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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

06/11/2001

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

NEWS SOURCE

NULL

CATEGORY

HEADLINE

Exporters in the dark over insurance premiums
01 November 2001 (Business Times) - LOCAL exporters are down to a guessinggame when it comes to estimating their costs of sending goods to Pakistan,India and West Asia.This is due to the current undisclosed sum of insurance premiums to bepaid by the charter parties following the September 11 terrorist attackson the US.“The new terms require us to call the insurers three weeks before a voyageand find out the actual insurance premium.”“To make matters worse, 48 hours before reaching the port of call, anotherclarification on whether the insurance premium is still the same isrequired,” one exporter told Business Times in Kuala Lumpur.The London-based War Risk Rating Committee sets the insurance rates andpremiums for vessels plying the trade routes.Sources said the committee is having difficulty to determine the actualcharges for ships headed for Pakistan, India and West Asia. Among the moreprominent vessel insurers are Lloyds of London and P&I Club.The previous rate of 0.025 per cent of the hull value of the vessel wasincreased to 0.05 per cent, a war risk surcharge to all destinations, andstands the same for any vessels plying all other waters.Sources said the problem is the undisclosed amount placed on vesselsplying to India, Pakistan and West Asia.The undisclosed insurance premium leaves the charterers in a daze as tothe actual amount of insurance charges to be placed on the other party.“The only solution is for the charterer to assume a figure and hope thatthe figure does not stray above the amount placed,” one exporter said.The current problem of undislosed premiums was brought up with the PrimaryIndustries Minister Datuk Seri Dr Lim Keng Yaik by the local insurancecompanies, shippers and oil palm exporters.The representatives from the various industries asked assistance from theGovernment, to place a deposit for the companies insuring the vessels tothe war risk regions.“It is not the case where the waters are unsafe to be travelled on, butmore of a situation where the large insurers are attempting to make back aUS$70 billion ( US$1 = RM3.80) loss from the crashing of the World TradeCentre in New York, and the four aircraft lost in the process,” one sourcesaid.Local insurance brokers feel that the placing of the undisclosed war risksurcharge is taking things a step too far. The local brokers feel that theimposition of such a surcharge is uncalled for as the actual attacks arein Afghanistan which has no sea boundary or ports.The meeting with the minister was only to inform the Government of theproblems, a solution is yet to be decided on.The minister, it seems, will call for another meeting sometime soon todecide on the possible assistance which can be offered by the localGovernment.