Marine Insurance PPT. This presentation gives you overall information about everything in Marine.

1. Name : Kavita Murari Agrawal
Registered No : 112512172
Programme Name : E-MBA – 3
Specialization : Finance
Topic : Commercial Line Marine Claims
Guide : Sandeep Liladhar Chopde
University : Manipal University, Manipal

2. Commercial Marine Line Claims
Introduction / History Of Marine Insurance
• Nature Of Marine Insurance Contract
• Insurance Principles
• Classes of Business
• Types Of Insurance & Reinsurance
• Organizations and Systems
• Claims
• Shipping Documents
• Rating
• Marine Underwriter
• Marine claims live case studyClasses of Business

3. Introduction
 Marine business is one of the oldest areas of insurance. The
current working environment has been created by historic case
law with the 1906 Marine Act formulating much additional
regulation and securing some standardization of definitions.
 Contrary to popular belief, Lloyds’ of London was not the first
group of people to offer a Maritime Commerce. The first form of
marine insurance dates back to the year 3000BC when Chinese
merchants dispersed their shipments amongst several vessels so
as to abridge the possibility of damage to the products. The
earliest account of insurance came in the form of ‘bottomry’, a
monetary payment that protects traders from debt if
merchandise is lost or damaged.
Commercial Marine Line Claims

4. Marine Insurance Market
 Lloyd's a corporate established in London is the biggest centre
for Marine insurance in the world.
 Lloyd's was a coffee house frequented by the Tradesmen, Ship
owners & others.
 The coffee house became the meeting house for brokers,
Insurers,& Ship owners for negotiating their Business
 At the coffee house they would discuss various aspects of the
shipping business including Cargo & Ship Insurance.
Commercial Marine Line Claims

5. Marine Insurance Market
 The market comprises insurance companies and
underwriters. There is some mutual pooling of risk by
ship owners, but this is mainly confined to P&I Clubs
(Protection and Indemnity) covering liabilities of ship
owners to cargo owners and third parties.
Commercial Marine Line Claims

6. Commercial Marine Line Claims
The insurance is submitted to underwriters in a slip form, as for all over
the world Market Business (Only in the context of Import Claims in
India), showing details such as:
• Names and brief details of vessels covered
• Name of the insured
• Name & Nature of the product
• Packing details
• Place of origin & destination
• Value of vessels
• Periods of cover
• Premium rate
• General Conditions
• Class and type of cover
• Deductions for brokerage Etc

7. Meaning Of Marine Policy
The terms & conditions on which a contract of marine
insurance is entered into between the assured and the
insurer are incorporated in document.
Commercial Marine Line Claims

8. Nature Of Marine Insurance
Contract
Marine insurance contract being a contract should satisfy the essential
elements of a valid contract. The essential elements of a marine insurance
contract from the perspective of Indian Contract Act includes:-
 Offer - In the form of proposal.
 Acceptance - Issue of cover note/policy
 Consideration - Premium payable on the policy
Commercial Marine Line Claims

9. Insurance principles Applied to
Marine Business
Utmost
Good Faith
Indemnity
ContributionSubrogation
Warranties
Commercial Marine Line Claims

10. Classes Of Business
Cargo
Hull &
Machinery
Liability
War Risk
Building
Risk
Specie
Rigs
Commercial Marine Line Claims

11. Classes of Business
Cargo
CARGO refers to
 The Goods & commodities Carried during TRANSIT by
Rail, Road, Sea Or Air from one place to another.
The Cargo transported by Sea is subject to Manifold risks
such as
 Loss or damage at the port
 Loss or damage during the Voyage.
Commercial Marine Line Claims

12. Commercial Marine Line Claims

13. Cargo Insurance
Marine Cargo Insurance provides the insurance cover in
respect of
• Loss or damage to Cargo during transit by
 Rail, Road, Sea Or Air.
Thus Marine Cargo Insurance Covers the following :
 Export & Import shipment by ocean.
 Transhipments
 Consignments send Rail Road & Air
 Articles sent by Post.
Commercial Marine Line Claims

14. Commercial Marine Line Claims
Cargo insurance usually attaches from the times goods leave the warehouse or
place of storage, continues during the ordinary course of transit and terminates
either on delivery to the final destination or the expiry of 60 days after discharge at
the final port, whichever occurs first
Cargo insurance normally provides indemnity against loss of or damage to
merchandise caused by fire or explosion, collision, sinking, capsizing, jettison,
washing overboard and general average sacrifice.
General average sacrifice is the deliberate sacrifice of the property in a marine
voyage in order to prevent the total loss of both ship and cargo. The sacrifice could
be partial, in which proportion of cargo is saved, or in severe cases the whole
consignment could be lost.
Cargo Insurance

15. Hull & Machinery
Hull insurance omits any
reference to goods or
merchandise and covers
only the structure of the
ship. It encompasses
damages to the grounding
ship from collision, etc.
Machinery is normally
covered, e.g. engine room,
ets.
Marine hull and
machinery
insurance is for
all types of ships
and vessels and
their equipment,
Container
ships
Oil & gas
tankers
Bulk
carriers
Passenger
vessels
Fishing vessels
Commercial Marine Line Claims

