The London marine insurance market responds to Chavez’s expropriation moves
London’s marine insurance market has placed Venezuela on its list of most risky places for shipping. The move follows Venezuelan president Hugo Chavez’s confiscation of private business assets in the region.
The Lloyd’s Market Association’s Joint War Committee draws up the hull war, strikes, terrorism and related perils list to alert underwriters of new dangers. 'Venezuela has become an area of increased concern because of the possibility of expropriation of commercial assets as the country's economy worsens,' said the LMA's note on Venezuela.
The notification is in response to deteriorating conditions in the country, including the expropriation of more than 300 boats and several gas processing units belonging to foreign companies. It includes coastal waters up to 12 nautical miles off the South American country’s coast.
The LMA’s notification is an indication that it believes Chavez will continue to expropriate business assets. 'It is considered highly probable that as the economy worsens further, the Venezuelan government will turn to seizure of some commercial maritime assets, including offshore installations,' said the LMA.
“The LMA's notification is an indication that it believes Chavez will continue to expropriate business assets.
Venezuelan law calls for compensation for expropriation and the affected companies have indicated that they intend to seek compensation.
The Lloyd’s market is one of the biggest marine insurance markets and Venezuela’s new status will mean ship-owners could face new terms and conditions and higher premiums. The decision could also influence other insurers.
Other places on the list include: Somalia, the Ivory Coast, Nigeria and all its offshore installations, Pakistan, Sri Lanka, the southern Gulf coast of Thailand, Jakarta, the north east coast of Borneo, Georgia and most of the Middle East.
The LMA's note on Venezuela
The country has had an internal dispute for several years, with the region surrounding Lake Maracaibo supporting one of the leading political opposition parties, Un Neuvo Tiempo. This domestic tension is compounded by ongoing economic problems, including rampant inflation, and an extremely high crime rate.
Venezuela has become an area of increased concern because of the possibility of expropriation of commercial assets as the country's economy worsens. This issue has arisen in a maritime context as a result of the Venezuelan government's nationalisation of the ports and airports in March. Security arrangements at maritime facilities in this country have been designated by the United States as not being in substantial compliance with the ISPS code.
The Venezuelan government has already expropriated assets in other major sectors of the economy, including agriculture and particularly oil; it is considered highly probable that as the economy worsens further, the Venezuelan government will turn to seizure of some commercial maritime assets, including offshore installations. It is because of this risk that the Country has been added to the JWC Listed Areas.