Sri Lankan team leaves for London to meet insurers

By Nirupama Subramanian

COLOMBO, AUG. 16. A high-level delegation led by the Sri Lankan Minister of Ports, Mr. Ronnie de Mel, left for London today to persuade insurance bosses to withdraw the war-risk surcharges imposed on shipping lines operating to the Colombo port after the LTTE attack on the Katunayake airport.

Shipping services to and from Sri Lanka have been badly hit by high premiums slapped on ships berthing at the port by insurance companies in the aftermath of the airport attack.

Vessels calling at the port are now subject to an additional war- risk premium from anywhere between $ 30,000 and 4,80,000 depending on the size and age of the vessel and the length of the call.

In a development that is already rippling through the Sri Lankan economy, as many as eight shipping lines have begun bypassing the Colombo port discouraged by the high insurance costs. One shipping line that used to make 28 calls at the port monthly has cut its operations down to six calls a month.

``The country is faced with a very grave, very serious situation which requires quick action by the authorities. Prohibitive insurance premia are forcing ships to suspend calls to Colombo thereby blocking key imports and exports,'' said Mr. Pushpa Amarasekera, chairman of the Ceylon Association of Shipping Agents.

Shipping companies still operating to Colombo have passed on their insurance costs to the shipper, imposing a war- risk surcharge of between $ 300 to $ 500 for a 20-ft container, and from $ 700 to $ 1,000 for a 40-ft container.

Sri Lanka exports high volumes of tea and garments, but with sky- rocketing freight rates, these would not be competitive in the world market. Sri Lanka also imports several essential items and commodities, besides fabric for its garment industry.

The 10-member delegation to London, where many of the international insurance companies are headquartered, includes the Defence Secretary, a top naval officer, and the Chairman of the Sri Lanka Ports Authority.

Airline services too have been greatly affected after insurance companies began levying a surcharge on every flight into Katunayake airport days after the attack.

According to a Llyod's List report, the $ 576 million insurance claim by Sri Lankan Airlines is the equivalent of the total aviation premium of the last 16 years.

Insurance companies are charging between $ 50,000 and $ 1,20,000 surcharge on existing premium per landing at the airport. The rates depend on the size of aircraft.

In addition, there is to be an additional surcharge of $ 30 to $ 50 on the present premium for every passenger on each sector.

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Section  : International
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