16. Liability
Death or injury to
passengers, crew,
stevedores and others
Damage to docks etc.
Damage to
cargo
Collision damage not covered
by hull insurance (25% for
most countries plus excess
over insured value)
Oil pollution
Unrecovered
general average
expense
Fines and other
penalties
Product liability – mainly
for constructions of the
ships and related parts
Any other public
liability
Commercial Marine Line Claims

17. Classes of Business
War Risks
From the earlier times, marine policies have normally
covered loss from damage by war risks. Nowadays, policies
normally exclude war unless specifically requested, except
for cargo.
 Building Risks
Building risks insurance covers the ship against all the risks
whilst under construction, launch, trials, and until delivery
to the owners.
Cover is also provided for liabilities through negligence
Commercial Marine Line Claims

18. Classes of Business
 Specie
Specie insurance is usually divided into three separate sub classes; cash,
fine art, and general specie. General Specie is a 'catch all' area for risks
that do not fit in to another classification within the portfolio, i.e. it is
not cash, art or jewellery but it is a high value product.
 Rigs
Exploration rigs and oil production platforms to extract oil and gas
from under the sea involve a different type of risk. No movement is
normally involved. Rigs are transported from their construction site to
the operation site and then commence operation. Catastrophe
accidents can occur and very large losses can emanate.
Commercial Marine Line Claims

19. Types Of Insurance
Time
Voyage
Time &
Voyage
Floating
Construction
Or Building
Commercial Marine Line Claims

20. Reinsurance
Insurance of
Insurance .
Insurance
Company to
Reinsurance
Company
Can be done in
no of ways
Commercial Marine Line Claims

21. Types Of Reinsurance
Commercial Marine Line Claims
Reinsurance
Treaty
Proportional
Non-
Proportional
Facultative

22. Marine Stock Throughout Policy
STP is popularly
known as “Cradle
to Grave”
Coverage.
to have single policy as
against multiple
marine and property
policies
Marine STP is the
process of insuring both
stock and
transit/inventory
exposures under a ‘Single
Policy’ to ensure
seamless protection to
the assured on a
worldwide basis.
STP is suitable for
organizations that
source raw
materials or semi
finished goods for
further value
addition. These
organizations then
store and distribute
finished goods
across the world.
Raw materials,
Work in Progress
& finished Goods
that are in transit
All locations are covered
such as assureds’ factory
(ies) / jobs worker/ sub-
contractors/ Warehouses
when cargoes are not in
course of transit within
the meaning of Marine
Insurance.
Commercial Marine Line Claims

23. Different Causes Of Marine Losses
Causes
Theft Pilferage
& Non Delivery
Handling &
Stowage
Damage
Loss From
Water
Marine Perils
Commercial Marine Line Claims

24. Types Of Association
Salvage
Association
Association of Avg
Adjusters
Protection &
Indemnity
Clubs
Commercial Marine Line Claims

25. Claims
A formal request to an insurance company asking for a
payment based on the terms of the insurance policy.
Insurance claims are reviewed by the company for
their validity and then paid out to the insured or
requesting party (on behalf of the insured) once
approved.
Commercial Marine Line Claims

26. Commercial Marine Line Claims
Types Of
Marine Insurance Claims
Marine
Cargo
Marine Hull Sundry Hulls
Ocean Going
Vessels

27. General Procedure Of All Marine
Insurance Claim
Commercial Marine Line Claims
Duty Of
Insured
• Do no give clear receipt on the delivery order but to give such notice of loss or damage
• In case of containerised cargo:
- Check carefully condition of
• - the containers if it was damaged or holed.
- its seal if numbers is matched with the document or if it was damaged or cut.
- If it was found damage, Give such notice of loss or damage on the delivery order.
Duty Of
Insured
• Immediately contact the carriers or its representative to do survey.
Immediately contact THE INSURANCE COMPANY to do joint - survey.
• Take photographs showing details of container, its seal and numbers, its floor, wall and
roof where it was damaged and condition of the cargo.
Duty Of
Insured
• reporting shall not later than 7 days from the time loss or damage noticed.
duty of the Insured to give THE INSURANCE COMPANY or Its survey agent an
opportunity to inspect the damage, vessel, interview with the master and crews and
other related parties.

