Marine insurance underwriting requires knowledge of how to trade, both domestically and internationally is conducted. These trades are generally conducted through agents, brokers, and intermediaries.
They are commission agents, warehouse keepers, shipping agents, freight forwarding agents, and Stevedores. Commission agents sell goods on behalf of the principal for which they receive a commission.
Brokers are agents who, for a commission, negotiate the sale or purchase of goods on behalf of other parties. They do not require the title to the goods and do not assume possession of goods.
Warehouse keepers receive the goods for the purpose of storage in their warehouses. Shipping agents have special arrangements with the shipping companies.
They formulate the various shipping documents arrange for the insurance of goods, and pass the customs entry. Freight forwarding agents make special arrangements with the import authorities.
They collect numerous packages from different traders and make up large consignments for which they obtain special rates.
Stevedores are contractors appointed by shipping companies to load and discharge cargo.
They plan and arrange equipment to receive cargo from vessels bringing import cargo. Some specific documents, such as open covers and Marine Policy, should be properly understood by Marine.
Insurance.
Open Cover
The open cover is an agreement, binding in honor, whereby the insured will undertake to insure all shipments declared by the insured and the assured to declare each and every shipment which comes within the scope of the open cover.
Premium is payable on each declaration against which a specific stamped certificate/policy is issued.
Advantages
The advantage of the open cover is automatic and continuous insurance. Once arranged, the insured is granted protection on the agreed basis for all shipments subject to a declaration of full shipping details.
The client is relieved of the necessity to negotiate the insurance of every shipment individually. The premium rates are agreed upon at inception, and this assists the insured in identifying his cost of insurance right at the outset.
However, for legal purposes, the open cover is treated as a cover note. K is not a policy and, therefore, is not stamped. The basis of valuation is the prime cost of the goods plus expenses for shipping, freight for which the assured is liable, and cost of insurance plus ten percent.
The assured is bound to declare each and every shipment as they go forward and obtain a certificate of insurance from the insurer as required, either for individual shipments or for the group of shipments.
Section 23 of the Act states, “A contract of marine insurance is deemed to be concluded when the proposal of the insured is accepted by the insurer whether the policy is issued or not reference may be made to the ship, covering note or another memorandum.
Marine Policy
Section 24 of the Marine Insurance Act 1963 States, “A contract of marine insurance shall not be admitted in evidence unless it is embodied in a Marine Policy in accordance with this Act.
The policy may be executed and issued either at the time when the contract is concluded or afterward.
Section 25 of the Act states that the policy must specify the name of the assured, or of some person who effects the insurance on his behalf, the subject-matter insured, and the risk insured against the voyage or period of time or both as the case may be, covered by the insurance; the sum or sums insured the name or names of the insurer or insurers.
Policy Schedule
The standard form of the Marine Policy has a schedule showing the following details:
- Policy number, place, and date of issue
- Name of assured with an address where the
transaction is financed by a Bank, the name of the Bank. - Description of the voyage/transit.
- The subject matter insured and the classification packing.
- Risks covered, risk excluded, duration, other term,s and conditions.
Surveyor’s Note
The Surveyor’s note contains the;
- Name and address of the surveyor who may be contacted at the destination point to conduct a survey on damaged goods insured under the policy and issue a surveyor report.
- Name and Address of the claims Setting Office at the destination which may be contacted so that the claim could be serviced, processed, on ultimately settled on behalf of the insurer concerned.
