The insurance conditions

  1. The current loss of hire insurance conditions

    The Nordic market covers as of 2016 loss of hire insurance based on the Nordic Marine Insurance Plan of 2013, version 2016 (hereinafter the Plan). The Plan is a set of standard insurance conditions agreed and adopted by the Nordic market.

    The Plan is governed by the law of one of the Nordic countries, see for the details Cl. 1-4. However, the Plan is, for practical purposes, the main source of legal regulation of marine insurance.  The Plan is not a source of law in and of itself because it is not a legislative act. It is a document agreed between organisations representing respectively the Nordic marine insurance market, the shipowners and other interested parties. Therefore, it becomes legally binding only if it is expressly incorporated into the individual insurance contract.

    The Nordic Plan has maintained the same widespread international acceptance as the previous Norwegian Plan of 1996 and subsequent versions, the latest of 2010. Furthermore, it has been intended to expand this acceptance even further, in view of which the 2013 Plan has been structured to lend itself easily to international application.

    The Nordic Plan has maintained the structure of the Norwegian Plan of 1996, which in turn maintained the structure of the Norwegian Marine Insurance Plan of 1964. Part One is maintained as the General Part applicable to all insurance covered on the basis of the Plan, including loss of hire insurance. Part Two contains provisions on hull insurance, including liability for collisions or striking (4/4th RDC and FFO). Part Three contains provisions on other insurance for ocean-going vessels, such as total loss insurance (Chapter 14), war risk insurance (Chapter 15) and loss of hire insurance (Chapter 16). Part Four contains provisions relevant to other insurance, such as insurance for coastal and fishing vessels (Chapter 17), movable off-shore units (drilling rigs etc.) (Chapter 18) and building risks (Chapter 19). Chapter 15, Section 6 contains some special rules for war risks, loss of hire insurance, which are dealt with in Chapter 16 below. Chapter 17, Section 7 contains some special conditions for fishing vessels which are dealt with in Chapter 17 below. Chapter 18, section 4 has incorporated to a large extent verbatim the same clauses as in Chapter 16, but there are some material differences which will dealt with in Chapter 18 below.

    The provisions of immediate interest to a shipowner who wants to cover loss of hire insurance on the basis of the Plan will be those found in Chapter 16, in combination with the provisions of Part One. 

  2. Earlier loss of hire insurance conditions

    As mentioned in 1.3.1 above, loss of hire insurance developed out of the Suez crisis in 1956. The development originated in the London market and the Norwegian market followed suit, initially using the conditions adopted by the London market. Later on, each of the insurers introduced their own conditions, to a large extent based on the conditions used by the competing foreign markets, with the US emerging as a third alternative market to London and Norway.

    In connection with the 1964 revision of the Norwegian Marine Insurance Plan, new loss of hire insurance conditions were introduced in Chapter 20 of this Plan. This was the first attempt to create common loss of hire conditions for the Norwegian market based on the Norwegian tradition of using the framework of the Plan. However, the new conditions were never used by the Norwegian market because the insurers engaged in this type of insurance still preferred their individual conditions, and the market was not prepared to adopt some of the solutions introduced in Chapter 20 of the 1964 Plan. § 261 of the 1964 Plan regarding simultaneous repairs in particular was at the time considered unsuitable by the market, see the 1972 Commentary, page 13.

    In 1972, another attempt was made to create common Norwegian conditions on loss of hire insurance, this time successfully. The 1972 conditions were initiated and published by four insurance companies:  Vesta and three other companies that merged into the previous Storebrand Property Insurance Company. Substantial restructuring has occurred within the Vesta and Storebrand Groups, the gist of which, for the purpose of loss of hire insurance, is that the ocean marine portfolio was transferred to Gard Marine and Energy.