28. Documentation
Claim
Form
Original
Policy
Original
BOL
Invoice
Packing
List
Delivery
Order
Official
Damage/Survey
Report
Letter of
claim
Estimate
d Cost Of
repair
Ship
Accident
report &
Complete
Documents
Picture Of
Damage
Commercial Marine Line Claims

29. Salvage
 It is a duty of the Insured / Consignee / Its Agent or Representative to
mitigate the loss and secure the salvageable cargo safe, do not destroy or
sell them without THE INSURANCE COMPANY’s written approval.
 THE INSURANCE COMPANY for and on behalf of the Insured have a right
to sell on tender the salvageable cargo and invite some buyers to quote.
 The Insured or Consignee can participate on the above tender
 Value of salvage is to be paid to the Insured and is to be deducted from
amount of claim payable.
Commercial Marine Line Claims

30. Shipping Documents
Air Way
Bill
Commerc
ial
Invoice
Certificat
e Of
Origin
Certificate
Of
Insurance
Packing
List
Bill of
Lading
Bill Of
Entry
Commercial Marine Line Claims

31. Factors To Be Considered While
Rating
Type Of Vessel
Size Of
Vessel
Type Of
Machinery &
Automation
Date Of Last
Survey
Age Of vessel
Repair Cost
Country Of
Registration
Size Of The Fleet Past Claim Exp Insured Value
Trade Routes
Voyage( Distance
/ Climatic
Conditions)
Nature of
Cargo
Commercial Marine Line Claims

32. Different Containers For Different
type of Cargo
Commercial Marine Line Claims
Open tops are used for easy load of cargo such as logs, machinery and
odd sized goods.

33. Different Containers For
Different type of Cargo
Commercial Marine Line Claims
tracks can be used for boats, vehicles, machinery or industrial
equipment.

34. Different Containers For Different
type of Cargo
Commercial Marine Line Claims
Open sides may be used for vegetables such as onions and
potatoes.

35. Marine Underwriter
 The person who provides marine underwriting is known as a marine
underwriter.
 These are professionals whose main expertise is to ensure that their
client is protected by unforeseen losses and casualties.
 Marine underwriting is a very tricky concept
 There are many different dimensions to it.
 The loss to the body or hull of the ship and the cargo it contained, the
reasons or the causes of the loss, the place where the loss occurred and
most importantly the amount that needs to be settled are the main
areas that a marine underwriter needs to focus on.
 A marine underwriter therefore needs to be aware of not just rules and
regulations of the country to which the ship belongs but also about
other countries where potential incidents could occur.
Commercial Marine Line Claims

36. Marine Insurance Broker
 Marine insurance is a very wide and encompassing field.
 Marine Insurance brokers are agents or representatives of Insurance
companies.
 They act as a guides to explain the various points and details involved
in a prospective marine insurance policy.
 Insurance Brokers try to complete their target & bring Business to the
company.
Commercial Marine Line Claims

37. Marine Insurance Surveyor
Inspection Of all types
of vessel
At the time of loss
Monitor &
Report
Equipment
required for new
or existing vessel
surveys include
structure, machinery
and equipment and
general condition of a
vessel.
Commercial Marine Line Claims

38. Case Study
 A Real Contamination
Damage caused by the
introduction of extraneous and
incompatible concentrations of
other material. The following
case study will look at an
example where there has been a
contamination onboard a vessel
and investigative analysis has
been used to get to the bottom
of the problem.
 Case Study
Commercial Marine Line Claims

39. A Real Contamination
 Vessel loads two
segregated grades of cargo
–gasoline and gasoil
-Gasoil cargo requires a
minimum flash point of
56oC
- On arrival at discharge
port, gasoil is found to be
off-specification for flash
point
Commercial Marine Line Claims

40. A Real Contamination
 It is known that is possible for
gasoline vapours to contaminate a
higher flash
material via a vessel’s common inert
gas system
 During attendance onboard the
vessel for re-sampling, it was noted
that the required double valve
segregation between cargo tanks
containing different grades was not
in place
 Suggests that a vapour phase
contamination may have occurred
Commercial Marine Line Claims

41. Commercial Marine Line Claims
A Real Contamination

42. A Real Contamination
 Typically, contamination
investigations will begin from a
testing point of view with certain
specification testing being
performed under joint witnessed
conditions.
 To confirm whether the cargo is off-
specification.
 To determine the extent of the
contamination
Commercial Marine Line Claims

43. A Real Contamination
 Flash Point is defined as the lowest
temperature at which the
application of an ignition source
causes the vapour of a sample to
ignite and the flame to propagate
across the surface of the liquid
under the specified conditions of
test
 A joint analysis took place where
samples from throughout the cargo
movement were tested for flash
point

Flash point testing indicated load
port samples acceptable, but pre-
discharge samples were off-
specification
Commercial Marine Line Claims

44. A Real Contamination
• For certain contamination
problems, routine analysis is not
sufficient to establish the
source/cause of the
contamination
• Joint testing confirms that gasoil
is off-specification for flash
point at discharge, but was on-
specification before loading.
• Review of documentation does
not suggest any other source for
contamination e.g from previous
cargoes
Commercial Marine Line Claims

45. Samples of gasoline and gasoil cargoes carried by the
vessel are tested by GCMS
1. Gas Chromatography is a
means of separating and
detecting compounds in
a mixture
2. Mass spectrometry is a
means of identifying the
individual compounds
that have been separated
Commercial Marine Line Claims

46. Level Of Gas Oil At different Port
Commercial Marine Line Claims

47. Commercial Marine Line Claims