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Marine Underwriting

Marine Underwriting
The term underwriting refers to all activities in respect of
acceptance of risks depending upon the hazards related there
to, fixing of premium rates, issuance of policies along with
appropriate terms and conditions and arranging for reinsurance protection.
It is Expected from a Marine Underwriter to have a:- Sound knowledge of various types of commodities;
- Susceptibility of commodities to various types of losses /
damage;
- Conditions obtaining at different ports and I or places.
Based on their characteristics and susceptibility to damage,
cargoes are broadly classified as under:-

CLASSIFICATION OF CARGOES BASED


ON SUCESSPTIBILITY TO THE LOSSES
a)

b)

c)
d)
e)
-

Fragile (easily broken) e.g.


Asbestos sheets, porcelain, glassware, liquids in glass
bottles.
Explosives
e.g. Acetylene, dynamite, fireworks, etc.
Exudes Gases or Vapours
e.g. rotten apple, onion, sulphur, etc.
Liable to Fermentation
e.g. honey, jams, pickle, etc.
Generates Heat
when in contact with water/ oil
- exothermic reaction
- rise in temperature
e.g. fishmeal, coal, oil cakes, tobacco, etc.

CLASSIFICATION OF CARGOES BASED


ON SUCESSPTIBILITY TO THE LOSSES
(f) Hygroscopic
- absorbs moisture
e.g. salt, nitrates, sugar, caustic soda, etc.
g) Inflammable
- easily catches fire
e.g. acetone, alcohol, celluloid, carbon disulphide, tallow,
jute, cotton, petroleum products etc.
h) Odorous and Aromatic Cargo
- they generally taint the vessel for long periods;
- produce very offensive and objectionable gases.
e.g. hides, gums, bone meal, etc.

CLASSIFICATION OF CARGOES BASED


ON SUCESSPTIBILITY TO THE LOSSES
i)

Highly Combustible
- e.g. oxidizing agents like chlorates, nitrates, peroxides,
phosphorous, etc.
j) Shifting Cargo
- generally bulk cargo, like
e.g. grain, iron beams, bars, rails, plates, metal scrap,
ores,etc.
k) Spontaneous Combustion
- generates heat due to oxidation and then catches fire;
e.g. soft coal, jute, cotton, hay, hemp, metallic dusts, etc.
l) Staining Cargo
- liable to stain its own packing and also other cargo
e.g. molasses, oily nuts, ores, soya bean, etc.

CLASSIFICATION OF CARGOES BASED


ON SUCESSPTIBILITY TO THE LOSSES
m) Sweating Cargo
- liable to sweat (condensation)
- inherent nature of some commodities to give off
moisture - hence their condition at the time of shipment is
important
e.g. grain, pepper, cinchona bark, potatoes, cement, C.I.
Sheets, pulses, nuts, timber, etc.
n) Taintable Cargo
- liable to be affected by other cargo during transit;
e.g. foodstuff, cigarettes, cigar, coffee, tea (most susceptible),
etc.

CLASSIFICATION OF CARGOES BASED


ON SUCESSPTIBILITY TO THE LOSSES
o) Cargo Susceptible to Vermin Damage
- liable to be affected by rats, termites, weevils, fungus,
mildew, etc.
e.g. flour ( by weevils, mould),
grain ( by insects),
tropical wood ( by white ants),
hides & skins ( by maggots, mildew, etc.)

UNDERWRITING CONSIDERATIONS
FOR SPECIFIED CARGOES
Bagged cargo, liquid cargo:
While negotiating business for bagged cargo, liquid cargo and
fragile cargo, suitable excess to be agreed upon to take care of
dusting through/bursting of bags, leakage/ullage of liquids,
breakage of fragile goods, etc.
Steel Cargo, Pipes and Sheets:
It is advisable to accept business of steel cargo, pipes and sheets
excluding cover for "rust, oxidation and discoloration",
"bending, twisting and end damage" whenever applicable.
Leather goods:
The terms of cover should exclude "damage by mould and
mildew howsoever caused".

