Are Cargo Insurance Policies Still Fit for Purpose?

As we celebrate the recent visit of Queen Elizabeth II to Lloyd’s to mark its 325th anniversary, it is also an opportunity to consider if the market is continuing to evolve and meet the needs of our clients in modern times.This has added importance in today’s complex world, where war, violence and political unrest are reported in the press on a daily basis.

Many clients believe they are covered for these and similar events by their cargo policies under the war and strikes clauses. However, this is not the case and many critical exposures are excluded.

Political Violence Usually Not Covered

Traditional cargo insurance policies exclude certain risks, such as those arising from civil war, terrorism for goods in store, insurrection and rebellion. Meanwhile, political violence policies, which typically respond to these types of risk, usually exclude transit exposures and cover fixed assets rather than stock.

These exclusions are nothing new but political instabilities give impetus to an important question:  Are cargo insurance policies still fit for purpose?

This table outlines the protection provided by UNDERCOVER in comparison to the coverage in cargo, war on land and political violence policies

This table outlines the protection provided by UNDERCOVER in comparison to the coverage in cargo, war on land and political violence policies

Whilst cargo is the one of the oldest forms of insurance and has met the needs of clients for centuries, the modern world is a far more complicated and connected place than when every voyage was an adventure shared in the Lloyd’s Coffee House.

For those clients who have become aware of their political exposures, the only option has been to purchase coverage from a selection of cargo, war-on-land and political violence policies. However, this can still leave gaps in cover.

In addition, there are a number of other issues that arise from purchasing cover via several insurance providers—not least increased premium costs due to duplication of cover and potential claims disputes.

In light of the above, we believe it’s time to challenge the conventional wisdom of the insurance market. In doing so, we can fulfil the needs of companies offering protection against a broad spectrum of risks in one single policy, including political violence, terrorism and war-on-land.

Willis has launched a new insurance facility, called Undercover, to protect cargo in transit and in store against all types of political violence, terrorism and war risks. More information on the specific cover offered by Undercover is available here.


Guest blogger Sally Irvine Guest blogger Sally Irvine is an Executive Director within the Cargo practice in Global Marine, based in London. Having trained under the Willis graduate programme in both the non-marine and marine divisions, in 1996 she joined Cargo and has worked in both the retail and reinsurance environment.

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