The introduction of a new general average (GA) security form has prompted discussion within the marine insurance sector about whether a meaningful change has taken place. In practice, GA continues to operate much as it has for decades. The new approach simplifies certain processes but leaves the underlying risk allocation largely unchanged.
GA’s continuing relevance
GA remains a long-established mechanism enabling shipowners to recover costs reasonably incurred to save a vessel and its cargo, with all interests contributing proportionately. Although contributions typically sit near ten percent of saved cargo value, some major casualties have resulted in far higher recoveries. Adjustment periods can be lengthy and administratively demanding, which is why some operators choose alternative insurance structures rather than declare GA.
Security requirements and the new CMI form
Traditionally, cargo owners provided a GA bond and insurers issued a GA guarantee. The Comité Maritime International (CMI) has now developed a single GA guarantee form that allows insured cargo to be released without a separate GA bond. The intention is to streamline administration in complex or multi-party incidents.
While the new form aligns closely with existing market wording, it includes notable provisions:
- Insurers confirm the guarantee remains valid regardless of other undertakings or insurance-policy terms.
- Insurers may be required to make without-prejudice payments on account where amounts are considered properly and legally due, although countersecurity may be requested before payment.
- Prescription begins once the final GA adjustment is issued, consistent with many existing legal positions.
- Parties “should” raise defences within three months of the adjustment, although this is framed as a request rather than a binding limitation period.
Commercial implications
For cargo owners, the removal of the GA bond requirement reduces administrative burden but does not materially alter exposure. For insurers, the position remains largely unchanged, aside from closer scrutiny of payment-on-account clauses and timelines for raising disputes.
Key practical considerations include:
- ensuring early clarity on valuation of damaged cargo
- monitoring the scope of guarantees issued under the new form
- engaging proactively with adjusters where liability or causation is in dispute
- reviewing internal processes for managing GA exposures, particularly in high-value or multi-jurisdictional casualties
Conclusion
The updated GA guarantee reflects an incremental refinement rather than a structural change. GA continues to be a significant cost and operational consideration for marine insurers and cargo interests. While the new form simplifies security provision, the core challenges associated with GA adjustments and dispute management remain.
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