MARINE INSURANCE U/W AND CLAIMS HISTORY Marine Insurance developed over many centuries.In fact it is the oldest branch of Insurance. Concept of Insurance Fear of risk. Uncertainty. Desire to seek protection against fear. MARINE INSURANCE Marine Insurance followed same concept of risk and spreading of risk on a large scale. Prevalent and Practiced in very older times, 5000 years ago. Chinese Traders used to send their goods from YANGTZE river to other parts of the world, by dividing their goods in different boats. EVIDENCE Egyptians were insuring their long “double ended vessels against disaster. Revealed by King of Babylon around 2300 B.C. Bottomry Bond system – Compensation to the ship owners if vessel was lost. Rhodions 2500 years ago advancing of loans under ‘Respondential & Bottomry Bonds’. Protection provided to merchants of Broach and Surat trading with Egypt, Greece, Iran, Lanka. BOTTOMRY Bottomry is a loan raised by the captain of the ship/ vessel- money is urgently required for the prosecution of voyage. Loan on the security of vessel alone or sometimes on both vessel and cargo.It is not responsible if the venture is lost. RESPONDENTIA An advance on Cargo alone and Repayable only if the cargo reaches the destination safely. Rate of interest on both is very high.It took care of risk element e.g. accidental loss at sea marine insurance. Act 1963 sec. 12. Lender of money or Bottomry or Respondentia has an insurable interest in respect of loss. Italy- dominant economic power till the discovery of America in the western world.Italians not purely the merchants but had monopoly in Banking. They were financers and Business Agents. DRAFT BILL OF EXCHNGE Double entry system. They were exponents of marine insurance According to VILLANI originated in LOMBARDY in 1182 A.D. tha time these underwriters were not trustworthy Lombards were popes merchants. LOMBORD street in London is named First to introduce insurance in London . Policy from Italian word ‘POLIZZA’ means promise / undertaking and earliest policy issued dated 20/9/1547. Indeed written in Italian. MARINE INSURANCE Practiced today, has its origin in 1779 A.D. ‘Lloyds’ were the pioneers having issued ship and goods policy.They are the largest underwriters in the world today. SHIP AND GOODS POLICY Initially provided cover for L/D to the Hull as well as Cargo due to MARITIME Perils or the Sea Perils’ e.g. Fire, Enemies jettisons,,Barratry of master or crews, pirates, thieves, arrests+ and it provided cover for perils connected with War.But in 1898 London mkt. Which dominated the marine insurance excluded war risk which is excluded in all classes of insurance-- industrial revolution -war peril included. INSTITUTE OF LONDON UNDERWRITERS 1894 Main function- liaison with Marine underwriters and shipping companies. Britishers being conservatives retained the old ship and goods policy forms. Institute introduced many clauses deal with scopes of cover for Hull and Cargo Insurance. Policy and clauses needed simplification. It was raised and discussed in the conf. Of (UNCT AD) United Nations Commission for Trade And Development cont.... UNCT AD ‘United Nations Commission For Trade And Development.’ London market finally simplified& Stream lined the wordings of the policy and clauses. Adopted in the English market wef. 01/01/1982 These new policy clauses introduced in the Indian market wef. 01/04/1983. LLOYD’S OF LONDON Marine insurance market in U.K. has its major centre in LONDON in and around Lloyd’s blg Substantial market in, Liverpool and to a lesser degree in Glasgow and other cities . London market includes Lloyd’s the principal British insurance companies the agencies, branches. LLOYD’S AS CORPORATION Provides all the facilities for its members enabling to transact all kinds of insurance business on their own account. Consolidated facilities from themselves in to syndicates of various sizes.. LLOYD’S OF LONDEN • Each Syndicate has its own underwriters • membership of syndicate means no escape from liabilities which is several &unlimited. • U/W members are elected by the committee only on strictest exam of their financial status. • Each member has to deposit security with the committee for their underwriting liabilities. cont…. Cont.. Deposit until whole of the members liabilities have been discharged. Whole Of the underwriting premium placed in the Trust Fund used exclusively- to pay underwriters liabilities & expenses.also to submit accounts annually to an auditor before the profits are released. THE INSTITUTE OF ‘LONDON UNDERWRITERS’ Origin like that of Lloyd’s.(London Coffee house) It was incorporated in June1884 and , has membership of 100 and more. OBJECTIVES Advancement of Marine Insurance . Protection of interest of companies writing marine business- consultation and united action. Not a tariff Org. But has influence on the tech. side of marine insurance in conjunction with “International Union of Marine Insurance” in Germany in 1874. Cont.... Cont.…. Assists to remove causes of friction bet. various insurance markets through various committees e.g. Jt. Hull Committee, the Cargo Committee, the War Risk Rating Committee, Technical and Clauses Committee. IUM insurance- members countries like Germany,Austria, Russia and Sweden and 30 more countries. SALVAGE ASSOCIATION First In 1856 by a Committee of Lloyd’s and underwriters to protect community interest reg. wrecked and damaged property. Salvage and Survey of damaged property ships , cargo, jetters, docks, aircraft's, superviosion repairs. VARIOUS ACTS IN r/o MARINE INSURANCE Marine Insurance Act 1963- India -marine insurance contract an agreement bet insurer and Assured reg. indemnity for agreed sum against marine losses. Inland,water or any land risk, see voyage or air. marine insurance highly specialised ,req experts . Marine insurance certain peculiarities -sound knowledge. Nature of cargoes- chemical- physical/ conditions of the ports of the world. At common law fundamental principles required to be observed in all insurance contracts. They have been codified In marine insurance Act.1906 of England and that of 1963 of India. India act is similar to that of England . Indian insurer is required to follow & strictly observe the promise Of marine insurance Act 1963 and all India marine cargo Tariff.(now deteriff) Has been deregularised. guidelines have been issued by GIC dated 19.5.1994. ACTS. THE CARRIAGE OF GOODS BY SEA ACT 1925. THE MERCHANT SHIPPING ACT 1958. TH E BILL OF LADING ACT 1855. THE INDIAN PORTS (MAJOR PORT) ACT 1963. THE INDIAN RAILWAY ACT 1890 THE CARRIERS ACT 1865 Cont... Cont... THE INDIAN POST OFFICE ACT 1898. THE CARRIAGE BY AIR ACT 1972. THE INSURANCE ACT 1938- RULES-1939. THE CARRIAGE OF GOODS BY SEA ACT 1924. MULTI MODAL TRANSPORTATION OF GOODS ACT 1993. GIC BUSINESS (NATIONALISATION) ACT 1972. IRDA ACT 2000. EXCHANGE CONTROL REGULATION . Residents in India not permitted to take marine insurance with foreign insurance companies without Prior permition of RBI by Nationalization of Insu. act 1972.