London And Nordic Marine Insurance Markets

A Comparative Analysis in Relation to Marine Insurance Cover.

London is recognized as the worldwide leader for the marine insurance market. The development began in the 18th century when by means of "The Bubble Act" it was forbidden to corporations and societies to run the marine insurance business unless they were authorised by Act of the Parliament or Royal Charter, This measure created a virtual monopoly for two companies.

Anyway, there was no provision in the law that prohibited individuals to carry on this business. The opportunity was taken by entrepreneurs at the old coffee house of Edward Lloyd. Lloyd's was created as the marine insurance location by individuals and it "became recognised as the place for obtaining marine insurance". In the early 19th century Lloyd's of London was already the dominant marine insurance market worldwide. (Gurses, 2015).

Individual underwriters used forms to specify coverage and exclusions in the contract of marine insurance. On 1779 Lloyd's issued the SG form of policy which was later included in the Marine Insurance Act 1905 as First Schedule which could be used as standard.

The Institute Clauses begun to appear in the 19th century. They took this name because they were promoted by the Institute of London Underwriters ILU along with Lloyd's.

Since the creation of the Institute Clauses they were updated in order to maintain competitiveness in the insurance market, to clarify concepts and also as a response to case law. In the eighties a new set of standard clauses were developed.

The tradition of the London Market was and continues today to insure vessels against specific named perils.

Three types of Hull clauses are available in the London market: The Institute Hull Clauses ITC, Voyage and Time (editions 1983 and 1995), and the International Hull Clauses IHC, edition 2003. (Gurses, 2015)The application of the clauses is not compulsory and they are now published in the IUA Clauses Document Library website. IUA is the International Underwriting Association of London, an entity that superseded the ILU due to a merger with the London International Insurance and Reinsurance Market Association (LIRMA).

The Nordic Association of Marine Insurers (CEFOR) initially promoted by Norwegian companies which previous name was "The Central Union of Marine Underwriters "is the current leading organization for the development of standard rules in the Nordic marine insurance market.

The first Norwegian standard insurance conditions known as the "Norwegian Marine insurance Plan" appeared in 1871 with the auspices of Det Norske Veritas DNV. It is known that for all the plans but the first have been developed under agreement basis with the market participants. On 2001 DNV transfers his intellectual property rights regarding the Plan to CEFOR. The Plan had its last version on 2010. Further, CEFOR promoted the enactment of the Nordic Plan. (Lund, 2011)

On 2010 the Ship-owners' Associations of Denmark, Finland, Norway and Sweden signed an agreement with Cefor in order to develop a Nordic Marine Insurance Plan. The Plan was approved and available on 2013 and the result was "The Nordic Marine Insurance Plan of 2013 based on the Norwegian Marine Insurance Plan of 1996, Version 2010". According to the agreement the plan is to be updated every 3 years, therefore the 2016 version is available. The clauses are also not compulsory. The difference with the London market is that the Nordic Plan is the result of a formal agreement by ship-owners and insurers. (Hammer, 2014) (Cefor, The Nordic Plan, 2016). The Plan is considered to be "unique as compared with other non-Nordic market conditions". (Lund, 2011)

The main difference with the London market is that the Nordic Plan states as standard the all-risks principle. Once a loss is justified it is the insurer who...