There are currently nine cases of vessels that are being detained in places like Venezuela, the Stena Impero in Iran, a case in Egypt, two cases in Indonesia, Bulgaria, Ukraine and Russia, and of the countries where the current vessel seizures are taking place, six of them aren’t in excluded areas, said Richard Young, head of hull and war at Beazley.
Speaking at Lockton’s panel on September 11th as part of London International Shipping Week ” Navigating Difficult Waters: How Sanctions And Wars Are Impacting The Shipping World”, Young said that “in many of these cases, these aren’t even war claims”. They could instead be a charterparty dispute, a title dispute, or some kind of breach of local customs.
“Nevertheless, as war underwriters we are presented with claims every time this sort of thing happens. In some cases it is the traditional club letter of undertaking, but sometimes they don’t work, and then we find ourselves, as war underwriters, faced with these ‘funny claims’, and we think to ourselves, ‘well, that’s not a war claim'”.
Young said that premium rates at the moment were incredibly competitive and that “we are not really charging enough for this seizure risk. Although we have standard exclusionary language in a war policy, there are a number of clever lawyers who find ways to get around this. The war market does not have enough premium on an annual basis to pay all these claims”.
Young noted that conversations within the Joint War Committee were often “robust”. He said that insurers were responsible to shareholders, but they also had a responsibility to the shipowners. He pointed out that underwriters were always at liberty whether to charge an additional premium, although that price tended eventually to coalesce around a market price.
He warned that what underwriters faced was constant pressure from underwriters. “I just had an email this morning from a broker who said ‘oh, it’s all gone quiet now in the Persian Gulf, surely the rates are ready to come down?’ but that isn’t the case as far as we are concerned. The situation is as tense as ever. There are almost daily IRGC boats passing Royal Navy boats, there have been exchanges of fire. There’s a lot that doesn’t get reported.” Also, the Stena Impero remains seized, and Young noted that, should that seizure exceed six months in period, that could give rise to a huge claim (presumably under a clause that would allow it to be declared a CTL after six months’ seizure: Ed)
He also expressed some concern at what might in some places be seen as “overreach” by the US, their extraterritorial actions, because not all countries agreed with those actions. “It’s US policy that we have to adhere to, but there are many areas of the world that just ignore it. … So it is very difficult for us to insure, for example, a Chinese fleet. Are they going to Iran? We have to ask that. We know that some Chinese vessels do go to Iran, and I can only assume that they do not write their insurance in the London Market”.
Young said that the very real reason of a vessel being seized by the US for contravention of sanctions, but in the eyes of the local jurisdiction the vessel is not breaking the law. Therefore “we could find ourselves with a seizure claim as a result of a US action and in the London market we would probably try to sit behind the sanctions exclusion.”
SOURCE: INSURANCE MARINE NEWS