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APPENDIX I PREMIUM CONDITIONS

A Premium adjustment for renewals and termination (Rule 10)

1 Premium deferral for renewal

a) When a Vessel is entered for a Policy Year, the Association and the Member may agree that a proportion of the premium payable for that Policy Year shall be deferred and shall only be payable in the circumstances described in paragraph A.1(b).

b) If the Member terminates the entry pursuant to Rule 15 at the end of the Policy Year referred to in paragraph A.1(a), the deferred proportion of the premium payable shall become payable to the Association on demand. The Member shall have no other liability for payment of the deferred proportion, which shall be deemed to be cancelled on the entry being renewed for the next subsequent Policy Year or being terminated pursuant to Rule 16 or ceasing under Rule 17.

2 Additional premium on termination

On any termination of an entry under Rule 16 the Association may levy an additional premium determined by the Association, subject to the following:

i where the loss ratio during the four year period ending on the date of termination, or the period of entry, if less than four years, is between 51 and 75 per cent, the additional premium shall not exceed five per cent of the premium payable in the last year of entry;

ii where the loss ratio during the four year period ending on the date of termination, or the period of entry, if less than four years, exceeds 75 per cent, the additional premium shall not exceed ten per cent of the premium payable in the last year of entry.

B Terms of Contract (Rule 42.2)

1 Introduction

a) The premium conditions set out in this paragraph B are applicable for all Vessels except US owned, operated or managed Vessels.

b)  The Premium Rating agreed with the Member, and the cover available to the Member are subject to any contract entered into by the Member for the provision of services by the Vessel containing a division of liability which is either

i in accordance with these premium conditions or with the terms of entry; or

ii approved by the Association after the date of entry, and for which a variation in the Premium Rating is agreed.

c) For the purpose of these premium conditions:

i "Operator" means the party chartering the Vessel by way of a charterparty or other form of contract, including any other party having an owning interest in the field being serviced by the Vessel;

ii "Operator Group" means the Operator their respective co-venturers, its and their parents and Affiliates together with the other contractors of Operator;

iii a Vessel shall be deemed to be an accommodation vessel if the Association so determines.

2 Guidelines indicating how various contractual arrangements entered into by the Member will influence Premium Rating. Except to the extent set out specifically in relevant cases below, the following divisions of liability in contracts entered into are acceptable within the standard cover and Premium Rating:

a) Where the Member is liable for the injury, illness or death of his own employees and the employees of any of his sub-contractors.

b) Where the Member is liable for loss of or damage to his own property and property belonging to any of his sub-contractors, provided that cover is conditional upon the Member obtaining a hold harmless agreement from any of his sub-contractors in respect of liability for the sub-contractor's property in the care, custody or control of the Member, onboard or outside the Vessel.

c)  Where the Member is liable for the injury, illness or death of the Operator's employees, or the employees of the Operator Group, subject as follows

Note: In the event that the Member obtains a hold harmless undertaking from the Operator in respect of the Operator's employees, there shall be a rebate of 5 per cent of premium on the first USD 50 million of cover.

In the event the Member obtains a hold harmless undertaking from the Operator in respect of the employees of the "Operator's Group", there shall be a rebate of 10 per cent of premium on the first USD 50 million of cover.

i In the case of accommodation vessels (including flotels), where the Member is liable in tort for the injury, illness or death of the accommodees of the Operator Group, provided that the number of such accommodees at risk does not exceed 15 persons.

Note: In the event of the number of such employees exceeding 15 persons, cover is available for each excess tranche of up to 50 persons at an additional premium of 15 per cent on the first USD 50 million of cover, but subject always to a maximum additional premium of 50 per cent.

ii In the case of accommodation vessels (including flotels), where the Member is strictly liable in contract for the injury, illness or death of accommodees of the Operator Group, provided that the number of such accommodees at risk does not exceed 15 persons.

Note: In the event of the number of such employees exceeding 15 persons, cover is available for each excess tranche of up to 10 persons at an additional premium of 5 per cent on the first USD 50 million of cover, but subject always to a maximum additional premium of 100 per cent.

d) Where the Member is liable in tort for loss of or damage to property of the Operator's Group, provided that cover is conditional upon the Member obtaining a hold harmless agreement in respect of liability for such property in the care, custody or control of the Member, on board or outside the Vessel.