More than 190 maritime
incidents were reported in the
six months from January to
June this year. This represents
significant financial losses to
cargo owners without
the requisite
marine insurance to protect
their financial interests in
their cargo, and in particular
for general average losses,
according to Jeffry Butt,
marine manager at Aon South
Africa.
“Many importers
and exporters
run the
gauntlet of
not insuring
their cargo in
a bid to save
on costs. But
cargo insurance
is an essential
means to guard
against serious
financial loss, and
in particular as
the application of
general average
losses grows and becomes more
commonplace,” he told FTW.
A General Average occurs
when a voluntary sacrifice
is made to safeguard the
vessel, cargo and crew from a
common peril – for example,
jettison of cargo to lighten a
vessel in order to get to the
closest port to prevent a ship
from sinking and even piracy.
“If the sacrifice is successful,
all parties contribute to the
loss based on a percentage
share that their cargo value
bears to the full value of loss
suffered, with the maximum
contribution not exceeding the
full value of their cargo,” said
Butt.
“If the cargo is not insured,
it will not be released until the
cargo owner posts a guarantee
in the form of a cash deposit,
bank guarantee or bond. If
the cargo is insured, however,
the insurance company will
post the General Average Bond
and Guarantee to meet the
cargo owner’s contribution and
facilitate release of the cargo.”
The impact of consequential
losses and trade disruptions
is also a huge risk factor, he
points out. “Salvage operations
can take weeks and even
months, leaving companies
without their cargo and no
sales activity. In the case of
piracy, ships and cargo can be
held for months on end before
any ransom negotiations even
begin. This leaves business
massively exposed to profit loss
risks if they are not insured
properly,” he added.
INSERT & CAPTION
The impact of
consequential losses
and trade disruptions
is also a huge risk
factor.
– Jeffry Butt
