Foreign economic insurance covers a complex of types of insurance that protect the interests of domestic and foreign participants in certain forms of international cooperation. It includes insurance of export-import cargo, vehicles carrying them (ships, airplanes, vehicles, etc.), domestic property interests abroad, tourism and auto tourism, property interests of foreign individuals and legal entities in our country, activities of joint ventures, marine insurance, foreign trade insurance. Depending on the content of the relevant contracts, insurance costs may be borne by either party, which chooses the insurance company and insurance conditions.
Insurance services in foreign trade activities on the territory of the Russian Federation are provided in accordance with federal laws on insurance activities, in particular with the Federal Law “On State Regulation of Foreign Trade Activities” (as amended on February 10, 1999). In order to stimulate exports, the state can participate in the export credit insurance system. Commercial risks in foreign trade activities are insured on a voluntary basis under insurance contracts with Russian or foreign insurers (legal entities).
An important condition of the export credit insurance contract is the so-called payment waiting period. According to this condition,
The insurer's liability does not arise immediately after payment under a trade or service contract is not made at the agreed time or on the agreed date, but after a certain period, usually 60-90 days. This period is necessary to determine the reasons for non-payment and take measures to eliminate them. Insurance of export credits against non-payment is most often carried out by specialized institutions and companies, which are usually owned by the state or in which the state has a controlling stake. Thus, in the UK, insurance of such risks is carried out by the Export Credit Guarantee Department, the Indemnity Society and the Lloyd Corporation; in Germany - by the Hermes society and the private company Troyarbeit; in France - by the Kafas society; in Italy - SACHE; in the USA - OPIC, etc. Typically, such insurers act on behalf and at the expense of the government within the limit of state guarantees for export loans, approved when the state budget is adopted. Obtaining such a guarantee or government insurance policy is not always possible for various reasons. In addition, state insurance, as the experience of foreign countries (USA, France, Germany, etc.) shows, is always placed within strict limits; insured loans must meet strict requirements. Taking into account the specifics of insurance of export credits or the risk of non-payment, tariffing for it requires an individual approach to each specific case. When setting premium rates, the following are taken into account: the total term and amount of the loan, the size of the down payment, the timing of partial repayment of the loan on certain dates, the object of supply on credit or the type of services provided. An important factor when considering the issue of accepting risk for insurance is the need to prevent cumulation. In any case, export credit insurance should be considered as a factor stimulating the development of foreign economic relations.
Insurance covers the property and personnel of our embassies and other organizations operating abroad, as well as rented premises and property of foreign embassies and other representative offices accredited in the CIS.
In recent years, tourism, and especially auto tourism, has developed significantly. In most countries of the world, liability insurance for motor tourists for damage that may be caused to property, health and life of third parties is mandatory. In this regard, motor tourists traveling abroad are required to have a third party liability insurance policy, which must be valid in the countries that the motor tourist is going to visit.
In international practice, a special type of insurance activity has developed - third party liability insurance. Such liability arises when certain incorrect actions are committed by the insured or his inaction and represents his obligation to compensate damage to any legal entities and individuals. Unlike property insurance, here the object of insurance relations is not the property subject to damage, but the economic interest of the possible cause of harm in monetary terms. The purpose of liability insurance is to compensate for the costs that the insured is required to bear by law or by court order for the benefit of persons who have suffered loss or harm. The insured amount cannot be assessed before the insured event.
A specific form of insurance activity is reinsurance. It represents the transfer to the insurers who entered into insurance (reinsurer) of part or all of their participation in this operation to another insurer (reinsurer). At the same time, the stipulated part of the insurance premium is also transferred, in proportion to which liability to the insured for damages is distributed between the reinsurer and the cedant. This operation is performed, as a rule, when accepting large risks for insurance that one insurer does not dare to take on entirely.
Having understood the essence and basic concepts and types of insurance, the student can proceed to consider the features of insurance for foreign economic activity.