    The 1972 conditions were prepared by an expert group. The leader of the expert group was the late Professor dr. jur. Sjur Brækhus.  The three average adjusters practicing in Norway at the time constituted the other members of the expert group. These were the late Henrik Ameln and the late Leif Strøm-Olsen and Jan Frøystein Halvorsen, who was later appointed Supreme Court Judge (now retired).  Sjur Brækhus wrote extensive commentaries to the 1972 conditions in co-operation with the other members of the expert group. Furthermore, the four insurance companies that originally published the 1972 conditions had appointed a committee of six representatives from their own staff, which closely examined and commented on the proposals of the expert group.

    Amendments to §§ 6 and 8 of the 1972 conditions were introduced in 1977 and were generally accepted and used by the market. They came to be known as "Amendments 1977".

    As late as 1993, there was a general overhaul of the loss of hire insurance conditions by market people with assistance from the average adjuster Ragnar Svarstad (now retired). The 1993 revision was published by the then Mutual Marine Insurers' Committee (GSK)[1] and was entitled General Conditions for Loss of Charter Hire insurance (1972) (Revised 1993). The company market published the same conditions as CEFOR form No. 237.

    By this time, the committee entrusted with the task of revising the Norwegian Plan itself was already appointed and had commenced its work. Part of its mandate was to incorporate the loss of hire conditions into the new Plan. This mandate was not restricted to merely incorporating the 1993 revision, but extended also to reviewing the conditions anew. This review resulted in the new Chapter 16 of the Norwegian 1996 Plan. Chapter 16 was amended in the 2003, 2007 and 2010 versions of the Norwegian Plan and maintained with one amendment in the Nordic Plan of 2013.  One further amendment was made in the 2016 version which, as explained under 1.4.1 above, now comprises the current loss of hire conditions used by the Nordic market.

    [1] GSK was dissolved with effect from 1 January 2001. The members of GSK, including NHC, joined The Central Union of Marine Underwriters (CEFOR) from the same date, which changed name to the Nordic Association of Marine Insurers (Cefor) in 2009. 

  3. Future amendments to the Plan

    Parties to an individual insurance contract are of course free to agree individual conditions. The market wishes, however, to avoid any development in the direction of generally adopted additional clauses, such as the 1977 amendments. In furtherance of this goal, the market has appointed a permanent Plan revision committee whose mandate is to propose amendments to the Plan, including the loss of hire insurance conditions contained in Chapter 16 of the Plan, if developments suggest that further amendments to the Plan are called for.

    Such amendments are incorporated into the Plan itself, and the consolidated amended text of the Plan will be reprinted every third year. The internet version of the Plan will be updated correspondingly.  The first printed version of the Norwegian 1996 Plan was published as version 97. At the end of 1998, version 1999 was released. Subsequently, versions 2002, 2003, 2007 and 2010 have been published. The Nordic Plan was published in 2013 and a new version in 2016. The next version is anticipated only in 2019, as the market agreed in 2003 that there is no need to produce new versions of the Plan with such high frequency as in the first years of the Norwegian 1996 Plan. There should at least be three years between each new version.

    The Plan and the Commentary are published in English and posted on the internet, at address:

    The English text is now the only official version of the Plan, but translations of the Plan text into Danish, Finnish, Norwegian and Swedish are published at the same website. If there is any conflict between the English text and any of the translations, the English text shall prevail. The Commentary has not been translated into any of the Nordic languages.

    Amendments, if any, are normally published on the above website by 1st October and are intended to enter into force on 1st January of the calendar year following the publication with effect for insurances entered into or renewed in the course of that year. General principles of contract law dictate that amendments cannot have retroactive effect on current policies unless expressly agreed by the parties to the particular insurance contract. There is nothing preventing the parties from agreeing to apply a new version of the Plan immediately after publication.

    If the amendments are to the benefit of the assured, the insurer may not be willing to let the assured enjoy these benefits on current policies without additional premium. But if there are several simultaneous amendments that go either to the detriment or the benefit of the assured, the parties may agree that on balance the amendments do not require any adjustment of the premium and therefore can apply to a current policy. That was in fact the case when the Norwegian Plan of 1996 entered into force on 1st January 1997. It was given retroactive effect on a large number of the current policies by express agreement. The same procedures have been followed with regard to the subsequent versions of the Plan.