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Charter Default Insurance

In response to shipowners’ increasing concerns about charterers’ solvency, Marsh has developed an industry-first product that protects owners from damaging financial losses.

Backed by both insurers and a leading financial institution, Marsh’s Charter Default product provides a mix of fixed recovery guarantee and credit insurance, tailored to the shipowner’s particular requirements.

Covering both outstanding debt at the time of an insolvency and the loss of future revenue for a set period, the product de-risks important revenue streams, thereby assisting owners to attract better terms fr om lenders by reducing counterparty credit risk.

Product Overview 

  • Financial default is a recurring problem. Recent high profile cases of shipping companies filing for bankruptcy have again highlighted counterparty risk in the shipping sector.
  • Companies with ships on charter are exposed to loss of revenue if their charterer folds or, at best, to enforced renegotiation of charter hire terms.
  • The risk of default increases at times of global financial uncertainty.
  • Fixed Recovery Guarantees and Credit Insurance protect against the risk of charterer default.
  • For a listed company, de-risking the revenue stream can improve stock prospects.
  • De-risking the revenue stream can also attract better terms from lenders.