The Danish Shipowners’ Association (Danish Shipping) welcomes the fact that the Danish state has reactivated its war insurance institute to provide cover for merchant ships in crisis areas.
Shipping is a strategic asset for Germany’s northern neighbor. A new legislative proposal on war insurance is now intended to ensure that the Danish merchant fleet remains insured and can continue to sail even in the event of war.
In an exceptional situation where Denmark and Danish shipping would be severely affected by war and the commercial insurance market collapses, the association says that war insurance is necessary. This ensures that the Danish merchant fleet remains insured and operational. This would benefit both Denmark and the shipping companies. A new government proposal to activate the so-called War Insurance Institute is now intended to ensure exactly that. The proposal provides for a state loan guarantee of DKK 6 billion (approx. €800 million) if the War Insurance Institute is activated. The legislative proposal will now be submitted for consultation and is expected to be presented in October.
Coverage gap closed according to Danish Shipping
“The timing for the activation of the War Insurance Institute is just right,” said Anne H. Steffensen, CEO of Danish Shipping. It is always wise to be well insured. And, of course, shipping companies are covered through the regular commercial market. “But in an exceptional war scenario, it can be crucial that the Danish merchant fleet is still able to operate. This proposal helps to secure that ability if Danish shipping can no longer be covered by commercial insurance. And as with all other insurance schemes, I sincerely hope that we never have to use it,” Steffensen continued.
“We live in an uncertain world. There are global tensions and war on European soil. It is therefore important that we are prepared – even for the most unpleasant scenarios,” said the Danish Minister for Industry, Business and Finance, Morten Bødskov, according to a press release quoted by Danish Shipping. The aim is to exercise caution in good time.
Industry-supported, but secured by the state
“It is absolutely essential that we can maintain the operation of the Danish merchant fleet in the event of war,” Bødskov continued. “Denmark is one of the world’s largest seafaring nations, so the importance of maintaining our merchant fleet cannot be overstated. This is an important strategic strength for Denmark. That is why we are acting now and making six billion kroner available to secure the Danish merchant fleet and thus maintain Danish jobs and economic growth.”
To ensure that the institute has sufficient liquidity when it is activated, the state is providing a loan facility. This will be repaid in the event of activation through premium payments from the shipping companies. It is therefore a solution financed by the shipping industry and based on a state-guaranteed credit line.
