Page 14 - Marine Insurance IC67 EBOOK
P. 14
charged and then the SDP discount should be policy the same cannot be converted into a
granted. Special Declaration Policy retrospectively.
Discount in premium rate where loss ratio is less (iii) Turnover discount will be granted on expiry of
than 60%. the policy retrospectively provided claim ratio
does not exceed 60%.
If the claim ratio for the three years excluding Open Cover
immediately preceding year is less than 60% then
the following discount is applied on the total rate. For clients engaged in substantial international
trade import/export goods and having substantial
LOSS RATIO DISCOUNT ON turnover, an Open Cover may be issued.
TOTAL RATE
An Open Cover is not an enforceable contract of
Less than 60% upto 40% 20% Marine insurance. It is an agreement binding in
honour, under which the insurer will accept
Less than 40% upto 20% 30% declarations and issue stamped specific policies
Less than 20% 50% or certificates of insurance against each
declaration.
The turnover discount has to be applied first and
thereafter discount for favourable claim experience An open cover is issued for a 12 months period
as given above has to be applied. and premium paid in advance and issue a fresh
policy. As and when insured declaration, hence
Further, it is clarified that NO DISCOUNT shall be office may issue a certificate against each
given where experience available is for less than declaration.
3 years immediately preceding the expiring year.
The total discount should not exceed 60% of the The advantages of an Open Cover are that (i) the
applicable rate either basic rate or all risk rate as agreement is continuous as provided for in its
per cover granted. terms, so that there is not risk of particular
shipments remaining uninsured through oversight,
Rules for sanction of turnover discount: inadvertant omission delay in making declaration,
(ii) premium are generally fixed and agreed in
Turnover discount can be allowed after expiry of advance as far as possible and may therefore be
the Policies retrospectively provided the total included accurately in costing; and (iii) in absence
turnover under the Policy exceeds Two Crores and of the sum insured there is no possibility of its
the claims ratio does not exceed 70%. getting exhausted by declarations as in the case
of open policy.
Special Declaration Policy can be issued to an
absolutely new risk during its very first policy Limits per sending for each type of conveyance
subject to should be specified keeping in mind the insured's
(i) The Total sum insured at the inception of requirements, underwriting limits and company's
reinsurance limits.
policy without taking into account any
anticipated one time increase be Two crores The basis of valuation is C.I.F. value plus ten
or more. percent. In the event of loss prior to declarations
(ii) The insured will have to take a Special
Declaration policy at the very outset and not
an Open Policy. If the insured takes an open
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