The Danish government plans to set up a DKK 6bn ($935m) war insurance scheme for its merchant shipping fleet, positioning the Nordic maritime nation to safeguard its vessels in the event of a war crisis. The proposed bill, which the government was planning to introduce to the nation’s parliament on Wednesday, October 8, involves a state loan guarantee of DKK 6bn as part of the activation of the War Insurance Institute.
As tradition dictates, the new parliamentary year was kicked off on the first Tuesday of October with the prime minister’s opening speech.
This year, prime minister Mette Frederiksen focused, among other things, on Denmark’s security and competitiveness.
The loan will be repaid through the contributions/premium payments that shipping companies must pay upon the activation of the Institute. The scheme is based on contributions from the shipping companies, backed by a state credit facility.
“We are living in a time of global tensions, and it is vital that Denmark can maintain the operation of its merchant fleet in the event of war – not least given that Denmark is among the world’s largest maritime nations. And as with any insurance policy, I hope we will never have to make use of it,” said Anne H. Steffensen, CEO of Danish Shipping.
For Danish shipping companies, the government’s proposal to amend the War Insurance Act is clearly the most important item in the presented legislative programme.
In an extraordinary situation where Denmark and Danish shipping are severely impacted by war and the commercial insurance market has collapsed, there is a need for a war insurance scheme that guarantees the Danish merchant fleet remains insured and operational.
The proposal creates a state-backed war insurance mechanism designed to ensure that the Danish merchant fleet can remain insured where commercial insurance markets become inaccessible due to a major conflict. The government’s proposal will also ensure that the Danish merchant fleet can continue sailing in a war situation.
When the proposal was sent out for consultation earlier this year, Danish Shipping described it as perfect timing to activate the War Insurance Institute.