Edible items:
Cover should exclude "damages by insects, weevils, etc. An
excess of 0.5% should be negotiated for liquids.
Machinery:
The terms of cover should exclude mechanical, electrical and
electronic derangement. Special terms should be incorporated
for second hand machinery

MARINE CARGO
UNDERWRITING CONSIDERATIONS
UNDERWRITING CONSIDERATIONS
Marine u/writing has some peculiarities of its own & therefore
required a thorough knowledge about
The nature of various types of cargo,
Nature of loss / damage to which certain types of cargos are
more susceptible & the conditions obtaining at different ports
in the world &
The ports which are involved during the voyage.
Following details are generally obtained from the Proposer The vessel
The voyage or transit
The nature of cargo and its packing
The conditions and terms of insurance.

UNDERWRITING CONSIDERATIONS
THE VESSEL
The Vessel
Whilst the insured goods are on board the carrying vessel,
neither the assured nor the underwriter has any control over
their safety, the goods being entirely in the hands of the
operators of the ship and largely dependent on the fitness and
the seaworthiness of the ship and the competence of the master,
officers and crew to carry the goods safely and deliver them in
a sound condition to destination.
a) Physical condition of vessel
The physical condition of the vessel is reflected as age of the
vessel.
As the age of the vessel increases, it reduces its ability to
withstand the diverse hazards of ocean navigation.
Although the age adverse feature may be mitigated up to
certain extent by careful maintenance & sound management of
the vessel.

UNDERWRITING CONSIDERATIONS
THE VESSEL
b) Size of vessel
The size of a vessel is also an important factor. For example, a
15,000 tonner (Vessel, whose Gross Tonnage is 15,000) will
normally ride through an Atlantic storm or an Indian Ocean
cyclone with greater stability than a 2,000 tonner.
c) Types of cargo vessel
General cargo vessels may be subdivided into "liners" and
"tramps".
i. Liners
The cargo "liner runs to an advertised schedule between her
home port and her overseas terminus, calling en route at a
varying number of ports according to a particular service in
which she is engaged.

UNDERWRITING CONSIDERATIONS
THE VESSEL
ii. Tramps
The "tramp", on the other hand, carries mostly bulk cargo, very
often seasonal in character, for which she is specially
chartered.
Tramps will carry any cargo anywhere so long as adequate
freight is offered.
A cargo "liner" is a better risk than a "tramp".
d)Vessel under charter
Another important factor is whether a vessel is chartered or
not.
A vessel under charter will need a closer scrutiny as to the
integrity, bonafides and reputation of the charterer.
e) Classification Societies
An important consideration of the underwriter is that the vessel
be fully classed.

UNDERWRITING CONSIDERATIONS
THE VESSEL
It means that she (vessel) be entered in an approved ship
classification society whose rules for initial registration and
subsequent periodical inspections provide the necessary
technical safeguards.
Most of the vessels plying the high seas are entered in one or
the other of these classification societies and whose
classification and other details are readily available to
underwriters by a reference to the:
Lloyd's Register Of Ships" ;
Lloyd's Shipping Index"; or
On website www.equasis.org.
Under open covers, where the vessel's identity will not be
known prior to declaration. Therefore to control this Institute
Classification Clause is attached.

UNDERWRITING CONSIDERATIONS
THE VESSEL
This Institute Classification Clause states that the carrying
vessel must comply with the highest classification standards
awarded by any one of the societies, who are Members or
Associate Members of the International Association of
Classification Societies. Indian Register of Shipping (IRS) is a
Member.
f) Age of vessel
Age of the vessel is generally restricted up to:- For Tankers, Bulk Carriers and Combination Carriers:- 10
years
- For other vessels:- 15 years,
- For "liner" vessels operating to regular advertised
itineraries:- 25 years.
- Containerized vessels operating as liners:- 30 years.

UNDERWRITING CONSIDERATIONS
THE VESSEL
Shipment by any vessel failing to meet these requirements is
"held covered" subject to additional premium for the adverse
features, such as:
Overage;
Non-classification; and
Where the vessel is registered in a "flag of convenience"
(FOC) country.
By registering his vessels in F.O.C countries, the shipowner
enjoys tax advantage and is able to effect considerable savings
in tax.
Underwriters are seriously concerned regarding Flag of
Convenience (FOC) vessels.
A large proportion of world fleet is registered under flags of
convenience.