In foreign economic relations, transactions concluded with foreign counterparties are insured. Insurance transactions are reflected on the country's balance of payments when the policyholder, insurer or beneficiary is a foreign legal entity or individual.
Transport insurance and export credit insurance occupy a central place in the insurance of foreign economic activity.
When transporting foreign trade operations, vehicles, foreign trade cargo, as well as expected profits and commissions, freight and other costs associated with transportation are insured. A transport insurance contract can be concluded on the following conditions: with liability for all risks, with liability for a private accident, without liability for damage, except in cases of a crash. The main documents for proof of interest are: when insuring cargo - a bill of lading, waybill and other shipping documents, invoices and invoices, if according to the content of these documents the insured has the right to dispose of the cargo; when insuring freight-charter-party, bills of lading, etc. The issues of marine insurance are studied in more detail in a special academic discipline.
Export credit insurance is a type of insurance that covers credit risks. Credit risks are the likelihood of non-payment of outstanding payments and obligations on time. In foreign trade transactions, they are associated primarily with late payment due to the fault of the buyer due to his dishonesty or insolvency. Such risks lying on the side of the borrower are considered commercial. Along with them, there is an increase in the so-called political risks associated with military action, nationalization, confiscation, the introduction of restrictions and embargoes, etc. Specific credit risks include risks arising when entering new markets caused by an unexpected increase in production costs (inflation risk) or changes in the exchange rate (currency risk).
National credit risk insurance systems have now been created in all industrialized countries and in a number of developing countries. The main role in them is played by state insurance institutions specializing in this area, while private ones perform auxiliary functions, although their importance varies in individual countries.
The development of credit risk insurance proceeds mainly in two directions. Firstly, the amount of insurance coverage increases, usually amounting to 80-90% of the policyholder’s possible losses, but in some cases reaching 100% (in particular, for political risks). Secondly, the list of insured risks is expanding and new types of insurance are being introduced.
State insurance of export credits is used as one of the instruments of foreign trade policy that allows regulating the volumes and geography of export credits.
In international practice, the objects of insurance can also be goods located in warehouses; technical risks arising during contracts, construction and installation works, supplies of machinery and equipment, etc.
The overwhelming majority of insurance transactions are concentrated in the hands of giant insurance monopolies, the dominant position among which is occupied by US monopolies (about 60% of the volume of insurance transactions carried out on the world market).
BIBLIOGRAPHY
Arkhipov A.P. Insurance business. – M.: MESI, 2005.
Gvozdenko A.A. Fundamentals of insurance. – M.: Ankil, 2005.
Insurance / Ed. V.V. Shakhova, Yu.T. Akhvlediani. – M.: UNITY-DANA, 2005.
Shakhov V.V. Starkhovanie. – M.: UNITY, 2006.
First risk insurance Property insurance, insurance of enterprise property and property of citizens Business Risk Insurance
Insurance in foreign economic activity is a complex of types of insurance that protects the property interests of business entities that take part in various forms of international and global economic cooperation. Thus, in foreign economic relations, transactions concluded between foreign counterparties are insured.
In the country's balance of payments, insurance transactions on foreign economic activity are displayed only when one of the parties to the insurance contract (policyholder, beneficiary, insurer) is a non-resident, that is, a foreign legal entity or individual.
The objects of insurance in foreign economic activity are material or property interests associated with various aspects of foreign economic cooperation (trade, currency, credit, production and investment, etc.).
The subjects of insurance in foreign economic activity (policyholders) can be either individual companies or the state as a whole as a counterparty to a foreign economic transaction.
