Page 56 - The Insurance Times December 2024

5. Cause of Loss Event 2: General Average Contribution:
Event 1: Damage Due to Poor Packing: o Total cargo value on board: Rs. 1 billion.
o Machinery components were improperly secured, o Total general average loss: Rs. 100 million.
leading to internal damage during rough handling
o Genesis Trading's share (insured value proportion):
at the loading port.
Contribution=Rs. 50million/Rs. 1billion×Rs.
o Investigative Report: Confirmed that the packing 100million=Rs. 5million
failed to meet international standards for machin- o Insurer paid Rs. 4.5 million after deducting Rs.
ery shipment.
5,00,000 (deductible).
Event 2: General Average Declaration:
o The vessel encountered a severe storm in the Ara- 9. Learnings from the Event
bian Sea.
For Insured Entities:
o The captain jettisoned some containers, including Lesson 1: Inadequate packaging can result in complete
part of the insured cargo, to stabilize the ship. rejection of claims.
o General average was declared, requiring contribu- Lesson 2: Conduct thorough risk assessments for high-
tions from all cargo owners. value shipments.
For Insurers:
6. Risk Assessment
Lesson 1: Stringent underwriting standards for high-
Underwriting: value cargo.
o While the insurer accepted the risk based on the
cargo value, no specific inquiry was made about Lesson 2: Proactively educate clients on policy exclu-
packaging quality. sions.
Missed Red Flags: For Industry Stakeholders:
Lesson: Develop technology-driven solutions for better
o Lack of stringent packaging inspection prior to ship-
ment. cargo monitoring and compliance checks.
o Overlooked exposure to adverse weather condi- 10. Conclusion
tions.
This case underscores the importance of comprehensive risk
7. Risk Management Advisory assessment and stringent compliance with packaging stan-
For Exporters: dards. While marine insurance mitigates financial losses
1. Ensure compliance with international packaging from unforeseen events, proactive measures by both insured
standards for fragile and high-value goods. and insurers can significantly reduce exposure to avoidable
risks. The incident highlights the role of insurance as a safe-
2. Conduct thorough pre-shipment inspections.
guard while emphasizing the need for continuous process
3. Use GPS-enabled trackers for real-time monitoring improvements in policy design and risk management.
of cargo conditions.
For Insurers:
1 . Mandate pre-shipment surveys for high-value con- Life Insurance Industry Adapts to
signments. New Norms

2. Include a packaging compliance clause in policies. The implementation of revised surrender value norms
has prompted life insurers to adapt their products and
3. Enhance risk evaluation for shipments involving ad-
verse weather-prone routes. processes. These changes, effective October 2024, aim
to enhance customer benefits but have posed
8. Claim Analysis operational challenges for insurers.
Event 1: Poor Packing: Despite this, the industry reported stable growth in new
o The insurer rejected claims for damage caused by business premiums, driven by strong demand for term
inadequate packing as per the policy exclusions. insurance and ULIP plans. Analysts expect fluctuating
growth as insurers find their footing under the new
o Financial Loss: Rs. 10 million, fully borne by the in-
sured. regulatory framework.

50 December 2024 The Insurance Times