A new insurance programme, backed by Bermuda-based Stockton Reinsurance Ltd.

and which enables petroleum carrying tankers to operate in US waters, received US Coast Guard approval yesterday.

First Line, developed by New York-based insurance brokers Johnson and Higgins (J&H) and underwritten by Stockton Re, became the third such programme to be approved by the US Coast Guard after OPA Club and Federal Insurance Company.

The new measure will enable shipping companies to obtain Certificates of Financial Responsibility (COFRs) in compliance with the Coast Guard-enforced Oil Pollution Act 1990 (OPA-90), which will require almost all vessels over 300 tons to have COFRs to trade in US waters by December 28.

COFRs are required by the Coast Guard as proof that shipping companies can pay for potential oil spills.

"Larger companies will likely self-insure but independent foreign flagged tankers depend on programmes like First Line,'' a US congressional Coast Guard and Navigational subcommittee spokesman said.

The Coast Guard has authorised Stockton Re, a wholly-owned subsidiary of the Commodities Corporation Group, to provide guarantees up to $150 million immediately, and up to $300 million subject to evidence of additional reinsurance.

Mr. Richard Black, vice president of Stockton Re, said,"clearly we are pleased to be involved with such an innovative programme, J&H have made great efforts to satisfy the needs of the ship owners.'' Stockton Re has obtained reinsurance from Bermuda and London markets, according to the US Coast Guard's National Pollution Funds Centre (NPFC).

"The First Line programme has received extensive reinsurance support from the reinsurance industry. It meets ship owners' desires for a fixed-cost, non-mutual, non-assessable facility that satisfies the Coast Guard's regulations,'' a J&H press release said yesterday.

"We are now working diligently to obtain reinsurance in order to provide guarantees up to $300 million,'' said Mr. D. Darby Duryea, a managing principal of Johnson & Higgins and head of the J&H marine division.

J&H developed the concept for First Line after working closely with Protection and Indemnity (P&I) clubs.

"The result -- it is a simple, cost-effective solution that fully complements existing P&I coverage and allows ship owners to budget costs absolutely. We began working two years ago in conjunction with Nicholson Leslie BankAssure Ltd., on a way to address the exposures presented by the OPA-90,'' Mr. Duryea added.

The programme includes a priced rating system with an annual premium plus a per voyage fee.

"Stockton Re is anticipating a speedy underwriting process that will allow ship owner to obtain COFRs in advance of December 28, 1994, when the Coast Guard will begin enforcing regulations established under OPA-90.

"Ship owners that are approved, will receive a COFR regardless of the number of ship owners that sign up for First Line,'' Mr. Duryea continued.

J&H was founded as a marine broker in 1845 and has expanded internationally into a wide range of global risk management and insurance-related services, as well as actuarial and employee benefit activities.

The company's global network, UNISON, includes 70 J&H offices in the US and Canada, 50 J&H offices overseas, and affiliations with UNISON partners in over 135 cities.

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