To find out why it is necessary to use the insurance mechanism in foreign economic activity, let’s look at an example. Suppose that exporter X from country A, according to the terms of a foreign trade transaction with importer B from country B, sent a shipment to its counterparty. Transportation including land (road transport) and sea (cargo ship) route elements. Payment will take place three months from the date of delivery of the goods. When implementing this agreement, the following risks may arise for foreign economic activity subjects:
1) damage to the goods during transportation (both sea and land)
2) a vehicle accident that may cause damage or loss of cargo;
3) environmental pollution and/or damage to health and/or property of third parties;
4) a change in the price/payment currency exchange rate during the validity of the contract, at the time of settlement, leads to losses in foreign exchange earnings of the exporter or importer.
5) refusal of the importer (for example, in case of bankruptcy) to make payment. This is not a complete list of risks that threaten the implementation of this foreign trade operation. Almost every foreign trade transaction is accompanied by a significant number of risks. This is due to a significant degree of uncertainty in the external environment due to the territorial remoteness of foreign trade entities, the different political, economic, socio-cultural state of their national economies, unforeseen changes in the internal (in the countries of foreign trade counterparties) and global market conditions in the relevant markets, insufficient information about the counterparty, imperfection of vehicles, increase in the number, scale, destructive power of natural and man-made disasters, industrial accidents, traffic accidents and the like. As a rule, each subject of a foreign economic transaction risks not only the expected profit, but also the fixed capital (for example, an exporter may lose goods during transportation, a creditor may not receive the amount of debt and interest, a foreign investor may forever retain his FDI, etc., each a foreign economic transaction involves monetary and financial settlements, in which any foreign trade entity may suffer significant losses as a result of currency risks; there is always the possibility of damage to third parties and, as a consequence, large amounts of compensation).
Since no counterparty wants to incur significant material costs in connection with compensation for its own losses or damage caused to third parties, it is advisable to contact an insurance institute.
Of course, concluding an insurance contract also requires certain costs, but the size of possible losses cannot be compared with the size of the insurance premium (for example, the cost of a modern passenger airliner such as the American Boeing 747 or DC-10 exceeds 50-60 million dollars, and the amount of compensation for all types of liability to passengers and third parties as a result of an accident of such an aircraft can be equal to 450-500 million dollars, which even a powerful company cannot pay off).
In our example, foreign trade subjects can avoid significant costs if they enter into insurance contracts: cargo (cargo) (1), vehicle (hull insurance) (2), carrier liability for possible damage to third parties (3), currency risks (4), export commercial credit (5).
At the present stage of development of foreign economic relations, there are practically no objects, processes or operations of foreign economic activity that are not protected by the insurance institution. Insurance of foreign economic risks is becoming an integral attribute of foreign economic transactions.
Risks of foreign economic activity can be classified according to the following criteria: main models of foreign economic activity: foreign trade and industrial investment; types of foreign trade activities in the industry and types of insurance.
Insurance of foreign trade risks under the foreign trade model includes insurance of objects of foreign trade transactions (goods, vehicles), liability associated with them, as well as currency and credit relations that are served (export loans, currency risks).
Insurance of foreign trade risks under the production-investment model covers the international movement of factors of production (international credit, FDI, international labor migration), the liability associated with them, and the monetary and credit relations that accompany them.
Foreign economic activity insurance covers numerous insurance risks related to all types of foreign economic activity and all branches of insurance: property, liability, personal.
1. Property insurance, including liability insurance includes:
1.1. Transport insurance, including: marine and aviation insurance, insurance of containers and vehicles.
1.2. Technical risk insurance: construction and installation insurance; insurance of cars against broken ones; post-launch warranty obligations; electronic equipment; liability to third parties during construction and installation work; insurance of imported complete equipment.
1.3. Property insurance, belonging to foreign and domestic legal entities and individuals in the territory of this country and abroad, from fire and other dangers.
1.4. Financial risk insurance, including: insurance of export commercial loans or risk of non-payment; currency risks; foreign investment from political risks.
2. Personal insurance, which includes accident insurance for foreign citizens on the territory of a given country, as well as citizens of a given country traveling abroad (on tourist or work visas).
