Lloyds Registry May Remove War Risk Rating on Sri Lanka Soon

15th March 2010, www.island.lk, By Devan Daniel

Officials from Lloyds Registry are due in Sri Lanka after the general elections next month to evaluate the possible removal of the war risk rating imposed on the country due to a decade- long war.

The London-based Joint Cargo Committee of Lloyds Registry had reduced the war risk rating on Sri Lanka from 3.4 to 3, changing the status by one notch from ‘severe’ to ‘high’ after the war ended in April last year. Since then authorities have been trying to remove the war risk rating altogether.

The war risk rating makes it expensive for ships to call on Sri Lanka as insurance premium are high, unwanted cost considering that many vessels operate with excess space because of the fall in trade levels caused by the global financial crisis, which lowered freight rates considerably. (But shippers say ship owners have formed cartels to keep rates unreasonably high).

The Lloyds war risk premium also made it expensive for domestic insurance companies to maintain reinsurance policies outside the country.

According to the Insurance Board of Sri Lanka, during the war years, insurance companies remitted out a little more than Rs. 10 billion by way of reinsurance premiums while the value gross written down premium retained in Sri Lanka amounted to about Rs. 34.5 billion.

But since the war ended, many reinsurers have reduced their premiums, which the Chairman of the Insurance Board of Sri Lanka Udayasri Kariyawasam could not quantify as he did not have the numbers at hand when he met journalists recently.

Kariyawasam said officials from Lloyds Registry would visit the island after the general elections.

"They would visit the port and other locations in Sri Lanka to determine whether or not the war risk premium should be lifted," he told journalists.