September 2001

Following the sequence of terrible events which took place on 11 September 2001 in the United States, it will come as no surprise to learn that the global insurance and reinsurance markets have been thrown into turmoil. A number of leading insurers and reinsurers and capital providers are headquartered, or have a significant presence in New York. As a result of this, markets may not be able to respond immediately to enquiries or requests for coverage.

The War Risks market in particular should be of great concern to our Marine Transportation and Hull clients. A number of discussions have taken place in the London insurance market over the last couple of days.

Cargo Risks

The War Risks Rating Committee at Lloyds has issued a notice in which the War Risks Rating Schedule is amended. With the exception of specific geographical areas, coverage for the risks of war, strikes and civil commotion, will remain in force in the cargo market. The principal change in the schedule is that the basic scale rate for the War and Strikes Risks will increase to 0.05% from 0.0275% with effect from 16h00 GMT on 24th September 2001. Insurers will, in all likelihood, implement this recommendation.

In addition to the above general increase, the list of geographical areas which require specific notification in advance or have special rates has been expanded.

No general notice of cancellation for war and strikes risks has been issued.

Hull Risks

A specific area of concern in light of the current situation is the Cruise and Passenger Ferry sectors. Underwriters have indicated that they will be considering each case individually and we anticipate a detailed questionnaire that will require completion and will be specifically concerned with security aspects.