MARINE INSURANCE

Historical Background

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Historical Aspects of Insurance The earliest beginning of insurance were in the field of marine insurance. The traders attempt to minimize the losses by spreading the losses amongst all who were similarly engaged.

cont.. Normally, many ships arrived safely in port and only few suffered losses. The many who were successful contribute to overcome the suffering of those who were unsuccessful. This was achieved by the payment of premium into a common fund.

cont.. Profitable Group of men who specialized in managing the fund by studying the rates of loss which occurred in the different types of marine adventure.

Definition of Insurance

What is Insurance?? Loss sharing arrangement Spreading the risk of loss faced by a specific person or enterprise to all parties who pool their resources to pay for individual losses.

Essential Features of Insurance It is an economic Institution It is based on the principle of mutuality or cooperation. Its objective is to accumulate funds to pay for claims that arise as a result of the operation of specific risks. Only certain risks can be insured against (namely those whose occurrence can be confidently estimated with a certain degree of accuracy.)

What is the Insurance service It Involves payment of contracted benefit or indemnify to the insured or a third party against unforeseen losses.

So.. Insurance means.. A contract (policy) in which an individual or entity receives financial protection to indemnify against losses from an insurance company, which pools client's risks to make payments more affordable, in exchange for a premium.

Functions of Insurance

Functions of Insurance Primary Function The equitable distribution of the financial losses of the few who are insured among the many insured.

cont.. Secondary Functions 1. Stabilization of Cost Avoid the necessity of having to freeze capital to providea financial protection against losses.

cont.. 2. Stimulation of Business Enterprise 3. Provision of Security for Expansion of Business 4. Reduction of Losses 5. Provision of Sources of Capital for Investment

Marine Insurance Definition

Marine Insurance A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. (S.1 Marine Insurance Act 1906)

Marine Adventure S.3 Marine Insurance Act 1906. There is a marine adventure where:- 1- Any ship goods or other moveable are exposed to maritime perils.

Cont.. 2- The earning or acquisition of any freight, passage money, commission, profit, or other pecuniary benefit, or the security for any advances, loan, or disbursements, is endangered by the exposure of insurable property to maritime perils

Cont.. 3-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.

Maritime Perils the perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind or which may be designated by the policy.

Cont.. The term "perils of the seas" refers only to fortuitous accidents or casualties of the seas (heavy weather, sinking, stranding, collision, contact), It does not include the ordinary action of the winds and waves. FIRST SCHEDULE (s 30), MIA 1906

MIXED SEA AND LAND RISKS extended so as to protect the assured against losses on inland waters or on any land risk which may be incidental to any sea voyage.

Non-Marine vs Marine Non-marine insurance: Insurance of persons: it deals with the life, physical integrity or health of the insured and is divided into individual insurance and group insurance. Damage insurance: property insurance and liability insurance.

Cont.. Marine insurance: the object is to indemnify the insured against losses incident to marine adventure.

Differences Marine policies value the assured’s interest at the date of policy rather than at the date of the loss.-S 16 A marine contract is enforceable only if embodied in a policy- S 22

Subject Matter Insured

Subject matter insured Ship - Hull Policies Goods - The Institute Cargo Clause (A),(B) and (C) Moveable Freight Profit - Profit on Goods - Profit on Charter

Cont.. Commission Disbursement Seamen’s Wages Venture Undertaken By A Company Liability to a Third Party

Marine Risk Refer to Hull and machinenary policy 1983

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