Subjects of foreign economic relations are distributed across national borders. This determines the main feature of insurance in foreign economic activity. It operates not within the framework of national economies, but in the middle of the metasystem of the modern world economy. This essential feature determines a number of specific features of insurance in foreign economic activity:
1. The sphere of foreign economic cooperation is characterized by a high degree of risk, and the insurance objects themselves are characterized by a significant cost.
2. The specifics of foreign economic risks determined the peculiarities of the organization of insurance activities: increasing requirements for the financial stability of insurers; development of international marketing of insurance companies; introduction into the practice of insurance companies of uniform unified rules and technologies for conducting insurance operations; formation of international and supranational regulatory institutions.
3. An important condition for insuring foreign economic activity is compliance with the principle of high integrity (relative to standards of behavior) of the insurer and the policyholder.
4. It is mandatory that the policyholder has an insurable interest, that is, a material interest in the successful outcome of the foreign economic transaction.
5. Most insurance contracts are concluded on a voluntary basis, however, despite this, insurance has actually become an integral element of foreign economic transactions.
6. When insuring foreign economic risks, as a rule, a written application from the policyholder is required, and the main insurance document is the insurance policy.
The advantages of insurance in foreign economic activity are as follows:
In the event of insured events, insurers compensate for material damage to participants in foreign economic transactions;
The reliability of material and material elements used in foreign economic transactions increases due to preventive measures;
There is a significant saving of financial resources of subjects of foreign economic activity (there is no need to resort to the formation of their own insurance fund)
The turnover of financial resources is accelerating;
Funds mobilized into insurance funds become a powerful source of investment on the scale of the modern world economy.
Foreign economic activity insurance is carried out by commercial insurance companies (state, joint-stock, foreign, mixed, cooperative and others), as well as other foreign economic activity entities whose statutory subject of activity includes insurance operations. The selection of an insurance company (insurer) is carried out by subjects of foreign trade activities independently. Insurance of foreign economic transactions by foreign economic entities is carried out on contractual principles and is voluntary, unless otherwise provided by the laws of Ukraine.
The creation of the foreign trade insurance segment in the Ukrainian insurance market is carried out quite dynamically. The problems of forming a legal framework for insurance, creating market infrastructure, developing civilized insurance relations on the basis of financially stable insurance companies are being solved, insurance products and the methodology and technology of insurance operations are being developed, qualified personnel are being trained who are able to work in new market conditions. This creates conditions for improving the situation on the Ukrainian insurance market and opens up new opportunities for its development and improvement.
Insurance of merchant ships
The practice of foreign economic activity for the export and import of goods and services is based on a system of insurance contracts that provide certain guarantees to exporters and importers in the event of various unforeseen circumstances and accidents. The vast majority of foreign trade is served by sea transport. Therefore, issues of insurance of foreign economic activity are considered through a system of marine insurance contracts. The range of marine insurance issues includes insurance of sea vessels (hulls and equipment of transportation and other watercraft), cargo insurance (carried cargo) and shipowners' liability insurance. Cargo insurance is also called transport cargo insurance. The widespread development of container transportation in recent years has led to the development of container insurance as an independent type.
Based on generally accepted practice, insurance companies accept for insurance any public interest related to the operation of the vessel against any accidents and dangers during navigation or during the construction of the vessel.
In order to standardize insurance contracts and provide the policyholder with a choice in insurance coverage, various conditions that combine a certain group of risks are also applied in the practice of ship insurance.
