THE EVOLUTION of cargo theft has been dramatic, particularly in the last few years, owing to the increased sophistication of cyber-enabled attacks. Gone are the days when criminals relied solely on physical break-ins or manual cargo interception. Today, organised groups use complex digital tools to infiltrate even the most advanced logistics systems, manipulate container release codes, and even reroute ships. This makes theft far less traceable, meaning these attacks often go undetected until the goods have completely vanished.
This convergence of cyber and physical risk means there is a pressing need for traditional marine cargo insurance wordings, written and designed for the pre-digital era, to catch up and align with today’s evolving risk landscape.
On the 28 October, the Joint Cargo Committee (JCC) in London introduced the Marine Cargo Cyber Exclusion with Physical Theft Confirmation Endorsement (JC2025-026). This new wording introduces much-needed clarity around cyber theft and coverage in the marine insurance market. Cyber-related losses remain excluded, however physical theft of insured goods is confirmed as covered, even if a cyberattack was part of the process.
Since 2018/19, most marine cargo policies included Marine Cyber Endorsement LMA5403, which broadly excluded losses “directly or indirectly” caused by cyber events.
Since its adoption this language has sparked concern: could a theft claim be denied if hackers facilitated access? It left potential for the wording to be construed as excluding what may otherwise be considered recoverable under a standard marine cargo policy as physical loss or damage of the insured goods by theft.
Iain Sharples, head of underwriting at SALT Marine Risks Pty Ltd said “Our interpretation and belief remain that the intention of those drafting Marine Cyber Endorsement LMA 5403 was not to preclude losses by theft. This prevalent ambiguity therefore prompted a thorough review by the JCC”.
The JCC Marine Cargo Cyber Exclusion with Physical Theft Confirmation Endorsement JC2025-026 directly addresses this problem. While excluding coverage for losses from cyberattacks, it confirms that physical theft is still covered, even if a cyberattack was involved in the process.
The endorsement acknowledges and addresses the growing risk of cyber-enabled theft in cargo transport and clarifies that the marine policy still covers theft as a physical act, distinguishing it from pure cyber-related losses. Clause 4 of the endorsement wording envisages a cyber event being followed by further human intervention, being the physical removal of the goods as part of the wider attack.
According to Mr Sharles, “this endorsement provides greater clarity and confidence for cargo owners”.
“While the revised wording has not been subject to judicial scrutiny, and its practical application will be closely watched by the market, for now it reflects the industry’s intent to keep theft recoverable under marine cargo policies, even when cyber plays a role,” he said.
“SALT will be introducing clause JC2025-26 to all marine cargo policies, schedules and supporting documents as we consider this a helpful clarification.
“We will also apply the expanded cover retrospectively to any claims arising under existing policies where the circumstances are relevant.”