UK insurer International Transport Intermediaries Club (ITIC) has been forced to reimburse a shipowner for an additional war risk premium (AWRP) after a breakdown in communications.

In its latest claims review, the company shed light on a case where a failure in information transfer sparked a dispute over a $60,000 payment.

ITIC said an unnamed tanker had been contracted for a voyage featuring an option to call in an AWRP area.

As per the terms of the charter, the charterer was liable to pay the premium if the vessel ventured into the specified area.

Crucially, the shipowner was obliged to obtain an AWRP quotation and transmit it to the charterer for approval “as soon as possible” and “before the owner pays the AWRP”, ITIC added.

The owner passed on the necessary information to the shipbroker involved in the deal.

But when the shipping company later notified the charterer of its AWRP claim, it became apparent that the broker had failed to convey this information to the charterer, which refused to pay.

ITIC argued that the decision to enter the AWRP area was a conscious one, and the delayed notification did not cause any losses, as the quotation aligned with market standards.

But the charterer held firm, citing a breach of the charter terms, which was technically correct.

Valid claim

The shipowner therefore had a valid claim for $60,000 against the broker, which was covered by ITIC.

The insurer’s claims director, Mark Brattman, reiterated the importance of attention to detail in such transactions, especially when it comes to passing on crucial information.

“Unfortunately, such oversight can lead to financial losses and even disputes between the parties involved,” he added. “Having professional indemnity insurance can offer a safety net in such situations. Therefore, prevention is key, but having expert support is just as crucial.”