Under terms with liability for death and damage subject to compensation:
a) losses from damage or actual or constructive total loss of the ship due to fire, lightning, storm, whirlwind and other natural disasters, wreck, grounding of the ship, collision of ships with each other or with any fixed or floating objects, including ice, or as a result of that that the ship capsizes or sinks, as well as due to accidents during loading, stowage and unloading of cargo or when receiving fuel, explosion on board or outside the ship, explosion of boilers, breakage of shafts, hidden defects in the hull, machinery and boilers, negligence or error of the captain, the engineer or other members of the crew or pilot;
b) losses from damage to the ship as a result of measures taken to rescue or extinguish a fire;
c) losses from the loss of a vessel;
d) losses, contributions and expenses for general average;
e) losses that the shipowner is obliged to compensate to the owner of another ship as a result of a collision between ships;
f) all necessary and expediently incurred expenses for salvaging the ship, reducing the loss and establishing its size, if the loss is compensated under the terms of insurance.
Under these conditions, losses from damage are compensated using a 3% deductible, i.e. losses are not subject to compensation if they do not reach 3% of the insured amount. Losses from damage are compensated without deductible only in cases where they were caused by a wreck, collision with another ship, grounding, fire or explosion on the ship, as well as in the presence of general average. Losses from the total loss of a vessel are in all cases reimbursed without a deductible.
Conditions without liability for damages, except in case of a crash, the insurer's liability is more limited. With the same list of risks, losses from the complete loss of the ship are fully compensated, and losses from damage - only in those cases if they were the result of the ship's wreck (grounding, fire or explosion on board the ship, collision with another ship or with any stationary or a floating object, including ice, or as a result of measures taken to rescue or extinguish a fire). Losses from the loss of a vessel are also subject to compensation; losses, contributions and expenses for general average; losses that the shipowner is obliged to pay to the owner of another ship as a result of a collision between ships; all necessary and expediently incurred expenses for salvaging the ship, as well as for reducing and determining its size, if the loss is subject to compensation under the terms of insurance.
Condition without liability for private accident provides for compensation for damages from the total actual or constructive loss of the ship for the reasons set out above in paragraph a) of the preceding condition; losses from the loss of a vessel; losses related to general average, but only in cases where the damage was caused to equipment, machinery, machinery and boilers, but not to the ship’s hull and rudder; Losses caused by extinguishing a fire or collision with other ships during rescue operations are also indemnified; expenses for salvaging the ship, reducing the loss and establishing its size are indemnified if the loss is indemnified under the terms of insurance.
Condition with liability only for the total loss of the vessel, including salvage costs, provides for compensation for losses from total loss (actual or constructive), loss of a vessel, and reimbursement of expenses for salvaging the vessel.
Condition with liability only for the total loss of the vessel provides for compensation for damages only from the complete (actual or constructive) loss of the vessel, due to the dangers listed above, and from the loss of the vessel without a trace.
In all cases, losses that occurred as a result of intent or gross negligence of the insured, beneficiary or their representatives are not compensated; unseaworthiness of the vessel (i.e. unreliability or unsuitability of the vessel for a given voyage, lack of the necessary equipment or equipment, the required composition of the crew, its proper qualifications, departure on a voyage without proper ship documents or incorrectly loaded); dilapidation or wear and tear of the vessel, its parts and accessories; forcing ice without assistance by an icebreaker, loading with the knowledge of the insured or beneficiary, but without the knowledge of the insurer, substances or objects dangerous in relation to explosion or spontaneous combustion; all kinds of military actions or military measures and their consequences, damage or destruction by mines, torpedoes, bombs and other weapons of war; acts of piracy, as well as civil war, civil unrest and strikes, confiscation, requisition, arrest or destruction of a ship at the request of military or civil authorities; loss of freight, demurrage (including costs of wages and crew maintenance during vessel downtime and repairs).
Other indirect losses of the insured are also not compensated, except in cases where, under the terms of insurance, such losses are subject to compensation under the general average procedure.
All of the listed conditions for ship insurance are, as it were, basic, pro forma for insurance contracts. By agreement of the parties, they can be expanded to include other risks.
Thus, it is generally accepted for a separate premium to include war and strike risks, loss of freight, etc. in the insurance contract.
Along with the listed insurance conditions, it is widely used in practice to include in national insurance policies some English standard conditions, the so-called clauses of the Institute of London Insurers, which regulate certain relationships between the parties under certain conditions.
