Page 212 - India Insurance Report 2023- BIMTECH

200 India Insurance Report - Series II

Republic of Congo, Nigeria, Eswatini, Malawi, and Ghana, to mention a few. Many Insurers are reluctant
to extend coverage beyond the final African port of discharge to the ultimate site, which could be in a
landlocked African country, and the cargo may have to move through more than one country and thousands
of kilometres. It is somewhat paradoxical when many Governments encourage exporters to focus on
Africa. Banks are financing such contracts, but the Insurers are not supporting the exporters readily.

The exporters oftenmust arrange a port-to-warehouse/site coverage at a very high premium from
an African Insurer. It is felt that the regulators/associations of Insurers should step in and prescribe
premium rates for movements up to the final warehouse/ site for various commodities moved to various
countries in Africa and other regions. For Africa, the countries can also be categorized as a) Coastal East
Africa with ports) Coastal West Africa, c) Central Africa and) North Africa. Considering the bad road
conditions in some countries and the high cost of surveying in the event of any loss, etc., the premium
rates can be suitably hiked, deductibles increased, and conditions like sharing the survey fee, a refund of
premium in case of no loss can also be thought of.

4. The Problem of Getting All Risk Coverage

It is well understood that the Insurers may restrict the insurance coverage if the perceived probability
of loss is high. However, since insurance is all about handling and managing risk, outright refusal to
grant ‘All Risk coverage’ is not a fair deal to the Exporters/Importers. For all project exports, the
contracts generally require marine insurance on All Risk terms, and Insurers’ refusal to provide All Risk
cover puts exporters in a tight spot. The solution lies in careful risk analysis, suggestions on proper
packing, dunnaging, and lashing, choice of vessels followed by a charging premium commensurate with
the risk and imposing high deductible /other conditions.

5. Futuristic Solutions Proposed

Some indicative (not exhaustive) solutions are proposed.

5.1 Make Cover Foolproof : Rather than refusing the coverage, let the insurance remain subject to
the sanctions and limitations clause with its proper interpretation in letter and spirit. The standard
wordings look as follows:

“No (re)insurer shall be deemed to provide cover, and no (re)insurer shall be liable to pay any claim
or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim
or provision of such benefit would expose that (re)insurer to any sanction, prohibition or restriction
under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European
Union, United Kingdom or United States of America.”