or the loss or damage to luggage must be brought within two years 14. Time limit is calculated from the date of disembarkation of the passenger, in case of personal injury 15 ; from the date when the passenger should have disembarked, in case of death occurring during the carriage 16 ; and from the date of death, provided that this period shall not exceed three years from the date of disembarkation, in the case of personal injury occurring during carriage and resulting in the death of the passenger after disembarkation. The Athens Protocol 2002 includes an opt-out clause, enabling State Parties to retain or introduce higher limits of liability (or unlimited liability) and a reservation on limit of liability in respect of claims relating to war or terrorism. The Athens Protocol 2002 also introduces compulsory insurance to cover passengers on ships 17 and mechanism to assist passengers in obtaining compensation 18. The Protocol replaces the fault-based liability system with a strict system for shipping related incidents, 8 Based on Bank Negara Malaysia s exchange rate of RM4.96 per Unit of Account as at 26/9/2011 9 Article 3.5 Ibid defines shipping incident to mean shipwreck, capsizing, collision, or stranding of the ship, explosion or fire in the ship, or defect in the ship 10 Article 3.1 Ibid 11 Article 7.1 Ibid 12 Article 3.2 Ibid 13 Article 3.6 Ibid 14 Article 16.1 Ibid 15 Article 16.2(a) Ibid 16 Article 16.2(b) Ibid 17 Article 4bis.1 Ibid 18 Article 4bis.10 Ibid 16

backed by the requirement that the carrier take out compulsory insurance to cover these potential claims. The convention only applies to registered ships for commercial or public purposes engaged in international carriage of passengers. However, its application may be extended to apply to domestic carriage of passengers. PERSONAL INJURY AND COMPENSATION REGIME IN MALAYSIA Unlike the Athens Convention, the liability and compensation regime in Malaysia applies to all vessels. The claimant is required to prove loss and fault of the carrier in all cases. The time limit for bringing an action is 3 years (1 year if action is brought against the Government). The carrier may exclude liability and contributory negligence principle applies. Insurance is optional. There is no direct action against the insurer and the limit of liability is set in the Merchant Shipping Ordinance 1950. On average, compensation awards range RM2, 000 RM400, 000 per claimant depending on the type of bodily injury and litigation costs typically approximate 30% of award. Tables 4 and 5 provide the estimates of bodily injury awards. Vessel owners are entitled to limit liability under Part IX of the Merchant Shipping Ordinance 1950. Prior to the Merchant Shipping (Amendment and Extension) Act 2011, the vessel owner s liability is limited to 3, 100 gold francs per gross registered tonnage 19, equivalent to RM629.51 per gross registered tonnage 20. The average gross registered tonnage for a high speed passenger ferry is 400 GRT with a capacity of 300 passengers. The limit of fund for loss of life, personal injury and loss of property is thus only RM251, 807 or RM840 per passenger. The revised Part IX of the Merchant Shipping Ordinance 1950, which incorporates the Convention on the Limitation of Liability for Maritime Claims 1976, significant increased the limit of fund available for passenger claims to 175, 000 Units of Account multiplied by the number of passengers which the ship is authorized to carry according to the ship s certificate. 175, 000 Units of Account is equivalent to RM868, 000 21 per passenger. 19 S360 Merchant Shipping Ordinance 1950 20 Merchant Shipping (Limitation of Liability) (Malaysian Ringgit Equivalent) Order 1993 21 Based on Bank Negara Malaysia s exchange rate of RM4.96 per Unit of Account as at 26/9/2011. 17

Table 3: Bodily Injury Awards Estimates Table 4: Bodily Injury Awards Estimates 18

Table 5 compares the liability and compensation regime under common law (Malaysia) and the Athens Convention. Table 5: Comparison of Liability and Compensation Regimes under Common Law and the Athens Convention Common Law Applies to all vessels Claimant proves fault in all cases 1 or 3 years time limit to bring action Carrier can exclude liability Contributory negligence applies Insurance optional No direct action against insurer Limit of liability 175,000 SDR (approx RM868,000*) (MSO1950) Athens Convention Applies only to registered ships for commercial or public purpose Presumed fault of carrier if shipping incident Claimant to prove fault if non-shipping incident and if claiming extended limit of 400000 SDR Two years limit to bring action No exclusion of liability Contributory negligence applies Carrier to take compulsory insurance Direct action against insurer Limit of liability 250,000 400,000 SDR (approx RM1.24 1.98 Million*) 19