UNDERWRITING CONSIDERATIONS
THE VESSEL
Also, the standards of safety and crew competence required by
FOC countries are below the high standards set by other
countries.
Thus, when a ship is registered under F.O.C, there is generally
a tendency to employ crew of lower competence, because by
doing so, the ship owner may effect savings on wages.
The world casualty records indicate that a higher proportion of
major losses on tonnage are represented by F.O.C. vessels.
Flag of convenience countries are:
Costa Rica, Cyprus,
Greece,
Honduras,
Lebanon, Liberia,
Maldives islands,
Malta,
Morocco, Nicaragua, Panama,
Singapore,
Somalia,
Sri Lanka,

UNDERWRITING CONSIDERATIONS
THE VESSEL
g) Adverse features
Adverse features of the carrying vessel will attract loading of
premium under the following situations, when vessel is: i. not on a regular trading pattern and is over 15 years old.(
over 10 years for tanker vessels)
ii. on a regular trading pattern, but is over 25 years old.(30 years
in case of containerized vessels)
iii. not a mechanically propelled steel vessel,
iv. classed below the minimum, as set out in the Institute
Classification Clause, or is classed with a Register other than
those approved or is unclassed.
v. Chartered and she is not classed and is 15 year old.

THE VOYAGE OR TRANSIT


MODE OF CONVEYANCE:
For transportation of cargo, shipper depending upon the
contemplated voyage requires to use different modes of
conveyance.
Marine Underwriter is required to analyze various features
involved in different types of transportation systems.
The main features involved are as under: (I)SEA TRANSIT
The Underwriter is required to consider the length and period
of transit involved by vessel & the type of vessel engaged for
the carriage of the cargo.
The name of the vessel to be engaged, the age of the vessel, its
tonnage capacity, flag, classification and ownership etc.,

THE VOYAGE OR TRANSIT


(II)RAIL / ROAD TRANSIT:The following factors may be examined: Whether the goods are sent in open wagons or closed wagons.
The distance and road conditions.
Any transshipment is involved.
(III) AIR TRANSIT
With regard to air transit, the Underwriter is particularly
required to check whether the value of the cargo is declared to
the Air Carriers and if so, the percentage of the total value.
This applies to valuables like Gems and Jewelleries, Currency
notes, bullion etc.
The cover granted under Institute Cargo Clauses (ICC) is from
"warehouse to warehouse" involving whole duration and extent
of the transit.
This will include most of the following stages and concerns:

THE VOYAGE OR TRANSIT


Land transit by rail or road from the time the goods leave the
consignor's warehouse to the port of shipment.
Under the Transit Clause of ICC, there is no cover during any
period before transit actually commences, such as, whilst the
goods are in transit to and in a packer's premises, unless a
special provision is made in the policy, in which event,
underwriters may also consider including a period in the
packer's premises.
Transit to a container terminal or a period in the port
warehouse awaiting customs formalities.
Will the goods be stacked in the open exposed to the elements
or will they be stored under cover in a shed?
Whether there will be direct quayside loading into the
carrying vessels or will loading involve lighterage?

THE VOYAGE OR TRANSIT


The lighterage will mean greater exposure to loss or damage.
Stowage into vessels is another factor to be considered.
Is there any transhipment? Each transhipment involved will
mean additional handling, storage and mode of on-carriage
from the transhipment port or place and so there will be
greater exposure to loss or damage.
The longer the voyage, longer the cargo on board will be
exposed to the accidents and perils of the sea.

THE VOYAGE OR TRANSIT


Weather conditions:- Monsoons conditions are to be carefully
considered for country craft & coastal voyages between ports
in India.
On-deck cargo, that is, cargo stored on deck is a substandard
risk for two reasons :
i. It is more exposed to weather; and
ii. There are virtually no prospects of recovery from carriers,
under subrogation, as deck cargo does not come within the
purview of the Carriage Of Goods by Sea Act, 1925.
Therefore, in practice, the carrier invariably exempts himself
from liability.
Deck cargo will, therefore, attract higher rate of premium and
possibly a restricted form of cover.

