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Import - Export Management
Import - Export Management
Uyen NGO
School of
Industrial Engineering and Management
IMPORT EXPORT MARINE INSURANCE April 2021
I M P O RT - MANAGEMEN
E X P O RT T
I M P O RT - MANAGEMEN
E X P O RT T
I M P O RT - MANAGEMEN
E X P O RT T
3. Insurance company/Insurer
An insurance company employs underwriters who transact business on behalf of
the company
4. Insurance broker
Insurance business is usually conducted through intermediaries, known as
insurance Brokers – on behalf of the buyer.
5. Claims Adjusters/Surveyors
Loss adjusters are insurance claims specialists, usually engaged by insurance
companies.
Risks
By insurance operation: Main risks insured, Miscellaneous risks
possibly insured, Risks insured in special case, Exemption risks
Loss
By liability: Personal loss, Common loss
Total loss: This marine loss category shows that the insured goods have
lost 100% or near-100% of their value. The category is further divided into
Actual Total Loss and Constructive Total Loss in Marine Insurance.
Actual Total Loss: To get quantified as an actual total loss, one or more of the
following conditions must be met:
•The insured cargo or the goods are entirely damaged or damaged to an extent where they
cannot be repaired.
•The insured cargo or the goods are in a state that the insured business cannot access
altogether.
•The vessel carrying the cargo has gone missing, and there are no reasonable chances of its
retrieval.
Constructive Total Loss in Marine Insurance: This is one of the trickiest marine
losses to understand but can be simplified with an illustration.
Partial Loss: This type of loss quantification requires discretion and subjective
decision-making at the hands of the surveyor.
Particular Partial Loss: One of the most common forms of marine losses
quantified under this category is Particular Partial Loss. If the goods incurred partial
damage for a reason covered under the marine insurance policy, it will be deemed a
particular partial loss.
General Average Loss: This type of loss is quantified only when the goods were
damaged deliberately to avoid some form of danger.
EX: imagine that you are a supplier of biochemical substances. You had a shipment worth
$2mil exported via a shipping company. On the way, the captain found that $200,000 worth
of boxes had leaked and were contaminating the ship. It had to be thrown away to secure the
rest of the shipment. This would be a General Average Loss. If the entire load was sold for
$1mil to another pharmaceutical manufacturer on the next port, it would have been a case of
Particular Partial Loss.
M.Sc. Uyen NGO School of Industrial Engineering and Management
I M P O RT - MANAGEMEN
E X P O RT T
Common loss costs are all the fees paying to 3rd party: cost of saving the vessel, costs
paid in the saving port, fuel, loading and unloading cost, food and wages for people
working on board, etc.,
Vessel owner has to pay 80,000, but he’s already paid 34600+400 pay 45,000
more.
Shipment owner (Rivery Co.,) has to pay 20,000, but he lost 65000 he would
get 45,000
Insurance Cargo Clause (B): Subject to the policy exclusions and warranties, the
(B) clauses provide all the cover under (C) and also cover loss of damage to the
subject matter insured reasonably attributable to:
o Earthquake, volcanic eruption or lightning
o Water damage by entry of sea/ water (excluding rainwater),
o Total loss of package lost overboard
Institute cargo Clause (A): Subject to the policy exclusions and warranties, the
clause “A” provides the widest of all three covers and generally summed up as ‘all
risk’ of loss or damage to the subject matter insured.
War Risk
SRCC (Strikes, riots and civil commotion)
Insurable value is the real value of the subject of insurance and determined as
follows:
1. The insurable value of the seagoing vessel is its total value at the commencement of
the insurance. This value also includes the value of its machinery, equipment, spare
parts and stores plus the whole insurance premium amount. The insurable value of the
seagoing may also include money advanced for crew’s wages and other disbursements
incurred to make the ship fit for the voyage as agreed upon in the policy.
2. The insurable value of the cargo is its value invoiced at the place of loading or its
market value at the place and time of loading plus the insurance premium, the freight
and may include the expected profit;
3. The insurable value of the freight is the gross amount of freight plus the insurance
premium. Where the charterer has the freight insured, this amount of freight is included
in the insurable value of the cargo for insurance;
4. The insurable value of any other subject of insurance, except obligations arising under
civil liability, is the value of the subject of insurance at the place and time of the
commencement of the insurance, plus the insurance premium.
I = CIF x R
CIF=FOB + F+(CIF x R) CIF=(FOB+F) / (1-R)
I: insurance premium
C: FOB price
R: insurance premium ratio
F: Shipping freight
In other cases if specified, insured amount can be computed using other formula (110%CIF price
or FOB price)
Insurance premium:
•Insured value:
+ FOB price : FOB = 1000x 2000 USD = 2,000,000 USD
+ Freight cost: 1000x 20 USD = 20,000 USD
+ CIF total price of the shipment:
CIF = ( C + F ) / ( 1 – R ) = ( 2.000.000 +20.000 ) / ( 1 – 0.18% ) = 2.023.643 USD
+ Total insured amount = 110 % x 2.023.643 = 2 226 007 USD
Insurance premium I = CIF*R
What losses company A (owner of shipment A) has to bear? How much vessel
owner has to pay? How much company A get from Bao Viet if they bought
insurance ICC term B with insured amount of 110%CIF price?
M.Sc. Uyen NGO School of Industrial Engineering and Management
APPENDIX
An introduction to the Lloyd’s Agency Network - YouTube
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