US – Iran tension

On 3 January 2020, amid rising tensions between the United States and Iran, the U.S. carried out a drone strike on a convoy traveling near Baghdad International Airport, killing Iranian major general Qasem Soleimani of the Islamic Revolutionary Guard Corps (IRGC), commander of the Quds Force and listed as a terrorist by the European Union.

On 6 January 2020, Al-Shabaab extremists have overrun a key military base in Kenya, killing three American Department of Defense personnel and destroying several US aircraft and vehicles before they were repelled.

On 08 January 2020, Iran launched missile attacks on U.S.-led forces in Iraq in retaliation for the U.S. drone strike on an Iranian commander whose killing last week.

This raised fears of a wider war in the Middle East. There is also growing threat of terrorism attacks.

Need for reviewing War & Terrorism Cover

War Cover

As per “Institute War Clause (Cargo) 2009 – Duration Transit Clause”, this insurance attaches only as the subject-matter insured is loaded on an oversea vessel and terminates as the subject-matter insured is discharged from an oversea vessel at the final port or place of discharge or on expiry of 15 days counting from midnight of the day of arrival of the vessel at the final port or place of discharge, whichever shall first occur.

Thus, war risk is covered only during sea voyage but not covered in following situations.

Import cargo

Inland transit from plant/warehouse to port of loading and during storage at port of loading

Export cargo

Inland transit from port of discharge to final destination and during storage at port of discharge

Similar is applicable in case of air voyage.

Similarly there is potential threat of increase in terrorism risk.

Increase in Risk Exposure

Amidst heightened tension in the Middle East, it is important to review the increase in the following risk exposures

• Growing risk of war exposure in the middle east countries during inland transit and during storage at the port
• Movement of cargo in countries sanctioned by UN, US and EU is not covered. Amidst growing tension between US and Iran, there is likely possibility that list of sanction countries may be expanded
• Properties abroad need to be protected against the potential threat of war and terrorism attack

Solutions from Beacon

It is better to evaluate above risk exposures if dealing with middle east countries. Beacon is composite broker and has developed its expertise in re-insurance market and can arrange following covers through its global network.

• We can arrange inland war cover for our clients
• We can arrange limited cover for sanction countries
• We can arrange terrorism cover for our clients

Please contact us in case you have a query or any assistance is required from our side.