THE VOYAGE OR TRANSIT


After discharge at destination, there is the inland transit by rail
or road to the consignee's final warehouse.
TAIL END RISK:
H a s the proposer declared the entire transit for the insurance
or is the insurance proposed relates only to part of the whole
transit, say, the latter part or the "tail -end " of the transit ? In
some cases the overseas supplier arranges for marine
insurance up to port of discharge.
The importer approaches their underwriters to cover the
interior transit after the consignment is landed at the Port of
Discharge.
Such type of transit risk is called "TAIL END" risk which is
basically an undesired risk to the underwriters.
The underwriters may wish to reject such proposal to avoid any
hidden loss or damage to cargo which may originate during
ocean voyage.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Nature of cargo and its packing
a) Cargo
This analysis about the goods should be looked into from
various angles and in particular to
i) Whether the cargo is hazardous or extra hazardous;
ii) Whether the cargo is of fragile nature;
iii) Whether the cargo is prone to some typical / different type of
losses viz., evaporation, loss in weight, spontaneous
combustion etc.
iv) Having regard to the nature of cargo whether the same is
being carried by a suitable or specially designed mode of
conveyance.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
i) In cargo insurance, the purpose of insurance is to
cover a risk that is fortuity and not the certainty.
ii) Therefore even in most comprehensive risk cover, the
loss, damage or expense caused by inherent vice is not
covered unless the policy specially so provides, as in
the case of Institute Coal Clauses.
All policies also exclude ordinary or inevitable losses,
such as:
Ordinary leakage;
Ordinary breakage;
Ordinary loss in weight or volume; or
Ordinary wear and tear of the subject matter insured.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Some commodities naturally lose weight, say, by evaporation of
their moisture content. In some trades customary ullage
(shortage) has been fixed by usage (trade ullage).
There are cargoes that gain in bulk during the voyage if
shipped in imperfect condition, for example, grain. Most
cargoes which contain excess of humidity when shipped are
susceptible to heating and spontaneous combustion, for
example, jute fibres and cotton in fully pressed bales.
Refined spirits evaporate and other cargoes have chemical
affinities with various commodities, for example, salt & sugar,
sulphur & nitrates.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
The following are the examples of such losses susceptible by
particular cargo:
Breakage of glasses, cast iron pipes crockery, chinaware etc.
Leakage of liquid cargo, contamination, theft and pilferage.
Heating and sweating of Butter, chocolate, sugar etc.
Water damage to cement, machinery and sugar etc.
Some commodities are also undesired in nature for
underwriting. These commodities are:
Hook damages in case of all types of bagged cargo
Breakage for Asbestos sheet, second hand machinery, glass
wares, cast iron or M. S. pipes, Crockery etc.
Leakage of all kinds of oils & other liquid items packed in
second hand drums / tins.
Heating or sweating in case of cloves, sugar & grains etc.
Heating & bursting when cargo is packed in paper bags.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
b) Packing
The purpose of packing goods for transit overseas or inland is
to ensure as far as possible that the goods reach destination in
the same perfect condition in which they were when they left
the shippers' premises.
The shipper is required to make certain that the goods are
packed in the manner which will enable them to withstand
normal handling during transit.
Packing, therefore, is an important factor in almost all
preventable cargo losses.
Insufficient, inadequate, improper, unsuitable and defective
packing can turn a small loss into a large one.
The condition of insufficient, inadequate, improper, unsuitable
and defective packing may become a cause of denial of the loss
by the insurer.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Under Institute Cargo Clauses there is an express exclusion
regarding "packing which reads as under:
"In no case shall this insurance cover loss, damage or expense
caused by insufficiency or unsuitability of packing or
preparation of the subject-matter insured ("packing" shall be
deemed to include stowage in a container or lift van, but only
when such stowage is carried out prior to attachment of this
insurance or by the assured or their servants)."
However, under the 2009 clauses, if packing is done by
independent contractors the exclusion is not applicable.
There are different types of packing that can be used for
various types of cargos.
These are generally - tins, bales, bags, drums, bundles, crates,
wooden cases / boxes, cartons, barrels etc.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Suitability of packing shall depend upon the nature of cargo, its
