Changes to War Risks Areas – JWLA028 dated 15.02.2022

WHAT ARE THE CHANGES

On 15th February 2022 the Joint War Committee implemented changes to the Areas of Perceived Enhanced Risk that are used as the foundation for trading exclusions in War Risks insurance policies.

The following listed areas have been added to the list: 

Ukrainian and Russian waters in the Black Sea and the Sea of Azov

HOW WILL YOUR WAR RISKS POLICY BE AFFECTED

The above new excluded areas will most likely be incorporated into your policy of insurance. There are usually two ways in which this could happen:

-    If your War Risks insurance is placed with or led by a “Club” or “Association”, the insurer will most likely issue a circular that will apply to all policies of insurance noting that the new areas will automatically be incorporated into the policy with effect from a future date.

-    If not, your War Risks lead insurer will need to issue notice (usually to your broker) that the new list of areas will be incorporated specifically into your policy with effect from a future date.

Insurers usually allow between 2-7 days for such a change to come into effect.

Any policies that contain pre-agreed rates for trade into newly excluded areas might need to have those rates revalidated or renegotiated.

We draw your attention to the requirement in most Protection & Indemnity policies of insurance that underlying war risks insurance, including a primary layer of war P&I cover, needs to be in place. This includes the period while vessels are within the new JWLA028 listed areas.

ADDITIONAL WAR RISKS PREMIUMS (AWRP)

It remains to be seen what additional premiums insurers will charge for calling, sailing through or within the new excluded areas. Owners able to pass on premiums to charterers for additional costs should make charterers aware that the owner’s War Risks policy will soon most likely incorporate the newly excluded areas. Assureds with long-term operations in the newly excluded areas might also wish to review their contracts to identify if they are able to pass on such additional costs.

KIDNAP & RANSOM INSURANCE

Vessel operators who purchase K&R insurance on a case-by-case basis should note that K&R insurance can be purchased not only for the period the vessel is in a high risk area, but also for the ‘approach’ – for example starting cover a few days prior to the approach of the excluded area. There is usually little to no cost impact for this.

ILLUSTRATIVE MAP

Howden’s marine clients will over the next few days receive an illustration of the new war risks areas. If this does not reach you, please let us know. This illustration should enable your operational and commercial teams to identify the new areas visually and to plan for the changed dynamic that may arise in respect of existing and future trade.

AWRP.INSURE

If you have not yet tried it, please visit our online premium indication tool AWRP.insure.

The tool is an online premium calculator. It enables prompt computation of a very rough indication of additional war risks insurance premiums (AWRP), Kidnap and Ransom insurance premiums (K&R), as well as premiums for Loss of Hire (LOH) for both AWRP and K&R (AWRP LOH and K&R LOH). Its purpose is to enable prompt and accurate budgeting of additional premiums at the time of commercial voyage calculations.

For any questions regarding the contents of this Marine Client Advisor or for any other marine insurance enquiries please do get in touch. 

Howden Insurance Brokers is not a technical, commercial or legal adviser. Any commentary made in this document should not be construed as such, and we do not guarantee in any way the accuracy of the resources used or referenced in this document. In case of doubt, formal advice should be obtained that is directly relevant to your circumstances.