For example, the clause of the Institute of London Insurers provides for the regulation of the relationship between the policyholder and the insurer in the event of a loss due to a collision of ships. The so-called ice clause, or Institute guarantees, is a series of standard guarantees or clauses, mainly of a navigational nature, prohibiting insured vessels from entering dangerous waters, especially in winter, due to the danger of ice arising there.
The conclusion of a ship insurance contract occurs on the basis of a written application from the insured, which must provide detailed information about the ship, the object of insurance, its type, name, year of construction and other data characterizing the ship; the insured amount, which cannot be higher than the insured value, i.e. the actual value of the vessel at the beginning of insurance; the desired insurance conditions are indicated, the period of insurance of the vessel is for a certain period or voyage. In the first case, in addition to the date, the expected navigation area is indicated, in the second - the ports of call of the vessel.
In case of term insurance, the insurer's liability begins and ends at 24 hours of the dates specified in the insurance contract. In this case, however, if the ship is at sea at the time of expiration of the contract, is in distress or is laid up at a port of refuge or call, the insurance contract is considered extended until arrival at the port of destination, and the insurer has the right to receive an additional premium in proportion to the extension period agreement.
When insuring a voyage, the insurer's liability (unless otherwise agreed) begins from the moment the mooring lines are released or the anchor is unanchored at the port of departure and ends at the moment of mooring or anchoring at the port of destination.
The insurer is liable for losses that occur only in the navigation area and only on the voyage that was stipulated in the insurance contract (policy).
When the vessel leaves the navigation area or deviates (deviates) from the route specified in the contract, insurance is terminated. In order for the insurance contract to remain in force in such cases, the policyholder must promptly notify the insurer of the upcoming change in the navigation area or voyage and confirm his willingness to pay an additional premium if the insurer requires it.
The deviation of the vessel from the stipulated route or leaving the navigation area in order to save human lives, ships and cargo, as well as deviation caused by the real need to ensure the safety of the further voyage, is not considered a violation of the insurance contract.
The international convention obliges ship captains to provide assistance to any person found at sea who is in danger of death, and, upon receiving a signal for help, to proceed as quickly as possible to the aid of those in distress (a similar norm is reflected in Article 53 of the MLC).
About all cases of changes in the insured risk that have become known to the insured, such as: voyage delay, deviation from the route, departure from the agreed navigation area, navigation in ice, wintering of the vessel not provided for in the insurance contract, towing (active and passive), etc. .p., - the policyholder is obliged to notify the insurer.
Changes in risk that occur after the conclusion of the insurance contract and increase the insurer's risk level give him the right to demand an additional premium or change the terms of insurance. In case of refusal by the policyholder, the contract is terminated from the moment the change in risk occurs.
Insurance premium called the fee that the insurer charges for insurance (assuming responsibility for possible damage or loss of the ship); the amount of the insurance premium is formed by multiplying the premium rate by the insured amount (the amount indicated in the insurance contract and which cannot be higher than the actual value of the vessel at the time of insurance). The tariff or contractual premium rate is the payment for insurance, expressed in hundredths or thousandths of the insured amount (as a percentage or ppm of the insured amount).
Due to the wide variety of types, types and classes of ships, the wide geography of their operation, and the areas of their navigation, ship insurance rates are also very diverse. Naturally, preference is given to the most advanced modern vessels of the highest class of register, sailing in quiet areas. In addition to the insurance conditions and the breadth of insurance coverage, the insurer takes into account the degree of risk associated with the quality of the vessel. Therefore, higher rates apply to ships that are old or have no register at all. The areas of navigation, the time of year when ice conditions may occur or the period of storms, etc. are taken into account.
Thus, for sailing in Arctic waters, where there is a danger of ice (vessels can get stuck in ice or be damaged by collision with ice), an additional, so-called extra premium is usually charged in addition to the normal rates established for sailing in warm waters.
