Broker Marsh is attempting to drive clarity into the issues surrounding piracy and war risk coverages with the launch of a new set of clauses.
The broker said the rise in the threat of piracy over recent years, particularly in the and around the Horn of Africa has seen a move by London underwriters shift the risk into the war policy away form the hull policies where it has traditionally been included.
Nick Riddle, Senior Vice President in Marsh’s Marine Practice explained the rise in the scourge of piracy has seen an increasing shift in where that exposure is now insured.
“The hull clauses as we know them have been in place since 1983 and the last major changes to the war policy clauses were in 1995,” he explained. “Recent years has seen the situation, particularly with concern to piracy, change dramatically.
“What has been seen in recent years is a move by hull underwriters to exclude cover for piracy and for the risks to be assumed by the war risk polices.”
There is a financial reason for such a move as war risk policies contain an option for the underwriter to charge a higher premium if vessels are to travel through designated high risk areas.
Last month the Joint War Committee made up of Lloyd’s and London market marine underwriters said it had increased the area which it deemed as high risk of piracy attack to one stretching from the Gulf of Aden almost to the coast of India.
“What has been clear is that the changes to the clauses which have been implemented piecemeal have left many confused as to what is and is not covered and without doubt there have been some owners who wrongly thought they were covered,” added Mr Riddle. “In the Norwegian market the war risk policy has always assumed the piracy risks but London has been different. We believe there needed to be clarity so that owners can understand the coverage they need and the policy which is needed to assume that risk.”
He said: “The new clauses have been designed after detailed discussions with underwriters, maritime lawyers and clients.”