Marine Insurance - Munich Re

06 May 2021

Chris Seboka & Kamo Phala

Marine InsuranceC1 - Public

Agenda

1. Marine background

2. Cargo Insurance

3. Other Marine Classes of Business

4. What can go Wrong ?

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Marine Background 1

Some History …

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It all started in Edward Lloyd’s Coffee Shop situated in Tower Street, London. The shop had cubicles where

the various dealers would sit. Edward Lloyd would send his waiters to the docks to obtain information on

ships arrivals and departures which would then be shared with the dealers. To this day there are still the

“waiters” at Lloyd’s.

The placing of the insurance business was carried out by a Lloyd’s Broker and it was only recently that

insurance companies were able to sit in Lloyd’s Room and write business.


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What is Marine Insurance?

A form of insurance in which the insurer undertakes to indemnify the insured against loss of the ship (hull

insurance), the cargo, any sums paid in freight (freight insurance), or any liability to a third party occurring

during a sea voyage. A marine insurance contract may be extended to losses on inland waters or to risks on

land that may be incidental to a sea voyage.

The risks listed in marine insurance policies include perils of the seas, fire, war perils, pirates, seizures,

restraints, jettisons, and barratry .


What is Marine Insurance?

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Cargo Insurance 2

Cargo Insurance

Definition

Marine Cargo Insurance refers to the insurance of goods shipped from one place to another, anywhere in the

world. Coverage is usually effected on a “per voyage” basis, i.e. from the time the goods leave the premises

of the seller until the time they arrive at the buyer’s premises. Cover may be acquired by either the buyer or

the seller, depending on the contract of sale. There are different types of recognized sale contracts that are

based on INCO terms.


Cargo Insurance

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Relevant Features

▪ Incoterms and Coverage.

▪ Risks Covered and Clauses.

▪ Single Transit/conveyance vs Turnover vs Open cover policy.

▪ Points of Accumulation (known & unknown).

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Cargo Insurance

Inco Terms


Relevant Features

▪ FOB (Free on Board)

▪ C&F ( Cost and Freight )

▪ CIF (Cost Insurance and Freight)

▪ EXW ( Ex Works )

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Cargo InsuranceTransport Chain


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Marine Cargo – Types of Policies

1. Specific Voyage Policy

2. Annual or Turnover Policy

3. Open Cover Policy

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Cargo Insurance

Risks Covered and Clauses

(C) Named Perils e.g. fire & explosion, vessel being stranded,

grounded, sunk or capsized, …

(B) Named Perils as in (C) with additional covers like entry of

sea, lake or river water into vessel…

(A) All Risks with exclusions – all fortuitous losses of every

description but exclude loss, damage or expense proximately

caused by delay, inherent vice, or the nature of the goods.

From the above it can be noted that ICC ( C) is the most

restrictive type of cover.

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1. Willful misconduct by the assured

2. Ordinary leakage, loss in weight, wear and tear

3. Insufficient or unsuitability of packing

4. Inherent vice or nature of the subject matter insured

5. Unseaworthiness of vessel (when the assured is privy to it)

6. Delay even though caused by a risk insured against

7. Insolvency or financial default of the carrier

8. Deliberate damage or destruction of the subject matter insured

9. Use of a nuclear weapon or as a result of a nuclear energy risk

10. War, strike or terrorism


Cargo Insurance

General Exclusions

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The GIT Policy offers protection against loss, destruction or damage to goods whilst they are in transit on

registered road, rail or postal vehicles or aircraft within the territory covered – from the time of leaving the

insured’s premises to final delivery.


Cargo Insurance

Ancillary (Sub-) Classes of Cargo - GIT

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STP cover is a combination of Ocean Cargo, Inland Cargo (road, rail air) and Property Covers for

warehouses or manufacturing premises anywhere in the world. This type of policy is selected whenever

cargo is to make multiple stops along the way. Goods are usually insured from the supplier or manufacturer

until placed in the hands of the end customer.

STPs provides a seamless cover to the policy holder.


Cargo Insurance

Ancillary (Sub-) Classes of Cargo - STP

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Project Cargo includes freight that is voluminous, either in weight, size or quantity or composed of complex

components that must be disassembled, shipped and then re-assembled.


Cargo Insurance

Ancillary (Sub-) Classes of Cargo - Project Cargo

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▪ War and SRCC (including terrorism) covers

▪ Professional Cash Carriers

▪ Transportation of Livestock

▪ Delay in Start-up (DSU)

▪ Rejection of Cargo

▪ Container Insurance


Cargo Insurance

Other Cargo Insurance Covers

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Underwriting considerations

• Name and place of the insured

• Precise information on insured cargo

• Precise information on Conveyance

• Type of packing

• Supervision of loading and unloading

• Voyage insured

• Statistics

• Climate

• Storage required

• Place of destination/arrival

• Port Conditions

• Sum Insureds


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Other Marine Classes of Business 3

Marine Classes of Business

• Cargo

• Hull

• Marine Liabilities

• Protection and Indemnity (P&I)

• Offshore / Energy


Marine Hull Insurance covers the loss of or damage to hull and machinery. The hull is the structure of the

vessel. The machinery includes the vessel’s engine(s), generator, boiler, cooler and other equipment for

producing thrust to move the vessel and power for lighting, heating, cooling etc.

Hull insurance may be divided into covers for ocean-going vessels (Ocean Hull), river vessels (River or

Inland Hull) and vessels that are used only within a defined area, e.g. within harbours or along a coast e.g.

ferries, feeders or barges (coastal or Harbour Hull).


Other Classes of Business

Definition of Hull Insurance

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Yachts can be defined as vessels that are intended for Private use only.

There are relatively small yachts and pleasure crafts and big “megayachts” which may have values in the

millions.

This insurance includes – frequently even as a legal requirement – liability insurance material damage and

bodily injury.


Small Yacht

Other Marine Classes of Business

Hull – Pleasure Craft /Yacht

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Marine liability insurance tailors a wide range of liability covers to meet the unique needs of transportation

and facility operators. All marine liability covers are closely related to the transportation services involved in

the logistics chain. Various marine liability covers are listed below.

- Protection and Indemnity

- Freight Forwarders’ Liability

- Marina Operators’ Liability

- Stevedores’ Liability

- Charterers’ Liability

- Port Operators’ Liability

- Ship Repairers’ Liability



Marine Liabilities

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Relevant Features

• Liability Insurance

• Almost exclusively written by Mutuals (P&I Clubs)

• Protects Ship owner against potential liability


P&I

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Relevant Features

• Property/ Liability Insurance for Energy related risks (at sea or fall within upstream segment)

• Only capacity-driven market in Marine Insurance


Offshore / Energy

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What could go wrong ?

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What can go wrong?

• Perils of the Sea

• Fire/Explosion on a Vessel

• Collision of two Vessels

• War, Terrorism, Strike, Civil Commotion

• Piracy

• Natural Perils (Earthquake, Volcanic Eruption and or Lightning)

• Human Factors


ACCUMULATION

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What can go wrong?



What Can go wrong?

Costa Concordia

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What Can go wrong?

MSC Napoli

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What Can go wrong?

EVERGREEN

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Questions?

Thank You!

Chris Seboka ([email protected])

Kamo Phala ([email protected])

Marine Insurance - Munich Re

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