APPENDIX 6 PASSENGER AND THIRD PARTY LIABILITY INSURANCE Table 6 lists the types of insurance available to carriers. Protection & Indemnity (P&I Clubs) Covers the ship operator for liability to crew members and other people on board, damage to fixed objects like docks, and other miscellaneous claims. Passenger insurance (Insurance companies) An accident insurance to cover personal injury, death and loss of property of passengers Limit of cover = RM5K / RM10K/ RM20K per incident Non-tariff. Premium approx RM10K (aggregate RM2.5 Million) About 20% of insurers provide such cover Not covered under third party liability Optional cover Liability insurance (Insurance companies) An accident insurance to cover personal injury, death and loss of property of passengers Limit of cover = RM25K RM100K per incident Non-tariff. Premium approx RM250 RM1K About 20% of insurers provide such cover Optional cover Table 6: Types of insurance available to carriers 20

APPENDIX 7 INTERVIEWS WITH STAKEHOLDERS Interviews were conducted with Mr Manogaran Sinnathamby, Persatuan Insurans Am Malaysia, for the insurer perspective on the options; the Consumer Association of Penang (CAP) for the passenger perspective on the options; with Mr. John Ferguson, Straits Quay Marina for the recreational vessel operator perspective; and Pn Badaria, representing the Malaysian Shipowners Association (MASA) for the commercial carrier perspective. The following section reports on stakeholders views in relation to the proposed options. Mr Manogaran Sinnathamby, Persatuan Insurans Am Malaysia (PIAM) Would the implementation of compulsory passenger insurance: Have a financial impact on insurance providers? Emphasise on the safety of passenger, vessel and craft as condition for insurance service? Increase the administrative burden of providing the insurance service? Change the way in which insurance service is provided? Aggravate legal risk to insurance providers? Mr Manogaran responded as follows. Ferry passengers Insurance product is available although it is not compulsory for ferry operators to have passenger insurance. Public liability coverage under hull insurance does not cover passengers. PIAM would be supportive of regulations to make passenger insurance compulsory. However, PIAM is aware of the difficulty in enforcing such regulations. Personal watercraft users Users should have their own personal accident insurance and also third party liability coverage. PIAM would welcome the suggestion for all vessels and crafts to be registered and for personal accident insurance to be made compulsory with registration. Water sport participants Users should have their own personal accident insurance and operators should have third party liability coverage. 21

Consumer Association of Penang (CAP) Would the implementation of compulsory passenger insurance: have a financial impact on passengers of commercial vessels, and users of recreational vessels and personal watercrafts? improve the safety of passengers of commercial vessels and users of recreational vessels and personal watercrafts? increase the administrative burden of passengers of commercial vessels and users of recreational vessels and personal watercrafts? change the way of life of passengers of commercial vessels and users of recreational vessels and personal watercrafts? cause legal risk to passengers of commercial vessels and users of recreational vessels and personal watercrafts? CAP responded as follows. Ferry passengers Whether passenger insurance is acceptable depends on how much it will cost Personal watercraft users Users should have their own personal accident insurance and also third party liability coverage. CAP would welcome the suggestion for all vessels and crafts to be registered Water sport participants Users should have their own personal accident insurance and operators should have third party liability coverage. CAP would also welcome the suggestion for water sport operators to be licensed Mr John Ferguson, Strait Quay Marina Would the implementation of compulsory passenger insurance: Have a financial impact on vessel and craft operations? Improve the safety aspects of vessel and craft operations? Increase the administrative burden of vessel and craft operations? Change the way in which vessel and craft are operated? cause legal risk to vessel and craft operations? Mr Ferguson responded as follows. 22

Third party liability should be made compulsory and this can be done by requiring all marine leisure vessels and crafts to be registered. A separate registry for small vessels and crafts to be administered and enforced by the Marine Department is suggested. Compulsory passenger insurance can be made a requirement for issue of passenger certificate. Marine leisure activity needs to be regulated operators to be licensed either by the local authority or Ministry of Tourism and third party liability insurance to be a pre-requisite to licensing. Tourism department to encourage tourist and participants of marine leisure activities to purchase personal accident insurance. It is suggested that personal accident insurance can either be made available at point of entry (tourist) or before commencement of marine leisure activity. Alternatively, no-fault scheme may be considered for tourists. Table 7 indicates stakeholders preference in options. 1 being most preferred. 3 being least preferred. It would appear that stakeholders prefer the compulsory insurance option. Table 7: Stakeholders preference Stakeholder Option Optional Insurance Compulsory insurance No-fault (Maritime Fund) Passenger/ User Owner/ Operator Insurer 3 1 2 2 2 1 1 3 3 23