Hence it is clear that in ship insurance, premium rates are applied individually for each ship depending on its type, insurance conditions, region and time of year, etc. It is almost impossible to develop fixed rates.
Practice only knows individual tariffs for ships sailing in strictly defined areas, tariff rates of extra premiums for sailing into areas designated as dangerous. This extra premium is a certain amount charged on each gross registered ton of the vessel, plus a certain percentage of the sum insured.
When insuring entire fleets, as a rule, the average rate is set for the entire fleet or, for a more accurate calculation, all vessels of this fleet are grouped according to common homogeneous indicators and the rate is set for each such group separately.
Relations between the parties upon the occurrence of an insured event, they are provided for in the insurance rules and the relevant maritime codes (in Russia - Article 218 KTM) and are binding on the parties. Failure to fulfill these obligations on the part of the policyholder or his representative may lead to the release of the insurer from liability under the insurance contract.
When an insured event occurs, the insured or his representative are obliged to take all measures within their power to prevent losses, rescue and preserve the damaged ship, and also ensure the insurer's rights of recourse against the guilty party.
The captain or officer of the watch must record all the circumstances of the accident at sea in the ship's log, and upon arrival at the port make a statement about the accident.
If the cause of the accident was force majeure, the captain, in order to relieve the shipowner (vessel) of liability for losses, must make a statement of maritime protest.
A maritime protest is submitted to a notary or other official at the port of arrival and must contain a description of the circumstances of the incident and the measures that the captain took to ensure the safety of the property entrusted to him.
The insurer may take part in measures to rescue and preserve the insured ship, give advice, agree on the terms of salvage contracts, etc., however, all of its actions are not considered the basis for recognizing the policyholder’s right to receive insurance compensation. This right is determined on the basis of the terms of the insurance contract.
When claiming insurance compensation, the policyholder is obliged to document the existence of an insured event.
Unless otherwise stated in the insurance contract, losses from damage to the ship must be compensated in an amount that should not exceed the cost of restoring the damaged or lost part of the ship, minus the natural wear and tear of this part at the time of the accident, i.e. In this case, the “old for new” principle applies.
After payment of the insurance indemnity, all claims and rights that the policyholder or beneficiary has against third parties guilty or responsible for causing harm are transferred to the insurer, within the limits of the amount paid. When receiving insurance compensation, the policyholder or beneficiary is obliged to transfer to the insurer all documents and evidence related to the loss in his possession and to complete all the formalities necessary to exercise the right of recourse to the guilty party.
Transport cargo insurance (CARGO insurance)
Modern foreign trade and maritime transport cannot do without insurance. In most cases, the insurance contract is an integral part of the commercial transaction. The question of who provides insurance and at whose expense is decided when these transactions are concluded.
In international trade, with all the diversity of its forms, the basic conditions for trade in certain goods and the corresponding proformas of trade contracts have been developed. These proformas provide for the mechanism for setting the price of the product and the actions taken by the parties to this transaction.
The most common four types of trade transactions are abbreviated as CIF, CAF, FOB and FAS.
It got its name from the initial letters of the English words: “cost of goods, insurance and freight.” This is a special type of contract in which the main issues of purchase and sale are resolved on special grounds: the moment of transfer to the buyer of the risk of accidental death, damage or transfer of goods, good faith actions of the seller; payment procedure and other issues.
When selling goods on CIF terms, the seller is obliged to deliver the cargo to the port of shipment, load it on board the vessel, charter the tonnage and pay the freight, insure the cargo against maritime risks for the entire duration of transportation until it is handed over by the carrier to the buyer and send the buyer all the necessary shipping documents.
Under a CIF transaction, the seller is not required to physically transfer the goods to the buyer; it is sufficient to send him all the shipping documents for this transaction. Having documents, the buyer can control the future fate of the cargo before receiving it.
