War on land exclusion (Waiver Agreement)
A market agreement concluded in London in 1937 under which insurers gave up covering property on land against war, because the bombing of cities makes accumulation unlimited; only goods at sea remain insurable.
The war on land exclusion originates in an agreement concluded in 1937 between Lloyd's underwriters and the companies of the London market, known as the Waiver Agreement. The aerial bombing of cities during the Spanish Civil War had shown that a single conflict could simultaneously destroy an unlimited number of insured properties in one country, making the risk impossible to pool or reserve. The signatories therefore undertook to stop insuring property on land against war risks, while keeping cover for goods in transit by sea, where the dispersion of ships limits accumulation. That division still explains three features of the market. Property policies exclude war without exception, where other exclusions are negotiable. War covers on cargo in principle end on discharge, under the so-called waterborne rule. And cover for war on land, where it exists, belongs to a specialist political violence market that sells it asset by asset, with short limits, precisely to avoid the accumulation the agreement sought to exclude.
When Russian strikes hit warehouses and factories in Ukraine from February 2022, owners' property policies did not respond, having no war on land cover; only assets insured in the political violence market with a war extension, and cargoes still aboard in the Black Sea under marine war covers, could give rise to indemnity.
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