Venezuela - check your insurance for war-risk policy removal

by Eric Watkins, Penn Energy/Sail-World on 21 Jun 2009 Cruising sailors who have the intention to transit Venezuelan waters or spend the hurricane season there, should check with their insurance company after the announcement this week about London's withdrawal of war-risk policy for the country.

London’s marine insurance market, spurred by President Hugo Chavez’s recent confiscation of 300 service vessels and more than 70 gas processing units, has withdrawn maritime war-risk policy coverage for Venezuela.

The removal of war-risk cover means vessels in the country may no longer be able to insure against asset confiscation, a move that will affect all water-borne vessels including tankers and containerships.

“This is a result of an accumulation of developments in Venezuela,” said Neil Roberts, secretary to the Marine Committee of the Lloyd’s Market Association.

“Banks, agriculture, ports, and offshore energy have all been targeted—it is a likely proposition that [Chavez] will continue to expropriate commercial assets,” said Roberts.

“Ultimately, this is an advisory note, and it is up to underwriters to decide how they wish to act on this decision,” Roberts told shipping daily Lloyd’s List.

The decision by the London insurers covers all of Venezuela, including all of its offshore installations up to 200 nautical miles offshore as part of the country’s maritime Exclusive Economic Zone.

Although London underwriters are the only ones to have removed the war-risk cover so far, industry observers expect that their lead will influence other insurance markets around the world.