IUMI welcomes revised York-Antwerp rules
The International Maritime Insurance Union (IUMI) welcomed the revised York-Antwerp rules (YAR 2016) which were adopted by the International Maritime Committee (CMI) at its conference in New York last week.
The York-Antwerp rules are a set of rules by which the general average (GA) is adjusted. According to the doctrine of general average, the sacrifices and expenses resulting from a maritime accident are distributed between the ship, the cargo and the other persons interested in a common maritime adventure according to their contributory values ââat the end of the voyage. .
The IUMI pays particular attention to their content because, on average, the GA system increases the cost of maritime accidents by 10 to 30%. The process of collecting the GA guarantee of all cargo interests, collecting information on the values ââand expenses of ships and cargo, and then readjusting all GA expenses and sacrifices usually takes several years and prevents rapid closure of complaint files.
For these reasons, the IUMI has been campaigning for over 20 years for a set of YARs that allow more GA spending to fall where it falls outside GA (but usually still covered as a “particular average” in marine insurance policies) and encourage the quicker publication of AG regularizations.
The 2004 AR contained a number of measures that reduced the cost of the GA, such as a variable but generally lower interest rate on GA allowances (on average 3.86%) and the removal of the commission at 2 %. However, YAR 2004 was not incorporated into BIMCO’s standard contract forms and therefore remained largely redundant.
To address this issue, an international CMI working group in 2012 undertook a comprehensive reassessment of the YAR for adoption at the CMI conference last week.
The new 2016 YAR introduces some useful measures that, if incorporated into contracts, can reduce insurers’ exposure to GA by a few percentage points, according to IUMI.
The most important gains of the new YAR for insurers are:
1. Interest will be fixed annually at LIBOR ICE on the first business day of each year in the currency of the adjustment plus four percentage points. For an adjustment in US dollars which would produce a rate of 5.18% for 2016 versus 7% for the 1994 YAR or 2.5% for the 2004 YAR. However, if this will result in short-term savings if the interest rates increase significantly, insurers may be exposed to rates even above seven percent.
2. The two percent commission will no longer be recoverable. It was one of the few changes made by the 2004 YAR that was retained.
3. Several measures intended to speed up the adjustment process have been introduced. These include excluding low value cargoes from GA contribution if the cost of their inclusion is greater than their contribution, and clarifying the process by which adjusters can estimate GA allowances in the process. lack of information from the parties.
4. Approved CMI guidelines regarding the nature and operation of the GA process have been introduced, and we hope that they will help those involved in the GA understand what is required of them.
A number of changes made by YAR 2004 or sought by IUMI have not been incorporated into YAR 2016. These include:
(a) Crew wages and maintenance while a ship is detained in a place of refuge should be permitted (as in YAR 1994 but not YAR 2004).
(b) The cost of temporary repairs of accidental damage in a port of refuge will not be capped as is the case in YAR 2004, thus restoring the situation in YAR 1994.
(c) The clawback will be readjusted in GA in most cases, unless such readjustment will not have a material impact on the situation of the parties, which are called simple clawback situations.
BIMCO must now decide whether to approve the YAR for incorporation into their standard contracts. If so, the new YAR is expected to start being incorporated into transport contracts by the end of 2016.
General average and York-Antwerp rules
According to the GA doctrine, the sacrifices and expenses resulting from a marine accident are divided between the ship, the cargo and other people interested in a common maritime adventure according to their contributory values ââat the end of the trip. The YAR is a set of 7 letters and 23 numbered rules by which the GA is adjusted. The first version of YAR was introduced in 1860 with the aim of harmonizing the very different practices of average adjusters around the world and since then nine new versions have been introduced. For at least 70 years, the CMI has been the guardian of the YAR.
YARs are not an international convention and generally only apply when incorporated into contracts for the carriage of goods by sea which are generally on standard forms, most often approved by the industrial body of shipowners, BIMCO .
Hull and freight insurers cover the GA liabilities of their policyholders in most standard forms of policy and are therefore often referred to as the âpaymastersâ of the GA system. However, since they have no influence on the terms of the transport contracts, they cannot determine the extent of the indemnities of GA for which they are potentially liable. There is no precise estimate of the amount of money moved in GA, but it would be surprising if it were less than $ 1 billion each year.