The American Steamship Owners Mutual Protection and Indemnity Association, Inc. (the American Club) has announced that its reinsurers have served a notice to cancel certain war risk exposures related to the conflict between Russia and Ukraine.
The American Club, a US-domiciled mutual protection and indemnity club, says that it in turn must now cancel corresponding policies with its members as of January 1st, 2023.
From this date, it will reinstate clauses that exclude all losses, damages, liabilities, costs or expenses connected to the Russia-Ukraine conflict, and for any other territories that may become embroiled in the conflict.
Notably, it will also exclude cover for losses arising from the seizure or restriction of any vessels or cargo due to the conflict, which has already proved a huge point of contention for the aviation industry.
The American Club also clarified that it will cancel any instances of cover related to civil strife arising from war, as well as strikes, riots, terrorism, and moves to nationalise or confiscate insured items.
However, it added that it may subsequently agree to reinstate cover, if required, on terms subject to agreement.
While the American Club has not disclosed which of its reinsurers have decided to pull their converage related to the conflict, it was reported earlier this month Hannover Re and Munich Re are among reinsurers who had warned to cease underwriting any kind of risks related to the conflict in Ukraine from the start of next year, with other reinsurers thought to be taking a similar approach.
With reinsurers preparing to potentially cease cover, the bulk of the risk looks set to be forced onto insurers, thus causing them to reduce what they offer, and in turn, pushing shipowners into a rush to try to find alternatives, or even operate with less cover.