size and cost of packing involved.
BALES:
From the underwriting point of view, baled cargo is considered
comparatively better / favourable than bagged cargo. Goods
like Cotton, Jute, and Piece goods etc. are shipped in bales
preferably in fully pressed iron bound bales.
Baled cargo is particularly susceptible to Hook, water, oil, mud
damages etc. including country damage.
BAGS: Bagged cargo is generally sent in single or double gunny bags
or sometimes in paper bags.
Bags can be made of Jute, Hessian Cloth, Craft Paper, & HDP
etc
From underwriting point of view, double gunny bags are
considered as safer risks than single bags.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Grains, sugar, flour, oil seeds are generally shipped in gunny
bags.
Cement is often shipped in paper of 4/6 ply/polypropylene
lining.
Bagged cargo are more prone to risk of tearing or bursting
resulting into loss of contents.
Edibles when packed in gunny bags can also get damage due
to infestation & contamination.
For such proposals, cover may be offered for ICC C or Rail,
Road clauses B only.
BUNDLES:- Sometimes certain goods viz., Iron & Steel articles
(strips or bags), are packed in bundles tied with iron Wires.
Risk involved in this type of risk is Pilferage & some times
when iron wires break down, the entire bundles get scattered.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
CASES: These are wooden cases tied with iron straps / bands / hoops,
which are used for avoiding the planks coming-out during
transit.
Tin lined cases are used for commodities like Tea, Coffee,
Tobacco or Cigarettes etc.
Some times Bituminized paper is used for inner lining for water
proofing for cargo which are likely to be effected by moist / wet
atmospheric conditions.
Cargo packed in cases is prone to the risks of breakage due to
handling, jerks & jolts, knocks & falls during transit, theft &
pilferage.
Losses due to theft & pilferage can be occasional when during
transit planks are removed & after committing theft, the same
are re-nailed.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Goods can also be damaged due to water & resting because of
entry of sea / rain water into the cases during transit.
CARTONS: Are made of corrugated craft paper or cardboard with varying
thickness, which is called as no. of piles used for the
manufacture of cartons.
The strength of the carton must match with the wt. & volume
of the cargo being packed.
The risk involved is damage due to crushing & even splitting
of sides when proper care is not taken while stuffing.
CRATES: -Machinery & the like items, which are
comparatively heavier & bigger size, are frequently packed in
crates instead of cases.
This type of packing is not considered as good as cargo
packed in cases.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
TINS, DRUMS & BARRELS: - Liquid cargo like edible oils,
paints, chemicals, molasses are packed in drums.
Barrels:- Generally made of soft wood & bounded with metal
bands over circumference.
Drums are constructed of hard board, fibre board / reinforced
plastic.
Tins & canes are generally made of thin iron sheets.
Whether new or secondhand drum shall be used for keeping the
materials.
The risk involved is that of leakage due to rolling over,
knocking with other cargo & side walls of
container/wagon/hold of the ship.
Edible oil, petroleum products & valuable chemical etc. are
exposed to the risk of pilferage of contents by unscrewing the
lids or caps & even puncturing.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Bulk cargo: certain commodities like Iron-ore, grains, sugar, fertilizers,
chemicals, salt, oil, butter oil etc. are shipped in bulk i. e. no
packing is used.
They are carried in specially built bulk carrier vessels /
tankers.
Loading or unloading operations for these bulk cargo are
carried through specialised mechanical methods such as
conveyors, suction pipes etc.
Extra care is required while selecting vessel & storage/loading
of the cargo.
Some times it may happen that a vessel may carry oil in one
voyage & grain in subsequent voyage without properly
cleaning the tankers.
It may result in contamination.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
There are also problems to ascertain the exact wt. or volume of
the cargo loaded & discharge at the port.
For such type of bulk cargos generally the wt. & volume are
measured on the basis of draft survey.
As this measurement cannot be very exact, generally variation
arises to the extent of 0.5% to 1.0%
Unitising the packages
Many products and commodities can be economically
palletised or unitised to facilitate handling, stowage and
general protection of cargo.
"Palletising" is the assembly of one or more packages on a
pallet (platform, usually wooden) base & properly secured to
it.
"Unitising" is the assembling of one or more packages or
items into a compact load, secured together and provided with
skids for easy handling.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING

