marine insurance

Marine Insurance in India Prof: Amina Momin

AakankshaMayurJyoti PiseNasir NabisahebJunaid Shaikh 9149

Marine Insurance: Overview• Nature and Scope of Marine Insurance Contract What is Maritime Perils? The Perils of the Sea The concept of Marine Adventure Definition of Marine Insurance Contract A Slip in Marine Insurance Rules In India Regarding Marine Insurance• Classification of Marine Policies

Valued Policy Unvalued Policy Floating Policy Time Policy Voyage Policy

Marine Insurance: Overview• Voyage – Deviation• Types of Marine Insurance Hull Insurance Cargo Insurance Fright Insurance Liability Insurance

• Warranties in Marine insurance Definition Effects of Breach of a Warranty Types of Warranty (3types)

Marine Insurance: Overview

• Loss Perils insured in a Marine Policy

Kinds of Losses

• Payment of Claims

Nature and Scope of Marine Insurance Contract

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The Marine Insurance is regulated under The Indian Marine Insurance Act, 1963 (enforced on 1st August, 1963) which is based on the original ‘Marine Insurance Act, 1906 of U.K.

Marine Insurance has been made mandatory in export and import business

The document containing the contract of insurance is known as the ‘Marine Policy’ or ‘Sea Policy’

It essentially provides cover for the losses suffered due to Marine Perils.

Maritime Perils

“Maritime Perils" means the perils consequent on, or incidental to, the navigation of thesea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures,seizures, restraints and detainments of princes and peoples, jettisons, barratry and anyother perils

___________________________________________________________________________Above definition is taken from Section 2 (e) under The Marine Insurance Act, 1963


The Perils of the Sea

A Peril of the Sea may be defined as to cover everything

that happens to the ship in the course of voyage by the

immediate act of God without the intervention of human

agency

Examples•Foundering at Sea•Shipwreck•Stranding•Collision


Losses not regarded as Perils of the Sea (Excluded Losses)

• Wear and Tear• Breakage of Goods• Inherent Vice (defects in goods)• Death of Animals etc due to nature’s causes• Loss by Rats and Vermin• Loss by Delay *

___________________________________________________________________________* As per Section 55 (2) (b) of the English Marine Insurance Act



A contract of marine insurance under Section 3 of The Marine Insurance Act, 1963 is defined as –

“A contract of Marine Insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incidental to marine adventure.”

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The Marine Adventure

In a contract of marine insurance, what is insured is not the property exposed to peril but only the risk or adventure of the assured.

The Statute therefore states that every lawful marine adventure may be the subject matter of a contract of marine insurance

To be continued in next slide..


“Marine Adventure" includes any adventure where – (i)any insurable property is exposed to maritime perils;(ii)the earnings or acquisition of any freight, passage

money, commission, profit or other pecuniary benefit, or the security for any advances, loans, ordisbursements is endangered by the exposure of insurable property to maritime perils;

(iii)any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property by reason of maritime perils;

___________________________________________________________________________Above definition is taken from Section 2 (d) under The Marine Insurance Act, 1963

A Slip in Marine Insurance

A Slip or Cover Note is an informal note or memorandum which is drawn at the time when the contract is entered into.

A Slip itself act as a contract of Insurance. It is a complete and final draft/agreement between the parties in Insurance.

A slip acts as Evidence. It is admissible only to prove the agreement since in practice the slip is never stamped.


Rules under The Marine Insurance Law Act, 1963

• The contract of Marine insurance acts as an evidence for which it has to be stamped under The Indian Stamp Act, 1899 [1]

• The Policy must be signed by the insurer himself [2]

• The Subject matter must be designated with reasonable certainty [3]

• The nature and extent of the interest of the assured need not be specified [4]

_________________________________________________________________________[1] Rule under Section – 24 of Indian Act[2] Taken from the English Act Section – 24 (1)[3] & [4] Under Section – 28 of Indian Act

Rules under The Marine Insurance Law Act, 1963

• The content of marine policy: [5]

A marine policy must specify:i. the name of the assured or the person who effects the

insurance;ii. the subject matter insured and the risk insured against;iii. the voyage or the period of time or bothiv. the sum or sums insured; andv. the name of the insurer of insurers. ^ • The Schedule attached to the Act gives the form in

which the policy should be made and also provides the ‘rules for construction of policy’. [6]

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[5] Under Section – 25 of Indian Act ^ The Indian Act Section – 26; [6] Under Section – 32 of Indian Act

Classification of Marine Policy

• Valued Policy Under this policy the value of loss to be compensated is

fixed and remains constant throughout the risk except where there is fraud and excessive over – valuation

• Unvalued PolicyUnder this policy the Value is not determined at the time of commencement of risk but is left to be valued when the loss takes place.

Classification of Marine Policy

• Floating Policy This policy describes the general terms and leaves the

amount of each shipment and other particulars to be declared later on. The declaration is made in order of dispatch of shipment.

• Time PolicyUnder this policy, the subject – matter is insured for a definite period of time. The Policy is generally taken for one year although it may be for less than one year.

Example: From 06:00 hrs of 1st April, 2009 to 06:00 hrs of 30th September, 2009

Classification of Marine Policy• Voyage Policy

The policy is issued to cover a particular voyage from one port to another and from one place to another. The policy mentions the port of departure and the port of destination between which the risks are generally underwritten.

Note: A Marine Insurance Policy may be a combination of different policies. It is also called as Mixed Policy. For e.g., Voyage policy with Time policy

Voyage - Deviation

• A ship must follow the course specified in a voyage. If no course is specified, the ship must follow the usual course for the voyage

• Deviation discharges the underwriters from all liability for subsequent loss (even though it may not increase the risk) unless it is caused by circumstances beyond control or is justified on certain very limited grounds

• Unreasonable delay may also amount to deviation

Types of Marine Insurance

• Hull Insurance• Cargo Insurance• Fright Insurance• Liability Insurance

Warranties in Marine Insurance

• Express Warranties• Implied Warranties• No Implied Warranty


• Express Warranties

Express warranties are those warranties which are expressly included or incorporated in the policy by reference


• Implied WarrantiesThese are not mentioned at all but are tactically understood by the parties as express warranties

Examples:• Seaworthiness of ship (includes ‘cargo - worthiness’)• Legality of venture• Non - deviation

Perils insured in a Marine Policy:

• Loss by Fire• Loss by Capture, Seizure or Taking at Sea• Loss by Arrest, Detention• War Risk• Loss Caused by Pirates and Thieves• Barratry

Losses

Losses

Kinds of Losses• Total Loss Actual Loss Constructive Loss• Partial Loss Partial can either be actual loss or constructive

loss

Payment of Claims• Notice of Claim• Documents Required for Claim:

i. Policy or certificate of Insuranceii. Bill of Lading – Determines the scope of the

contract of carriageiii. Invoice of bill stating terms and conditions of saleiv. Copy of protestv. Certificate of Surveyvi. Letter of Subrogation

PSU’s Business Class breakdown* (2006)

_________________________________________________________________________Source: Lloyds report on General Insurance in India : 2006

Private Company’s Business Class breakdown* (2006)


Marine Cargo* absolute growth and market share – Top five players (2005 vs. 2006)


Marine Hull* absolute growth and market share – Top four players (2005 vs. 2006)


Thank You

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