Marine Cargo Insurance

MARINE CARGO INSURANCE

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INDIA INSURANCE FORUM IIF

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• PLEASE FEEL FREE TO ASK QUESTIONS AT ANY POINT

• THE MORE YOU ASK, THE MORE WE ALL LEARN

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CONTENTS:• PRINCIPLES OF INSURANCE• INTRODUCTION TO CARGO

INSURANCE• POLICIES & CLAUSES• UNDERWRITING OF MARINE CARGO

PROPOSALS• BRIEF OVERVIEW OF CLAIMS• CONCLUSION

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PRINCIPLES OF INSURANCE

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UTMOST GOOD FAITH

INSURABLE INTEREST

INDEMNITY

PROXIMATE CAUSE

SUBROGATION

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PRINCIPLES OF INSURANCE


INTRODUCTION TO CARGO INSURANCE

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MARINE INSURANCE – A FACILITATOR OF TRADE

•Trade involves movement of goods. Goods in transit are exposed to multiple perils at every stage-loading/ unloading, transit, storage.

•Cargo insurance enables traders to venture their capital more freely, thus expanding the scope of their operations.

•Banks would not finance overseas trade without cargo insurance.

•Marine policy/certificate is often lodged with the bank as collateral security.

•Who buys insurance- whether buyer or seller- is determined by the sales contract

•Common trade terms- FOB (Free on Board), C & F (Cost & Freight), CIF ( Cost, Insurance & Freight) - INCOTERMS


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KEY FEATURES OF MARINE INSURANCE

•Governed by a separate Act- the Marine Insurance Act, 1906

•International in nature. The marine clauses and forms used are same the world over.

•Insurable Interest must exist at the time of loss, not necessarily at the time of effecting insurance.

•A marine policy is freely assignable unless it contains terms expressly prohibiting assignment. It may be assigned either before or after loss.

•Agreed Value Policy- the sum of money payable under the policy is agreed on advance. Underinsurance is not applicable to marine contracts.

•Risk can incept at any point of the voyage.

•‘Lost or not lost’- Cover maybe granted for shipments which have commenced transit and may have already been lost ( unknown to the Insured and the insurer)


ANCIENT PROVERB

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“The mistakes of doctors and nurses are covered by the earth and the mistakes of shipmasters and crew are covered by the insurance”

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MARINE CARGO – WAREHOUSE TO WAREHOUSE


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MARINE INSURANCE PROVIDES COVER FOR -

Export/Import of goods by

• Sea• Air• Road/Rail• Post Parcel

Inland Transit

• Road/Rail• Air• Post Parcel• Coastal voyage• Inland Vessels


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MARINE CARGO - POLICIES & CLAUSES

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TYPE OF MARINE POLICIES

EXPORT/IMPORTSPECIFIC VOYAGE POLICYOPEN COVERCOVER NOTEDUTY INSURANCEINCREASED VALUE

INLAND TRANSIT (GOODS IN TRANSIT)SPECIFIC POLICYOPEN POLICYANNUAL POLICY


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MARINE INSURANCE CLAUSESEXPORT/IMPORT - INSTITUTE CARGO CLAUSES

•ICC (A)- ALL RISKS SUBJECT TO NAMED EXCLUSIONS•ICC (B)- NAMED PERILS•ICC (C)- NAMED PERILS•WAR•SRCC - STRIKE, RIOT, CIVIL COMMOTION•ICC (AIR)•REGISTERED MAIL & POST PARCEL

(THESE CLAUSES ARE THE SAME ALL OVER THE WORLD AND FACILITATE TRADE)

INLAND TRANSIT- INLAND TRANSIT CLAUSES•GOODS IN TRANSIT POLICY / RESTRICTED COVER

(THE SAME CLAUSES ARE USED BY ALL TANZANIAN INSURERS)


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MARINE INSURANCE CLAUSES

ICC (A)

“ALL RISKS” OF LOSS OR DAMAGE TO THE SUBJECT MATTER OTHER THAN THOSE EXCLUDED

WILLFUL MISCONDUCT ORDINARY ( INEVITABLE) LOSS IMPROPER PACKING INHERENT VICE DELAY INSOLVENCY OR FINANCIAL DEFAULT NUCLEAR WEAPONS RISK UNSEAWORTHINESS OF VESSEL OR CRAFT/ UNFITNESS OF VESSEL WAR PERILS ( COVERED BY PAYMENT OF EXTRA PREMIUM) STRIKES, RIOTS AND CIVIL COMMOTION ( COVERED BY PAYMENT OF EXTRA PREMIUM)