These methods have following advantages:


They eliminate the multiple handling of individual items.
They speed up loading and unloading operations.
They compel greater use of mechanical handling, reducing
possible damage from multiple manual handling.
They facilitate applications of waterproofing protection
for the entire load.
They reduce the incidence of lost or straying items.
Speedy loading & discharge operations lead to improved "turn
around" of ships & savings in dock dues for the shipowner.
The concept of unit carriage is important because it is
increasingly becoming a common method of cargo
transportation.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Pallets:- Packages are fastened to a platform and firmly secured
to it through the transit.
The platform is called a "pallet" & is lifted into and out of the
ship as a complete unit.
This facilitates loading and discharging operations, causing
considerable reduction in delay.
Some pallets are fitted with rollers for ease in movement. Fork
lift trucks are used for moving the pallets in the dock areas and
within a ship's hold.
Container transport
Containerisation is a wider application of the concept of
unitisation. The use of intermodal containers for transport of a
variety of cargoes has become increasingly common in recent
years.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
Intermodal transport involves rapid movement and transport of
standard cargo containers by sea, land and air. It has reduced
cargo handling, particularly in Door-to-Door shipments.
"Containers mean large boxes of regulated sizes, constructed
of strong light-weight metal, specifically designed for carriage
by custom-built cellular container ships.
A fully laden container ship will normally include one or two
tiers of container cargo "on deck".
Containers vary in size and in designs according to the
requirements of the container operators and shippers.
Generally accepted standard sizes by the ISO (International
Standards Organisation) are: 8 or 8.5 feet high by 8 feet wide
and 10 or 20 or 30 or 40 feet long.

UNDERWRITING CONSIDERATIONS
NATURE OF CARGO & ITS PACKING
The main standard used is 20 feet in length expressed as TEU
(" Twenty Foot Container Equivalent Unit").
Such containers fit into the specially constructed holds of
container vessels as well as in the holds of most conventional
ships and can be placed on a suitable transport for rail or road
haulage.
For the purpose of shipping, the contents of a container are
described as:- Full Container Load (FCL) or
Less-than-Container Load (LCL).
FCL implies a full load for a single shipper.
LCL is the term used for a smaller consignment consolidated
with goods of other exporters to fill the container.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
Containerisation in India
In India, advanced container handling facilities exist in major
ports like Mumbai, Chennai, Kochi, Haldia and Kolkata.
Jawaharlal Nehru Port at Nhava Sheva of Mumbai has one of
the most automated container terminal management systems in
the world. Facilities for bulk cargoes and containers are very
well planned.
Door-to-door concept has not yet caught on in India and a
large number of containers are meant to be destuffed and
stuffed in the port.
For that purpose, extensive shed space facilities exist.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
The containerisation does not do away with the need for
adequate cargo protection. The container is not a substitute for
adequate packing or for proper stowage or handling.
In many countries there are packaging consultants. These
consultants design specialised containers for all types of
goods.
They also advise on the elimination of loss and damage and
devise methods for the safe transit of goods.
In India, we have the Indian Institute of Packaging at Mumbai
to assist a shipper on packing.
Inland Container Depots (ICD) were established mainly
through the initiative of Indian Railways at Delhi, Bengaluru,
Coimbatore, Guntur, Ludhiana, Amingaon and other places (
246 places) for serving the shippers and consignees located in
different parts of India.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
In the early days of containerization, it was expectation of the
shippers that underwriters will reduce the rates on the grounds
that such carriage must reduce claims. Regrettably, this
expectation did not materialise.
Recovery prospects from the carriers became difficult in case
of heavy losses. Therefore underwriter prefers to charge higher
rates.
Advantages and disadvantages
Advantages
i. Quick and efficient carriage of cargo (especially when door-todoor) by custom- built container vessels between custom - built
container terminals.
ii. Multiple handling is minimised or eliminated, particularly for
F C L s and door - to -door containers.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
iii. Theft and pilferage risks are reduced though not entirely
eliminated.
iv. Economies in individual packing contents.
v. Protection against external contract damage.
vi. Protection against sea and / or fresh water damage.
vii. A container is a better protection against fire risk as well as
against water damage during fire extinguishing operations.
viii. Reduced risk of misdelivery.
Disadvantages
i. A carrier may decide to stow a container on deck. Containers
shipped to the deck are exposed to the elements and to the
risk of being washed overboard in severe weather.
In practice, the difficulty is compounded when frequently the
shipper is not aware that deck stowage has taken place.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
ii. Inadequate inspections & improper container maintenance
may leave damaged containers in service, thus exposing the
contents to water damage in particular.
iii. The concentration of values in a single container load of
consumer goods has become a convenient target for thieves
and hijackers.
iv. Inadequate or defective ventilation may increase the risk of
sweat damage and condensation.
v. Container shipments may encourage a lower standard of
individual packing of contents and this could spell disaster
particularly when LCL container load is involved and transit is
not door-to-door.
vi. Incomplete filling of a container or defective stuffing may
allow excessive free movement of contents in transit resulting
in self-damage.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
vii. A large variation in weight, where containers are stowed on
deck, can effect stability and unevenly weighted containers can
cause problems for the driver of a truck during inland transit.
viii. Bulky goods cannot be reasonably carried economically in
containers.
Difficulties in stuffing arise where one, or perhaps two, large
items occupy a container leaving much space in the container
unused.
ix. Contamination risks, if incompatible cargo is stowed in the
same container. Also there is the risk of contamination by
residual material or odours from previous cargo.
x. If a container is damaged in transit and substitute container
is not available for transshipment.

