Transport, Trade And Logistics Update

A new form of security following the declaration of general average (GA) has the market wondering if a real change has occurred. In brief, the answer is a resounding "no", although the process is slightly simpler and the new form has some provisions that the marine insurance market needs to be aware of.

GA is an ancient legal principle which is well known to the South African marine insurance market and has had significant exposure on casualties such as the mv Sealand Express, mv Kota Kado, mv MSC Napoli and the mv APL Austria. GA is a legal mechanism by which shipowners recover costs that they have incurred in saving a ship and her cargo by which all of the saved interests contribute pro rata to those costs. Depending on the nature of the casualty and the extent of the expenses incurred, underwriters' contribution to GA can be extensive. Owners recovered a 45% contribution on the MSC Napoli and a 100% contribution on the Kota Kado. Generally speaking however, GA