Market News

Charter Default Insurance – Re-establishing a specialist product as a part of a Wider Credit Insurance Market

We have noticed considerable comment in the Trade Press over recent weeks regarding Charter Default Insurance which provides cover against losses arising from the Insolvency of a ship operator’s charterparty.

This has long been a specialist product offered by Credit Insurers and in addition to losses of amounts outstanding for payment will provide a measure of protection for loss of anticipated revenue under a charter agreement.

Given trading conditions within the sector over the past two to three years and subsequent adverse experience a number of the Insurers previously offering this product had withdrawn their support or become significantly more selective in their underwriting. More recently new capacity – most notably through the Chaucer 1084 Syndicate in Lloyd’s – has become available which is of course a welcome development.

However, underwriting capacity and appetite do remain limited. Insurers will continue to be very selective regarding the risks they take on and are looking for transactions with significant supporting information in the form of financial information on the charter party.

London Special Risks would be pleased to investigate this product on your behalf. Indeed, Charter Default Insurance is only one of a number of Policies we can provide that may be appropriate for Ship Owners and their financiers and we would welcome the opportunity of discussing these with you in greater detail.

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