Cargo underwriters all at sea following Hanjin collapse
10 October 2017
A leading marine insurance lawyers has said the collapse of the Hanjin shipping firm last August has hit the appetite for the market to offer certain covers.
Speaking to the Insurance Institute of London in the Old Library, today (10 October) Mike Roderick, Partner, Clyde & Co LLP, said while the hull and machinery market had been largely unaffected the impact of the collapse had been felt elsewhere.
One of the major areas was the Container Lessee Default market where there was specific coverage for the insolvency, or bankruptcy of the carrier.
He said whichever way you looked at the coverage there was a claim to be made on such policies.
“ I am aware of polices that have been triggered,” he said. “These policies will cover the loss of damage of the cargo and the repositioning to the end destination.
“These policies do not tend to be for a single container but thousands if not tens of thousands and a number of these policies have been settled on a total loss basis.”
He added cargo underwriters were checking their exclusions.
The traditional cover had a broad exclusion which made it clear there would be no pay out for delays for insolvency. This was a clause form 1982, but under pressure from the market the London market and others inserted a new clause in 2009 which would exclude payment only if it could be found that the policyholder knew or could expect that the carriage of the cargo would be disrupted or delayed by the insolvency of the carrier.
“That is a hard thing for the market to prove,” he added.
US cargo policies traditionally have no insolvency exclusion and Mr Roderick said the American Institute of Marine underwriters’ cargo committee, was discussing how they approach the issue.
The Middle Eastern market however had stuck with the 1982 clause and as such expected no claims on the cargo policies.
“I have heard from underwriters in the London market who want to return to the simplicity of the 1982 clause but I think that is wishful thinking,” he added. “There have been a number of figures published on the total loss for the cargo market of Hanjin and it was put at $2 billion.
“I think the actual claims did not come anywhere near $2 billion.” re