Page 19 - Insurance Times March 2017 Sample

insurance, exclusions under the policy and important susceptible to different types of damage/ losses e.g.
slip attached with the policy mention the steps to be sugar, glass sheets, leather goods, liquid cargo, are
taken by the insured/ claimant in the event of loss/ subjected to different types of losses.
damage. 2) PACKING: Goods may be fragile but if packed properly,

6) ENDORSEMENTS: Sometimes after insurance of the risk is considerably reduced. If Rice cargo is packed
Marine policy, some amendments are required to be in gunny bags risks of water damage is more than what
done in a policy. Such amendments after insurance of when it is packed in HDPE bags. Wooden packing is
policy are done by issuing an endorsement e.g. insured better than cardboard carton packing. New drums are
had declared that goods are packed in wooden boxes better risk than second hand drums.
but subsequently it is found that goods would be 3) VOYAGE: The destination of voyage is very important.
dispatched in cardboard cartons. The insured in such There are many restrictions for insurance of export of
cases approach insurance company for insurance of cargo to Russia & CIS countries became of frequent
endorsement to change the mode of packing in the losses. If voyage is not direct and involve transshipment
policy. - the risk increases. For transits within India dispatches
7) CERTIFICATE OF INSURANCE: This document is primarily to North Eastern states is considered as bad risk.
issued in care of export/ import policies where the 4) MODE OF TRANSIT: Air is better than Sea. Transit by
insurers have issued 'OPEN COVER'. It gives information Rail within India is better risk than transit by Road
about the goods shipped/ sent. This certificate of within India.
insurance is also stamped as per provisions of the Indian 5) TERMS OF INSURANCE: Wider the insurance cover
Stamp Act. Sometimes Certificate of Insurance (COI) is more will be the premium. If cover is for IT (C) alone,
issued under open policy also but in such cases the COI only bare minimum premium is charged. When insured
need not be stamped because the open policy is a agrees for imposition of excess in a policy - a rebate in
stamped document.
premium is given.
Marine Cargo Rating & Underwriting 6) VESSEL: When goods are sent by sea then name of the
vessel is very important. Depending upon vessel
Considerations involved in transit of goods, extra premium may be

In any Insurance Department, the underwriting required to be charged in following cases:-
department is most important portfolio. This is because it a) Overage extra: When the vessel is more than 15yrs
is the underwriting department, which decides as to of age, an extra premium called overage extra is
whether: charged.
i) to accept / or reject the risk b) Under tonnage extra: Small vessels are considered
ii) if accepted what premium to be charged as bad risks for which under tonnage extra is
charged.
iii) what conditions / warrantees to be put.
c) Non-approval: When the vessel is not approved by
Prior to 1/4/1994 there was All India Marine Cargo Tariff, the company, an extra premium @1% extra is
which provided for basic rates for inland transit and major charged.
commodities export/ import rates. This Tariff was however d) Non- classification extra: There is a system of
withdrawn w.e.f. 01/04/1994 and now insurers are free to classification of vessels by classification Societies.
charge any premium rate for any policy in Marine Cargo If the vessel by which cargo is being supplied is
Department in view of unhealthy competition GIC came classified by any of these societies, then it is
forward with certain guide rates in 1994 to be followed by considered as good risk. If the vessel is not classified
all Public Sector Companies. There guide rates can now be by the societies then it is considered as bad risk and
reduced/ loaded depending upon the risk involved. In a non classification extra premium is charged @
detariffed regime the role of underwriter is very important. 0.10% on sum insured.
In Marine Cargo department the following factors are taken
into account to assess the risk:- Some of the classification societies are as under:
1) SUBJECT MATTER: Risk varies depending upon subject 1) Bureau Veritas
matter (insured cargo). Different types of goods are 2) American Bureau of shipping

The Insurance Times, March 2017 19

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