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MARINE INSURANCE CLAUSES – DURATION

DURATION OF VOYAGE (TRANSIT CLAUSE)- ICC (A), (B),(C)

INSURANCE ATTACHES FROM THE TIME GOODS LEAVE THE WAREHOUSE OR PLACE OF STORAGE FOR THE COMMENCEMENT OF TRANSIT,

CONTINUES DURING THE ORDINARY COURSE OF TRANSIT AND TERMINATES EITHER ON DELIVERY TO CONSIGNEES’ OR OTHER FINAL WAREHOUSE OR PLACE OF STORAGE AT DESTINATION

ON DELIVERY TO ANY OTHER WAREHOUSE OR PLACE OF STORAGE, FOR STORAGE OTHER THAN IN THE ORDINARY COURSE OF TRANSIT OR FOR ALLOCATION OR DISTRIBUTION, OR

ON EXPIRY OF 60 DAYS AFTER COMPLETION OF DISCHARGE FROM OVERSEAS VESSEL AT FINAL PORT OF DISCHARGE

whichever shall first occur.


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UNDERWRITING OF MARINE CARGO PROPOSALS

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COMMODITY CLASSIFICATION FOR UNDERWRITINGCARGO CLASSED INTO 5 CATEGORIES FOR UNDERWRITING

PURPOSE:

CATEGORY A - VERY LOW RISKCATEGORY B - LOW RISKCATEGORY C - MEDIUM RISKCATEGORY D - HIGH RISKCATEGORY E - EXTREMELY HIGH RISK

CATEGORISATION HAS BEEN MADE CONSIDERING THE DAMAGES THAT CAN HAPPEN TO THE CARGO WHILE IN TRANSIT


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KEY FACTORS FOR INSURING CARGO

FAVOURABLE FEATURESDOOR TO DOOR CONTAINER DELIVERYSTANDARDISED PACKINGVESSEL CLASSIFIED/LESS THAN 15 YEARS OF AGE/APPROVED FLAGGOOD TONNAGEUNDER DECK CARGOGOOD ROUTECOVER UPTO PORT ONLYCONTAINERISED/COVERED WAGONSFAVOURABLE CLIMATETRANSIT LESS THAN 250 KMS.VOLUNTARY EXCESSWITH APPROPRIATE WARRANTY FOR CONTAINING LOSSESGOOD CLAIMS EXPERIENCELOW PBL WITHIN TREATY LIMITSREGULAR CLIENT


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KEY FACTORS FOR INSURING CARGO

ADVERSE FACTORSNON - CONTAINERISED BULK CARGO OLD VESSEL / FLAG OF CONVINIENCELOW TONNAGE / UNDER TONNAGEOVER DECK CARGO CLAIM PRONE ROUTE COVER FOR INTERIOR DESTINATIONSIN OPEN WAGONSADVERSE CLIMATELONG DISTANCES TO BE COVEREDNO EXCESS ON POLICYWITHOUT WARRANTYBAD CLAIMS EXPERIENCE OF CLIENT/COMMODITYHIGH PER BOTTOM LIMITONE OFF CONSIGNMENTS


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MARINE CARGO CLAIMS

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BRIEF OVERVIEW OF CLAIMS

• UNIQUENESS OF MARINE CLAIMS

• PARTIAL LOSSG (PART. AVG / TOTAL LOSS)

• GENERAL AVERAGE

• SALVAGE

• SUE & LABOUR

• SUBROGATION

• RECOVERIES


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CONCLUSION

• IMPORTANCE OF MARINE INSURANCE

• ANALYSING A MARINE CARGO PROPOSAL – COMMODITY / MODE OF TRANSPORT / GEOGRAPHY / CLAUSES / RATE / EXCESS / INSURED ETC.

• TECHNOLOGY / SERVICE PROVIDERS ETC.

• QUALITIES REQUIRED TO SPECIALISE IN MARINE INSURANCE – A VERY LONG VOYAGE - LIFELONG LEARNER CONCEPT.


WARREN BUFFET:

THE URGINGS OF WALL STREET, PRESSURES FROM THE AGENCY FORCE AND BROKERS, OR SIMPLY A REFUSAL BY A TESTOSTERONE-DRIVEN CEO TO ACCEPT SHRINKING VOLUMES HAS LED TOO MANY INSURERS TO WRITE BUSINESS AT INADEQUATE PRICES. ‘THE OTHER GUY IS DOING IT SO WE MUST AS WELL’ SPELLS TROUBLE IN ANY BUSINESS, BUT NONE MORE SO THAN INSURANCE.”

THANK YOU

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Marine Cargo Insurance

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