Marine Insurance Brokers Role in Procuring Various Insurance Coverage
Marine insurance brokers play a significant role in helping companies and
individuals procure marine cargo insurance, hull and machinery insurance, P and I cover. Other forms of insurance, as the case may be. They can canvas the worldwide marine insurance market. The goal is to support getting the best terms of insurance cover at the most competing premium rates.
One is not legally obliged to use a broker. Marine insurance can be procured
directly with the underwriter. However, brokers are routinely used because of
their knowledge of the insurance market, the various insurance products
available, their connections with underwriters, and the value-added services they
provide.
Marine insurance brokers also provide services beyond procuring
insurance, such as providing risk assessments, insurance consulting services,
insurance-related regulatory and legislative updates claim assistance services,
among so many other duties.
In exchange for these services they receive a commission typically
expressed as a percentage of the premium.
Someone working as a marine insurance broker should know that:
The broker is an intermediary. They put the underwriter(s) in contact with the
insured.
Legally, the broker is the agent of the insured and not the underwriter with
whom the broker places the insurance.
Even though the insurer pays the broker's commission, the broker's
responsibility (and loyalty) is to the assured.
Broker negligence can result in legal liability. The broker should use expertise
and skill in obtaining the best cover at the best premium.
In addition, an insurance broker (like a shipbroker) has a fiduciary obligation to
the client. It requires a high standard of ethical beliefs. The broker is expected to put the concern of clients ahead of his/her interest in earning a commission. Besides, strict accounting procedures need to be used when handling the client's
capital.
M.V. Asian Lily ran aground
The broker must also maintain a close watch on the financial solvency of
underwriters. Marine insurance is underwritten in any number of markets
worldwide. It is common that numerous underwriters, located in many
countries, take a percentage of the same risk. Not all underwriters are the same.
Brokers must also maintain the principle of good faith when dealing with
underwriters. They need to ensure that accurate and material information is
provided to underwriters so they can adequately assess the risk. To do otherwise
could prejudice the insurance cover that the client seeks.
Claims made under a policy can be complicated and require extensive
supporting documentation. The insurance policy may also have strict
requirements regarding the method and timeliness of making claims. In the event
the insured has a claim against the underwriters under the policy, the broker
needs to advise the insured of proper claims procedures and should assist in
negotiating and arranging for settlement.
Shipping is a risky business. Risks need to be managed effectively.
Without marine insurance, sellers are less inclined to sell, and buyers will be less
inclined to buy. Banks will not lend against collateral. Trade would be reduced
to a trickle.
As a marine insurance broker, expect to provide a valuable service while
routinely traveling to meet underwriters and clients around the world.
Resources:
Many who seek to work in marine insurance, whether as a broker, an
underwriter, in claims, or in other capacities, choose to take continuing
education courses with organizations like The Institutes.
Marsh, Inc.
is a very large U.S. based brokerage and risk management
firm.
General Average & The York Antwerp Rules The law of General Average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. It is a unique maritime concept. One of the most
ancient aspects of shipping is the general average. When an intentional sacrifice of property is made onboard a ship to avoid a common peril, the general average law requires all of the parties to the maritime adventure that benefited by the intentional sacrifice to contribute money on a pro-rata basis.
P&I Clubs guideline The P&I Clubs are correctly called Protection and Indemnity Associations and number around 20 worldwide, with the majority being the United Kingdom-based. The shipowner in taking out insurance with a particular association becomes a member of that Club. The Clubs are mutual, which means that all costs involved in providing cover or paying out a claim to anyone are shared by all members. It is achieved by setting a rating or premium for the Owner, known as an "advance call," based on the Owner's history and exposure to risk.
Marine cargo insurance underwriters Ships operate in a difficult environment, and cargo may be lost or damaged
during domestic and international transit. However, ocean carriers are well protected under the law
against responsibility for loss or damage to cargo that might arise during the
transportation of goods.
Hull & Machinery underwriters
A hull and machinery underwriter provides insurance coverage for boats, ships, and other naval assets. It gives protection to shipowners against the hull, machinery, and onboard equipment damages in the event of any perils encountered while on the water, including collision with another vessel, natural obstacles, and other structures as well as storms and other natural disasters.
Procedure for insurance claim
A ship is insured against various risks by the Owner taking out different insurance policies. However, for many reasons, insurance claims often being denied by marine insurance providers. A shipowner can prosecute a claim accurately and successfully. The Master needs to send full details and documentation relating to any accidents or incidents resulting in damage to the ship, property, cargo, or personal injury. Nautical Institute publication, "The Mariner's Role in Collecting Evidence," is a good source of guidance to shipmasters.
