BIFA says “leave the rules of general average alone”

Marine Insurance, Markets, News — By on April 2, 2013 at 10:59 AM
Peter Quantrill

Peter Quantrill

In response to a review of the rules of General Average, which is being undertaken by Comite Maritime International (CMI), the trade association for UK freight forwarders says that it sees little need for change.

The British International Freight Association (BIFA) – – says that this ancient element of maritime law, where all cargo owners have to chip in a General Average sum to recompense a ship’s master forced to sacrifice the cargo, equipment or funds to save a voyage, must be protected.

BIFA is now questioning its Members and initial feedback indicates widespread support for the maintenance of this custom and little need for changes to a well-accepted principle.

Peter Quantrill, BIFA Director-General, comments: “The adage is ‘if it ain’t broke, don’t fix it’. This is not just a saying that affects machinery: business systems, such as insurance policies, are equally affected.”

When the ship’s master declares a General Average, the cargo will not be released until the cargo owners put up a cash bond or the cargo insurers put up a General Average guarantee. Typically shippers may be faced with General Average claim once every decade.

Quantrill adds: “General Average is best described as an ancient unwritten law of marine insurance. It is a process whereby the parties whose interests have been sacrificed or who have incurred extra expense, are recompensed by the contribution of those whose interests have been saved. If a General Average is declared, any standard marine policy will include General Average losses so if the goods have been insured the importer should obtain a General Average guarantee from the insurers. If no insurance has been organised then a cash deposit will be needed.

“When our Members receive notification that a General Average has been declared for a vessel, whatever the position, their first action is to give the importer immediate notice. The appointed average adjusters will need to be in possession of completed guarantees and bond forms or cash deposit before release of cargo, so it is vital that the importer takes immediate action.”

Most BIFA members promote marine insurance to their customers, which can give peace of mind when a General Average is declared.

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