This posting is to clarify any questions on how IWSF legally offers its benefits and services to their members.
Montreal, September 13th 2006
RE: Our Client: International Water Safety Foundation (or ‘‘IWSF’’)
To whom it may concern,
Please be informed that we are acting as legal representative for IWSF and the purpose of this letter is, considering you have read the article reported on www.offshoreonly.com, to eliminate any concerns you may have regarding IWSF’s activities, despite the cease and desist orders.
First and foremost, after our review of this article, we wish to inform you that the said article contains many wrong allegations and that your related conclusions are totally groundless in respect of the law, the whole for all the reasons which are more fully described hereinafter.
Furthermore, please acknowledge that IWSF did not participate into any legal procedure relating to the said cease and desist orders and IWSF reckons that they have been wrongfully rendered against them. Moreover, IWSF duly signified to the authorities their contentions related to the allegations supporting the said cease and desist orders and the reasons why it would be meaningless for IWSF to be so involved into such a costly litigation.
For a better understanding of the legal argumentation on which the above conclusions are based, please read the following. As part of its benefits, IWSF makes available only and exclusively to its members a water craft insurance certificate under a Master Policy issued by an independent underwriter, namely North American Marine General & Insurance Company (‘’NAMGIC’’).
It is important to mention that IWSF and NAMGIC do not conduct any business activities whatsoever within the United States of America and do not have any physical presence therein. IWSF and NAMGIC have no employee, no representative and no office or place of business within the United States of America, and no contracts whatsoever are therein made by any of them. All contracts are issued, executed and performed outside the United States of America.
This being said, in light of the legislative history of McCarren Ferguson Act, any state’s requirement of licensing is not applicable to both IWSF and NAMGIC because of their status of out-of-state organizations conducting out-of-state transactions.
The Due Process Clause and the Commerce Clause of the 14th Amendment to the U.S. Constitution precludes any State from regulating or taxing insurance transactions where the arrangements are made outside of its own territorial jurisdiction, regardless to the fact that the insured interest is located within such jurisdiction. To that effect, the Supreme Court of the United States has also ruled that an insurance company which merely uses interstates communications facilities either to receive applications or to transmit an issued policy does not constitute ‘’doing business’’ in any jurisdiction other than the one where it actually conducts its operations (Minnesota Commercial Men’s Association V. Benn, 261 U.S. 140 (1923)). It was also said that it would be beyond the competence of any state to enact a statute which would deny a citizen’s right to enter into any insurance contract with a foreign or a non-admitted insurance company, such right being protected and guaranteed by the 14th Amendment of the U.S. Constitution.
For your convenience, be informed that the above arguments have been strongly defended, notably, within the following Supreme Court decisions: State Board of Insurance et Al. v. Todd Shipyards, 370 U.S. 451 (1962); Minnesota Commercial Men’s Association V. Benn, 261 U.S. 140 (1923); Allgeyer v. State of Louisiana, 165 U.S. 578 (1897); St. Louis Cotton Compress Co. v. Arkansas 260 U.S. 346 ( 1922) ; Connecticut General Life Ins. Co. v. Johnson 303 U.S. 77 (1938 ) ;
Following a thorough legal research, it appears that no subsequent Supreme Court decisions have yet overruled the above-mentioned interpretation and application of the McCarren-Ferguson Act and the 14th Amendment to the U.S. Constitution.
In light of the above-mentioned U.S. Laws and jurisprudence, IWSF therefore concludes that neither they nor NAMGIC conduct any business activities within the United States of America, it has no physical presence therein, nor has it any substancial nexus. Consequently, IWSF reckons that both IWSF and NAMGIC have absolutely no obligation whatsoever to be licensed in any of the States of America.
For your information, NAMGIC has made available to IWSF members excellent insurance benefit coverage for more than nine years. The claims payable ratio for IWSF members in 2004 and 2005 boasted an impressive 55%. In addition, IWSF further protects their members by providing $500.00 towards any claim which may require arbitration.
Please also acknowledge that IWSF members are protected and benefit from a valuable legal recourse, namely an arbitration procedure, in the event any dispute may oppose them to IWSF in regard to a claim or the policy. The Arbitration panel is subject to the UNCITRAL rules enacted by the United Nations. Any such dispute would be presented before an independent arbitrator appointed by Insurance Arbitration Bureau International, an independent manager of arbitral procedures.
Therefore, considering the good stability of both NAMGIC and IWSF and the fact that they legally operate as out-of-sate organisations, the whole without having to be licensed, IWSF is to the opinion that any discomforts that you may have regarding the security, validity and quality of the insurance coverage provided by NAMGIC should be dissipated.
Trusting the foregoing is to your satisfaction, we remain,
FREDERIC BERNIER, ATTORNEY AT LAW