Indian ports of Kandla (Gujarat) and Mumbai (Maharashtra), have come under war clouds as the international reinsurance industry has imposed a war risk premium on any vessels -- passenger liners or cargo ships -- calling at these ports.
The London war risk committee, which imposed the revised war rates premiums effective March 18, 16:00 GMT, has not quoted any premium rates for vessels docking at the Iraqi port of Basra.
Insurance coverage to vessels docking at the ports of Somalia will be at the sole discretion of the insurance company at a price to be decided upon, if at all cover is granted. In the case of other Iraqi ports like Omm Qaer, the risk premium stands at one per cent and 0.85 per cent for Mine Al Bakr.
Even before the expiry of the 48-hour ultimatum given by the US president Bush to Saddam Hussain, the international war risk underwriters have upward revised war risk premium on any cargo or passengers moving in sensitive zones.
The committee has listed 29 ports where it has imposed a war risk premium varying from 0.01 to one per cent of the value of the cargo being transported.
"The industry is concerned over the hike in the war risk premium on vessels moving in sensitive zones," said Dinyar Manekshaw Jivaasha, corporate environment risk and insurance management head and vice president at Essar Group.
Cargo has already stopped going to a few Iraqi ports and adjoining ports in Iran, stated sources as insurance companies have declined coverage in these regions.
Charter rates will soar and shipping company sources stated that they will pass on the entire burden of the hike in premium rates to customers. The hike in charter rates also follows volatility in fuel prices and anticipated hike in the hull cover of shipping vessels, which is expected to increase on declaration of war.
Even before the US has declared war on Iraq, the international reinsurance industry has expanded the sensitive war zone to include ports like Pakistan, Egypt, Algeria, Bahrain, Iran, Kuwait, and Saudi region among others.
War risk premium saw a rise mid 2002 when the US government talked of war to combat terrorism.
At the time, a notice of cancellation was issued by the International Underwriting Association of London and Llyods Underwriters' Association effective June 10 for vessels venturing in international waters 18 degrees north and west of 73 degrees east. Vessels have since then been paying 0.05 per cent of the value of the cargo shipped.
The list of 29 high risk areas has now been expanded further, and incorporates Algeria (0.02%), Angola (0.015%), Bahrain (0.025%), Congo (0.0525%), Egypt (0.0125%), Eritrea (0.05%), India (0.025%), Indonesia (0.025%), Iran (0.056-0.165%), Iraq (0.85-1%), Israel (0.15%), Ivory Coast (0.0525%), Jordan (0.05%), Kuwait (0.2%), Lebanon (0.075%), Liberia (0.05%), Libya (0.045%), Oman (nil premium), Pakistan (0.08%), Qatar (0.025%), Saudia Arabia (0.0125-0.075%), Sierre Leone (0.05%), Somalia (not ava), Sudan (0.097%), Sri Lanka (0.025-0.25), Syria (0.0525%), UAE (nil premium) and Yemen (0.4%).