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29th December 2022
INTRODUCTION
- Following significant losses arising from the conflict, Reinsurers have restrictedP&I Carriers’ (both clubs and Fixed Premium providers) ability to continueproviding War Risk cover for certain trades.
- The international marine reinsurance markets have therefore imposed anexclusion in respect of certain war risk exposures relating to Russia, Ukraine andBelarus (RUB) that will enter into force on January 01st 2023
- The restriction is in respect of non-poolable type of cover, and does not apply tomutual entries for P&I and FD&D;
- All International Group P&I Clubs have been forced to issue notices ofcancellation for those cover that include a war risk element.
The Notice shall run for seven days from 24:00 hours GMT on 24 December 2022.Upon expiry of this Notice at 24:00 hours GMT on 31 December 2022, coverextensions will be automatically reinstated by applying the following wording :
“Excluding all loss, damage, liability, cost or expense:
(a) caused by or arising from or in connection with any Russia-Ukraine conflict and/or anyexpansion of such conflict; or
(b) in any area or territory or territorial waters where Russian armed forces,Russianbacked forces, and/or Russian authorities, are engaged in conflict within theterritories (including territorial waters) of the Russian Federation, Belarus, Ukraine andany disputed regions of Ukraine, the Crimean Peninsula and the Republic of Moldova; or
(c) arising from capture, seizure, arrest, detainment, confiscation, nationalisation,expropriation, deprivation or requisition for title or use, or the restraint of movement ofvessels and cargo in the territories (including territorial waters) of the Russian Federation,Belarus, Ukraine and any disputed regions of Ukraine, the Crimean Peninsula and theRepublic of Moldova.”
Relevant circulars for each Club can be found at following links :
American - Club Announcement
Britannia - Club Announcement
Gard - Club Announcement
Japan - Club Announcement
London - Club Announcement
North of England - Club Announcement
SOP - Club Announcement
Skuld - Issued individual notices for their Members and Assureds
Standard - Club Announcement
Steamship - Club Announcement
Swedish - Club Announcement
UK - Club Announcement
West of England - Club Announcement
CHARTERERS
- Cover for Charterers Liability and Damage to Hull will remain in force for those areas (as long as not already excluded from policy trading areas) with the exclusion applying to the War Risk section of both cover lines;
- Our understanding is that Clubs may consider reinstating War Risk for Charterers liability and Damage to Hull on a case by case basis and for specific voyages only;
- FDD cover is not affected from a reinsurance standpoint.
- From a practical point of view any claim relating to an event arising within excluded areas, taking place after the 31.12.2022 will not be covered under war risk section independently whether the Vessel was declared before or after such date
FIXED ENTRY OWNERS P&I
- War risk elements afforded under fixed Owners entries, both P&I and additionalcovers (such as but not limited to Specialist Operation, Contractual, SOLextensions etc.) will no longer form part of the cover provided beyond Jan 01st2023 : the war risk exclusion overrides the Rules/Terms of Cover and the extent ofcover provided even in case the voyage started before such date.
- Non-war risks for P&I, FDD and additional covers will remain in place in case ofRussian, Belaraus or Ukranian trading, if not specifically excluded from policytrading limits, sanction limitations or other specific policy terms.
MUTUAL ENTRY OWNERS P&I
- Poolable P&I Cover exclude War Risks however mutual cover provided by IGClubs include a “Excess P&I War” of USD 500M. as of today, Excess P&I War riskcover remain in force.
- We remind you that “Excess P&I War”, as the name suggest, operates in excessof the Hull War cover that is primary for what concern War Risks. P&I Clubsrecommend that Owners maintain in place primary Hull War Cover, inclusive of“P&I War inclusion clause”, with a separate and independent limit for the liabilities,as per market standards. Pls refer to our publications detailing this subject inMarch 22 ( PLF News&Insights 02-22 ) and April 22 ( PLF News&Insights 03-22 )
- Non-war risks for P&I, FDD and additional covers will remain in place in case ofRussian, Belaraus or Ukranian trading, if not specifically excluded from policytrading limits, sanction limitations or other specific policy terms.
CONCLUSION
The situation is very fluid and the P&I Clubs and P&I Carriers are endeavoring to work out a solution for their Members and Clients.
We will continue to keep you updated and our team of global marine experts remain ready to assist wherever needed so please do not hesitate to reach out to your local Lockton/P.L. Ferrari representative.
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This newsletter, and our information archive, can also be accessed at
P.L. FERRARI & CO. S.r.l.
P.L.Ferrari – A Member of the Lockton Group of Companies
This newsletter is intended solely as an overview of the marine market and does not constitute any form of advice. It is based on sources believed to be accurate at the time of printing andwe cannot be held liable for the omission of any information within the newsletter.
