Royal Caribbean Cruise Lines 2010 Annual Report Download - page 24

PART I
ROYAL CARIBBEAN CRUISES LTD. 21
characteristics, types of customers, regulatory envi-
ronment, maintenance requirements, supporting sys-
tems and processes as well as products and services
provided. Our Chairman and Chief Executive Officer
has been identified as the chief operating decision-
maker and all significant operating decisions including
the allocation of resources are based upon the analy-
ses of the Company as one segment. (For financial
information see Item 8. Financial Statements and
Supplementary Data.)
EMPLOYEES
As of December 31, 2010, we employed approximately
5,200 full-time and 850 part-time employees world-
wide in our shoreside operations. We also employed
approximately 52,000 shipboard employees. As of
December 31, 2010, approximately 80% of our ship-
board employees were covered by collective bargain-
ing agreements. Based on employee survey results,
we believe our employees’ satisfaction level with our
organization is strong.
INSURANCE
We maintain insurance on the hull and machinery of
our ships, which includes additional coverage for dis-
bursements, earnings and increased value, which are
maintained in amounts related to the value of each
ship. The coverage for each of the hull policies is
maintained with syndicates of insurance underwriters
from the British, Scandinavian, French, United States
and other international insurance markets.
We maintain liability protection and indemnity insur-
ance for each of our ships through either the United
Kingdom Mutual Steam Ship Assurance Association
(Bermuda) Limited, the Steamship Mutual Underwriting
Association (Bermuda) Limited or the Assurance-
foreningen SKULD (Gjensidig). Our protection and
indemnity liability insurance is done on a mutual basis
and we are subject to additional premium calls in
amounts based on claim records of all members of
the mutual protection and indemnity association. We
are also subject to additional premium calls based on
investment shortfalls experienced by the insurer.
We maintain war risk insurance, including terrorist risk
insurance, on each ship through a Norwegian war risk
insurance organization. This coverage includes cover-
age for physical damage to the ship which is not cov-
ered under the hull policies as a result of war exclusion
clauses in such hull policies. We also maintain protec-
tion and indemnity war risk coverage for risks that
would be excluded by the rules of the indemnity
insurance organizations, subject to certain limitations.
Consistent with most marine war risk policies, under the
terms of our war risk insurance coverage, underwriters
can give seven days notice to us that the policy will
be canceled and reinstated at higher premium rates.
Insurance coverage for shoreside property, shipboard
inventory, and general liability risks are maintained
with insurance underwriters in the United States and
the United Kingdom.
We do not carry business interruption insurance for
our ships based on our evaluation of the risks involved
and protective measures already in place, as compared
to the cost of insurance. We carry business interrup-
tion insurance for certain of our shoreside operations.
All insurance coverage is subject to certain limitations,
exclusions and deductible levels. In addition, in cer-
tain circumstances, we co-insure a portion of these
risks. Premiums charged by insurance carriers, includ-
ing carriers in the maritime insurance industry, increase
or decrease from time to time and tend to be cyclical
in nature. These cycles are impacted both by our own
loss experience and by losses incurred in direct and
reinsurance markets. We historically have been able
to obtain insurance coverage in amounts and at pre-
miums we have deemed to be commercially acceptable.
No assurance can be given that affordable and secure
insurance markets will be available to us in the future,
particularly for war risk insurance.
The Athens Convention relating to the Carriage of
Passengers and their Luggage by Sea (1974) and the
1976 Protocol to the Athens Convention are generally
applicable to passenger ships. The United States has
not ratified the Athens Convention; however, with lim-
ited exceptions, the 1976 Athens Convention Protocol
may be contractually enforced with respect to those
of our cruises that do not call at a United States port.
The International Maritime Organization Diplomatic
Conference agreed upon a new Protocol to the Athens
Convention on November 1, 2002. The 2002 Protocol,
which is not yet in force, substantially increases the
level of compulsory insurance, which must be main-
tained by passenger ship operators. No assurance can
be given as to if or when the 2002 Protocol will come
into force. If in force, no assurance can be given that
affordable and secure insurance markets will be avail-
able to provide the level of coverage required under
the 2002 Protocol.
TRADEMARKS
We own a number of registered trademarks related to
the Royal Caribbean International, Celebrity Cruises,
Azamara Club Cruises, Pullmantur and CDF Croisières
de France cruise brands. The registered trademarks
include the name “Royal Caribbean” and its crown
and anchor logo, the name “Celebrity Cruises” and its
“X” logo, the name “Azamara Club Cruises” and its
logo, the names “Pullmantur Cruises” and “Pullmantur”