Five‑Powers Clause Explained
Steve Hsu broke down how the 'Five Powers Clause' can void war‑risk cover if geopolitical tensions escalate — a pertinent primer as US‑China frictions and supply‑chain exposure raise underwriting uncertainty. That clause is now a live consideration for marine, trade and war‑risk underwriters. (x.com)
The model “Five Powers War Clause” explicitly excludes loss, damage, liability or expense arising from an outbreak of war (whether declared or not) between the United States, United Kingdom, France, the Russian Federation and the People’s Republic of China. (garex.fr ) That model wording is published as JC2023‑024 and was circulated to the market on 6 January 2023 by the Joint Cargo Committee for standardisation across marine and war‑risk policies. (lmalloyds.com ) Academic legal analysis from the Centre for Maritime Law (NUS) and Cambridge Law Journal states activation of the clause would not only deny claims but “create a fundamental link” to automatic termination of commercial war‑risk cover and the possible deployment of government‑orchestrated marine insurance. (cambridge.org ) Mutual clubs and industry guidance record the same automatic‑cessation effect in market rules (Steamship Mutual cites Rule 21 iii b), confirming that an outbreak between any of the five powers is treated as a market‑wide termination trigger. (steamshipmutual.com ) Some market versions of the clause have been amended to add a NATO‑triggering formulation, illustrating active drafting variation by reinsurers and wordings providers across 2023–2024 model updates. (efuinsurance.com ) Industry model PDFs and commentary warn that the clause’s activation would transfer exposure away from commercial underwriters and reshape claims pathways during a major‑power conflict, a legal and underwriting consequence flagged repeatedly in market model wording and academic reviews. (pminsurancebrokers.com )
