A new General Average Insurance cover, introduced by The Swedish Club in May, aims to resolve many of the problems currently surrounding GA in container vessel casualty situations.

The cover provides a new alternative for vessel owners and charterers. It is intended to reduce delays, cuts costs and leaves intact valuable commercial relationships between owners, charterers and cargo interests.

With this new cover in place, an owner can decide not to collect GA security from cargo interests, even if the costs are significant and reach beyond the norms of a Hull & Machinery policy’s GA absorption clause. In short, GA Insurance allows the owner to avoid GA security collection, even if GA costs substantially exceed the absorption limit (say, in excess of USD 1 million but not exceeding USD 5 million). As this solution does not involve the absorption clause, there is no impact on the H&M claims record.

Lars A. Malm, The Swedish Club’s Director, Team Management, says: “The new cover would not be appropriate in a catastrophic situation, but it offers a viable, highly beneficial alternative in the vast majority of GA cases. We are the first provider to offer separate comprehensive GA cover. Other attempts to resolve the problems of container vessels and GA have tended to focus on either higher absorption clause limits, or cover for individual interests in the GA rather than a separate comprehensive cover. Consequently, they have failed to tackle some of the more difficult aspects of GA, including obtaining security from a host of cargo owners.”

The Swedish Club’s GA Insurance offers three key advantages: a commercial benefit to policy-holders in relation to their clients (cargo owners), much reduced costs and very rapid recovery of cargo. Lengthy delays arising from declaration of GA are avoided. With just a handful of parties involved, the process can move forward much more rapidly. With GA Insurance in place, there is no need to seek security from hundreds (in some cases, thousands) of cargo interests.

Lars A. Malm says: “We believe this cover will attract many containership owners. The advantages for the big liner operators are obvious. Members taking this cover can present it to their clients as a major commercial advantage. Charterers and Cargo owners will not be over-burdened in a GA-type situation. Policy-holders also benefit, in that there is less chance that their relationships with valued clients will be disturbed by a GA.”

Lars A. Malm, Director, Team Management, The Swedish Club

More information about GA insurance can be found by clicking here.