With war drums beating ever more loudly in the Middle East,marine insurers have to make some tricky underwriting decisions asto where the greatest perils lie.

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As the new head of the Joint War Committee, Beazley's chiefmarine underwriter, Clive Washbourn, and his fellow panelists willhelp guide marine underwriters in making a profit where politicalturbulence makes that goal all the more difficult to achieve.

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Marine insurance has traditionally been written in the Londonmarket. Thus, the Joint War Committee is made up of underwritersfrom both the Lloyd's Market Association and the London-basedInternational Underwriting Association.

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Both Lloyd's and the London insurance market in general continueto take lead roles in the sensitive area of war riskexclusions.

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"Clearly, any country which has been placed on our exclusionlist can be frustrated because there is an economic impact in termsof the cost of shipments to and from those countries," Mr.Washbourn noted.

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The alternative, he asserted, was to make no differential at alland then charge a higher premium to everyone.

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Two years ago, the JWC revamped its procedures to enter into anagreement with a separate third-party security consultant topublish periodically a list of areas of perceived enhanced risk inrelation to war, strikes, terrorism and related perils.

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Neil Smith--marine, aviation and transport manager at theLloyd's Market Association--noted governments often say increasedshipping costs that come with inclusion on the list will hampertheir trading in the international market.

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But while the list plays an important role in underwritingdecisions, it is difficult to determine in dollars and cents whatinclusion on the list means, since all underwriting agreements areprivate contracts between the insurer and insured.

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"The application of the list on individual contracts is a matterfor specific negotiation, and responsibility for use of the listrests entirely with individual underwriters, brokers and assureds,"according to Mr. Smith.

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Mr. Washbourn said there are underwriters who choose not tofollow JWC recommendations, "which is the sure sign of a freemarket."

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Last year, the inclusion of the Malacca Straits to the JWC listcreated quite a reaction, recalled Mr. Smith.

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"In the case of Malacca, it is interesting to note thehigh-profile efforts which have subsequently been taken by thelittoral states and other affected governments to address thesituation, and the positive impact this has had on the overallsecurity situation," according to Mr. Smith.

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The straits are located between Thailand, Malaysia, Singaporeand the Indonesian island of Sumatra to the west. The United Stateshas expressed concern in the past as to the vulnerability of thearea to the shipment of material related to weapons of massdestruction and other terrorist threats.

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In addition, while the spotlight shone on the battle betweenIsrael and terrorist forces in Lebanon this summer, the easternMediterranean was already on the JWC list.

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