General average is one of the oldest principles in insurance, and one of the most document-intensive. When a ship’s master makes an intentional, reasonable sacrifice or incurs an extraordinary expense to save the ship and cargo from a common peril (jettisoning cargo, fighting a fire, engaging salvors, putting into a port of refuge), the cost is shared among everyone with property at risk in the voyage, in proportion to the value of what was saved.
The principle is simple. The administration is not. A general average declaration on a large container vessel can involve thousands of separate cargo interests, each of whom must provide security before their cargo is released, each of whose values must be established, and each of whom must eventually contribute according to an adjustment that can take years to finalize.
For cargo insurers, marine claims TPAs, brokers, and average adjusters, much of that work is collecting, reading, matching, and tracking documents. That is exactly where automation helps, provided the expert judgment at the heart of the adjustment stays with the experts.
A quick refresher on how GA works
The main steps, in brief:
- Declaration. After a casualty, the shipowner declares general average and appoints an average adjuster. The York-Antwerp Rules, in whichever version the contract of carriage incorporates, usually govern the adjustment.
- Security. Before releasing cargo, the shipowner (through the adjuster) requires security from each cargo interest. Typically that means a general average bond signed by the cargo receiver, plus either a general average guarantee from the cargo insurer or a cash deposit if the cargo is uninsured. If salvors were involved, separate salvage security may also be required.
- Valuation. Each cargo interest provides documents, usually commercial invoices, to establish the value of their cargo, which feeds the contributory values.
- Adjustment. The adjuster gathers evidence of the sacrifices and expenditures, determines what is allowable, calculates contributory values for ship, cargo, and freight, and apportions the loss.
- Settlement. Contributions are collected against the security provided, excess deposits are refunded, and cargo insurers settle with their insureds under the cargo policy.
Each step generates paperwork, and each involves many parties.
Where the time goes
Ask anyone who has worked through a large GA case and the pain points are consistent:
- Identifying exposure. When a declaration arrives, a cargo insurer has to work out which of its insureds have cargo on that vessel and voyage. For open cargo policies with declarations, that can mean searching through shipment declarations, bills of lading, and container numbers across many policies.
- Security requests at volume. Brokers and insurers receive large numbers of requests for guarantees, often in different formats, each needing to be checked against coverage and issued under the right authority.
- Collecting valuation documents. Commercial invoices, packing lists, and bills of lading have to be gathered from insureds and passed to the adjuster, with chasing for what’s missing.
- Tracking releases. Insureds want their cargo. Every day of delay in providing security costs them money and strains the relationship.
- Reconciling the final adjustment. When the adjustment is eventually published, often years later, each contribution has to be checked, paid, and matched against the original security and the claim file.
What automation can do for each party
For cargo insurers and marine claims TPAs
- Ingest the declaration and extract the vessel, voyage, casualty date, adjuster, and security requirements.
- Find affected insureds by matching the vessel and voyage against shipment declarations, certificates, bills of lading, and container numbers across the cargo book, with uncertain matches routed for review.
- Check coverage for each affected shipment: the policy covers general average and salvage charges, the shipment is declared, and values and conditions line up.
- Prepare guarantees in the adjuster’s required form for review and signature under defined authority levels, tracking which ones have been issued, returned, and accepted.
- Collect valuation documents from insureds through a single request, extract invoice values and terms, and flag inconsistencies, such as an invoice value that doesn’t match the declared insured value.
- Set and update reserves for each affected shipment, based on provisional security percentages and later the final adjustment.
For brokers
- Notify affected clients quickly with a clear explanation of what GA means, what documents are needed, and how security will be arranged.
- Coordinate between client, insurer, and adjuster with a single view of status for every shipment.
For average adjusters
- Organize incoming documents (bonds, guarantees, invoices, survey reports, port of refuge accounts, salvage documents) by cargo interest and category.
- Extract and validate values from commercial invoices and cargo declarations to support contributory value calculations.
- Track security status across all cargo interests and identify which cargo can be released.
- Classify and summarize expenditure vouchers, such as port charges, crew wages and maintenance, fuel, and towage, to support the allowance work.
What stays with the experts
Automation should take on document handling, matching, extraction, and tracking. The core judgments in general average should stay with qualified people:
- Whether a sacrifice or expenditure is allowable under the applicable rules and contract.
- Contributory value determinations where values are disputed or unusual.
- Questions of fault. Rule D of the York-Antwerp Rules preserves the right to contribution even where an event was caused by a party’s fault, but it leaves open remedies against that party. Cargo interests may challenge their contribution if, for example, they argue the carrier failed to exercise due diligence to make the vessel seaworthy. Those are legal and expert questions, not automation questions.
- Recovery strategy, including subrogation against carriers or other parties.
Every automated step should keep links to the source documents and record who approved each guarantee, reserve, and payment, so the file stands up to scrutiny years later when the adjustment is finalized.
Illustrative example: a cargo insurer receiving a GA declaration on a container vessel might use automated matching to identify affected shipments across its open cargo policies within hours instead of days, generate guarantee drafts for underwriter approval, and send each insured a single request for invoices. Insureds get their cargo released sooner, and the claims team has a complete, organized file ready for the adjustment.
Why speed matters in GA
General average is slow by nature, and parts of it should be: careful adjustment protects everyone’s interests. But the slow parts shouldn’t include working out which clients are affected, retyping guarantee forms, or chasing the same invoice three times. Speeding up security and valuation gets cargo moving, reduces storage and demurrage costs for insureds, and builds trust between insurers, brokers, and their clients.
What to measure
- Time from declaration to identification of all affected insureds
- Time from declaration to security provided, per shipment
- Documents chased per shipment, and time to complete valuation packs
- Guarantee errors or rejections by the adjuster
- Reserve accuracy against final contributions
- Time to reconcile and settle after the adjustment is published
Old principle, modern operations
General average has survived for centuries because it’s fair: everyone who benefits from a sacrifice shares in its cost. The administration around it can be modernized without changing that principle at all, so marine claims teams spend their expertise on the judgments that matter rather than the paperwork around them.
Bring your marine claims workflows up to speed. Download the Aketud Claims Automation Workbook to map document-heavy claims processes such as general average, cargo, and hull claims, and identify where automation can cut handling time without taking judgment away from your experts.
