Mainly, the Nordic Marine Insurance Plan (NMIP) is a document that was agreed between Nordic insurers and Nordic shipowners through the mechanism of a Standing Revision Committee. The roots of the current Plan go back to the first Norwegian Plan of 1867.
The NMIP 2013 followed now, covers all traditional marine insurances, except P&I. According to Nic Wilmot, Gard's Special Adviser, the NMIP and its Commentary are to be revised in three year cycles.
Yet, the most important clarification was made in relation to clauses 2-8 and 2-9 which deal with the division between marine and war perils.
Additionally, NMIP is an all-risk insurance contract where the perils covered by the war-risk insurance are specified, while the range of perils covered by the insurance against marine perils is negatively defined covering any other form of perils to which the interest is exposed.
Most importantly, the revisions focus on clarifying the cover under clause 2-8 (b) which highlighted that intervention by state power was not included in the marine cover.
Also, in recent past, insurers noted a trend of vessels being captured or detained in ports without it being obvious whether the motivation was law enforcement or whether there were other political motives.
Therefore, the insurers decided that state interventions that fell outside the war risk cover, should be included in the marine insurance cover. Whereas, the war risk cover would continue to be restricted to politically motivated interventions.
The new structure can be broken down into three types of interventions:
- Political risks
In the NMIP a specific reference is made to capture at sea, confiscation, expropriation and similar interventions. Insurers will provide cover only if these actions are taken by the vessel's own state.
The expectation is that own state administration will voluntarily compensate the owners for the use of the vessel.
Yet, if the same actions are taken by a foreign state power war risk insurance will provide cover for any resulting losses.
The highlight is that for war insurance to respond it will always be a requirement that the actions against the ship were motivated by the furthering of an overriding national or supranational political objective.
The Commentary to the NMIP notes that neither Nordic nor English law has a clear definition of requisitions.
It is made clear that there is an understanding that requisition is something else than expropriation.
For cases of requisition there is an expectation that formal legal procedure will be followed prior to the vessel being requisited.
In the possibility that the vessel is registered in one of the Nordic countries it is expected that the State will pay compensation if they take over the vessel for ownership or use regardless of the motive for the requisition. So, it is not natural to cover this under the insurance.
- General law enforcement
There may also be situations where a vessel is detained or captured without a supranational political objective.
This could happen due to breaching, or investigations into breaches, of regulations concerning customs, pollution, safety of navigation or similar state legislations.
There's a possibility that a vessel is retained for a long period that can not be justified. In this case, there is not a specific exclusion and therefore claims from such interventions will be covered by the general all-risk principle of the NMIP.
- 3-16 makes clear that losses resulting from the use of a vessel for illegal purposes are not recoverable from the insurers. This is a general limitation of cover with a clear public policy rationale behind it and does not apply to breaches where the shipowner acted in good faith;
- 2-18 (d) excludes cover for any losses resulting from state interventions consequential on the assured’s insolvency or lack of liquidity.
Also, the Committee also focused to the time a vessel owner has to wait from the date of the intervention by a foreign state until being able to claim a total loss of a vessel under the war insurance cover.
This time has been decreased from 12 to 6 months. A shorter time limit is an apparent advantage for an owner who has found himself in an unfortunate and difficult situation.
Concluding, Gard hopes that these changes will clarify the scope of cover war cover while providing broader cover under the marine conditions. It should nevertheless be stated that clauses 2-8 and 2-9 are designed as a coordinated system and owners wishing to purchase marine or war cover on a different set of rules should carefully investigate the exact scope of the cover they are buying.