UNDERWRITING CONSIDERATIONS
CONTAINERISATION
xi. No remedial measures can be taken during the voyage or
transit if contents of container are damage. Damages will
remain concealed in the container it reaches at final
destination.
xii. In the event of a major casualty at sea, e.g. a stranding or
collision, immediate removal of container become impossible
because most container vessels do not have on-board lifting
equipment, and loading and discharge equipments.

Conditions of insurance
Rating should take into consideration each material element of
the risk involved, i.e. carrying vessel, or the voyage or the
nature of cargo and packing.
These characteristics vary considerably from risk to risk e.g.
- A proposal to ship heavy machinery of a cement plant on deck
rather than under deck will highlight the risk of washing
overboard in heavy weather.
Under ICC {B) cover, "Washing Overboard" is covered but
under ICC(C)-where "Washing Overboard" is not specifically
covered.
Likewise, in a consignment of consumer electronic articles, the
risk of theft and pilferage will be a major factor to include in
the rating under ICC (A), whereas it would be an immaterial
factor under the narrower coverage of either ICC (B) or (C).

Rates for wars and strikes risks and other extras


should be quoted separately from Marine premium
rates.
Moral Hazard and Morale Hazard factors:- Moral
Hazard relates to honesty and integrity of the insured
whereas Morale hazard relates to the attitude of the
insured. An honest insured, if negligent or careless
towards losses, is equally bad compared to a person
with bad moral hazard.

COMMON CAUSES OF CARGO


DAMAGE
COMMON CAUSES OF CARGO DAMAGE
Damage due to multiple handling during loading & discharging operations
may take place & the same is classified under the following heads;
Careless winch work- lowering heavy slings or drafts of cargo too fast on
to cargo already in stowage not infrequently is responsible for damage
which, often, goes undetected until discharge.
Cargo hooks, although highly undesirable, are used to handle commodities
like bagged cargo, bales, paper rolls and matting, and even liquid
containers. The use of cargo hooks may cause damage while loading and
unloading.
Crow & Pinch Bars are used for sound stowage of many classes of heavy
packages, but their use should never be permitted when stowing liquid
containers, or with any packages which are not able to withstand damage
from their use.

COMMON CAUSES OF CARGO DAMAGE


A pinch bar is a tool used for prying, moving, rolling, or lifting
heavy objects. This tool, which is also known as a pinch point
bar or pinch point crow bar, allows users to move a heavy
object by hand instead of relying on a piece of heavy
equipment. Pinch bars are frequently used in the automotive
industry as well as for many building and construction
applications.
A crowbar or prybar is a type of tool used to pry objects apart,
remove nails, and for general demolition.
Crushing against Ship's sides, hatch coamings, beam sockets,
etc, should be safeguarded against by the use of over side
skids, the correct plumbing and guying of derricks, & careful
winch driving, specially, when swinging booms are in use.

COMMON CAUSES OF CARGO DAMAGE


Dragging of Cargo by winches along the dock to save
trucking, from remote ends & wings of holds & Veen Hooks
instead of making up the draft or sling near the hatch, is a
prolific source of damage to & loss of contents of the lighter
class of packages, as well as to the cargo in stowage over
which such is dragged.
Dropping of Package from trucks and rail cart etc. may cause
external or internal breakage.
Improper Slinging: Too much of weight in a draft endangers
the safety of packages situated at the outside edge of bottom
and top tiers into which the sling is liable to be drawn by
weight below and compression above.