Insurers face choice as freight ban bites

As the European Union and the UK look to find ways to allow freight and essential visitors to enter or leave the UK a leading lawyer has said there is likely to be an uptick in insurance claims.

Jonathan Moss, insurance Partner and Head of the Transport Sector at global law firm, DWF, said insurers need to brace themselves for claims arising from the disruption at ports across the country.

“As a result of the closure of borders owing to the UK Government’s announcement of the new virus strain, there is likely to be a rise in claims related to transportation delays,” he explained.  “The standard Institute Cargo Clauses (A) (ICCA) clauses exclude delay under clause 4.5, but they include forwarding expenses for specific reasons. The duration, termination of transit and change of voyage clauses all provide cover for cargo should destinations change and advice be given to underwriters subject to exclusions.

“However, on 17 April  2020, Lloyd’s Joint Cargo Committee, the JCC, published a new communicable disease clause which excludes ‘any loss, damage, liability, claim, cost or expense of whatsoever nature caused by, contributed to by, resulting from, arising out of, or in connection with a Communicable Disease or the fear or threat (whether actual or perceived) of a Communicable Disease regardless of any other cause or event contributing concurrently or in any other sequence thereto’.

“This means that those policies which include the communicable disease exclusion clause could prevent hauliers and freight forwarders and those entities engaged in the transportation of goods, from recovering losses.”

European Commissioner for Justice Didier Reynders has urged EU nations to end the blanket ban on the movement of people and goods form the UK.

“Given the current uncertainties and in light of the precautionary principle, member states should take co-ordinated action to discourage non-essential travel between the UK and the EU,” he said. “At the same time, blanket travel bans should not prevent thousands of EU and UK citizens from returning to their homes.

“While precautions are needed to contain the spread of the new coronavirus variant, with today’s recommendation, we therefore ensure that the restrictions are co-ordinated and provide for the necessary exemptions for citizens and residents returning home and other essential travellers.”

Mr Moss added the industry was faced with limited options.

“Underwriters have the choice to either use a full exclusion or to use an alternative exclusion with a limited buy-back,” he explained. “The buy-back option afforded a measure of expenses coverage in line with each specific policy wording. Each policy should be scrutinised carefully to see whether the exclusions apply or if there is any scope for cover.”