The role of a insurance broker
Marine insurance brokers play a significant role in helping companies and individuals procure marine cargo insurance, hull and machinery insurance, P and I cover, and other forms of insurance as the case may be. They can canvas the worldwide marine insurance market. The goal is to assist in getting the best terms of insurance cover at the most competitive premium rates.
Marine salvage procedures
Marine salvage contracts fall into two main categories. First, those which enable salvage services to be rendered on the basis that the compensation to be paid to the salvors will be determined after the completion of the services. It is done by a direct settlement or if the parties cannot agree, then by a court or an arbitrator
Role of a freight forwarder
A freight forwarder, forwarder, or forwarding agent, is a person or a business entity that organizes shipments for individuals or corporations to get the goods from the point of origin to the desired market or from a producer directly to the customer or a distribution center. A freight forwarder dispatches shipments via a common carrier and books or arranging spaces for those shipments on behalf of shippers.
How a Non-Vessel Operating Common Carrier ( NVOCC) differs from a freight forwarder?
A NVOCC (Non-vessel Operating Common Carrier) is "a common carrier that holds itself out to the public to provide ocean transportation, issues its bills of lading or equivalent documents, but does not operate the vessels that transport cargo." An NVOCC is a carrier. It enters into a contract of carriage with the cargo shipper. It undertakes responsibility for the carriage like a shipowner that owns a vessel. However, the NVOCC is a carrier that does not own or operate the vessel used to perform the carriage.
P & I Insurance cover and Members of IG club
At the heart of P and I is the concept of "mutuality." Shipowners form a nonprofit association to protect and indemnify one another against third party liabilities. Unlike commercial insurance, the insured ship owners, meaning the "members" of the Club, are both the insurer and the insured. Each P and I Club is controlled by its members.
Role of shipbrokers
London and New York have always been viewed as major shipbroking centers. In recent years, many U.S. ship brokerage firms have relocated to offices in Stamford and Greenwich, Connecticut, and nearby communities. Of course, there is a large shipbroking presence in Singapore, Hamburg, as well as other cities.
Sale & purchase brokers
Sale and Purchase Brokers (S and P Brokers) are highly specialized shipbrokers. Their clients are typically ship owners. S and P Brokers serve as intermediaries in the business of selling and buying ships. They assist in the sale and purchase of second-hand tonnage and newbuilding. Their compensation is normally in the form of a commission.
Ship agency services
A ship's agent works on the front lines, and there might involve an unlimited number of issues in port. The agent must work towards solving these problems. An agent needs to learn a lot fast about ships and cargo.
Role of a ship management company
Ship management companies are located in the world's maritime centers. Many companies manage large fleets on behalf of numerous ship owners. Many of the larger management companies also own vessels. Essentially, the decision to outsource a ship management function is a financially driven one. In most cases, outsourcing of ship management services means that the shipowner can conduct business at a reduced cost, primarily due to reduced in-house staff and resources.
Ship finance considerations
Ship finance is somewhat different from other asset-based lendings such as real estate finance. After all, shipping business earnings can be quite volatile and, therefore, less predictable. Additionally, the collateralized asset (the ship) is extremely mobile. The traditional method for ship finance was private resources.
Ship recycling industry
Scrapping ships (also known as ship breaking or ship demolition) is a dangerous and controversial part of the shipping business. Ships have a life span of 20 – 30 years – sometimes a little more -sometimes a little less. Ships wear out and/, or there may be a lack of spare parts. After a while, they no longer make sense economically. The shipowner needs to make a decision – continue to repair or scrap.
Ship registry procedure
To trade internationally, a ship must have a nationality. Without being registered under certain flag states, a ship cannot enter another state's geographic limit. Once registered, a ship becomes subject to the laws of a registering nation. Registration makes the ship entitled to military protection, and therefore it is an extension of that nation anywhere in the world.
Maritime security concerns
Maritime security issues affect how ship owners, charterers, cargo interests, ports and terminals, and their insurers do business. There is the added expense to deal with. There has also been an increase in the number of international conventions and domestic legislation geared towards furthering maritime security.
How maritime law works in the United States? Maritime law used to apply only to American waters within the ebb and flow of the tide. However, it now covers any waters navigable within the United States for interstate or foreign commerce. Admiralty jurisdiction also includes some maritime matters not involving interstate commerce, for example, recreational boating.
The Master’s Responsibility during Salvage Operation
Request for Salvage -
The Master shall normally request salvage after consultation with the Company. However, he has complete authority to seek salvage assistance without referencing the Company if he considers this necessary.
Requirement of towing arrangement in oil tankers, readyness, & training onboard
All Oil, Chemical and Gas Tankers above 20000 DWT, constructed on or after 1st July, 2002, are equipped with an “Emergency Towing Arrangement (E.T.A.) both Forward And aft to provide the ship with a rapidly deployed towage capacity in an emergency.
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