The widespread use of CIF transactions in international trade has led to the need to develop special international rules for their interpretation.
Such rules, developed by the International Association of International Law, were initially adopted at a conference in Warsaw in 1928, and then in 1932 in Oxford (Great Britain) they were revised and the final version was called the Warsaw-Oxford Rules.
The rules were not binding and were applied only when agreed upon between the seller and the buyer at the conclusion of the trade transaction.
At the same time, any expansion of the conditions could be made, but at the expense of the buyer.
In England, Germany, France and other countries, in the process of applying the rules, appropriate recommendations were developed in the form of additions, which took into account the customs of these countries, some special terms of transactions based on the specific properties of certain goods (for example, flour, vegetable oil, grain, cotton etc.).
These recommendations in some cases were formalized by official government acts. However, they were mainly of an advisory dispositive nature, which made it legally possible to use various pro forma transactions and standard conditions in international trade, including different interpretations of the terms of a CIF transaction.
Thus, the vegetable oil trade association had up to 40 standard proformas, the London Grain Trade Association - up to 70 types of various proformas of standard sales contracts. The Cotton Trade Association had its own forms, etc.
In 1936, and then in 1956, 1980 and 1990. The International Chamber of Commerce has done a lot of work to unify, informally codify and interpret the terms of international trade contracts, established customs, generally accepted interpretations, common foreign trade terms and commercial concepts. As a result of this work, a consolidated reference material called “Incoterms 1990” (International Chamber of Commerce document No. 350) was published, which is widely used in international trade practice, including in transactions on CIF terms. Until 1980, Incoterms was published in editions of 1936, 1953, 1967, 1976.
Over the years, changes and additions have been made to the rules to take into account the evolving practice of international trade.
"Incoterms 1990" aims to establish uniform international rules for the interpretation of the most important terms and concepts used in sales contracts in foreign trade. As noted above, these rules are not mandatory, but they are increasingly being resorted to by participants in trade transactions who prefer clear, uniform international rules to those various vague interpretations of the same terms that still exist in different countries and can lead to misunderstandings and disputes involving loss of time and money.
The Incoterms 1990 rules have not yet been able to establish a uniform interpretation of some concepts and terms, so in such cases they recommend using the established customs of the ports of loading and unloading.
It is established that the special terms of contracts concluded by the parties to a trade transaction prevail over any provisions of Incoterms and that the parties, applying the rules of Incoterms 1980, can supplement or change them at their discretion. To avoid misunderstandings, it is recommended not to include in an international trade transaction agreement various abbreviations of concepts that are well known to one party, since they are used in domestic trade, but may be completely unfamiliar to the other party.
CAF transactions get their name from the initial letters of the English words “cost and freight.”
Under a CAF transaction, the seller must enter into a contract of carriage by sea at his own expense to the destination specified in the contract and deliver the cargo on board the vessel. The responsibility for insurance lies with the buyer.
FOB transactions get their name from the English expression “free on board”. Under the terms of this type of transaction, the seller is obliged to load the goods on board a vessel that the buyer must charter. He must also insure the goods during transportation, usually from the inland point to the port of loading and further to the final destination.
FAS transactions - from the English expression “free along the side” or “free along the side of the vessel”.
A marine cargo insurance contract is concluded on the basis of a written application from the insured, which must indicate: the exact name of the cargo, type of packaging, number of pieces, weight of the cargo, numbers and dates of bills of lading or other transportation documents; name, year of construction, flag and tonnage of the vessel; method of cargo placement (in the hold, on the deck, in bulk, in bulk, in bulk); points of departure, transshipment and destination of cargo; date of departure of the vessel, amount of cargo insured, insurance conditions. All this data is necessary to determine the compliance of a given transportation of goods, which provide for various cargoes certain requirements for packaging, stowage on the ship, the ship itself, etc.
These groups, in one modification or another, comply with the standard conditions of the Institute of London Insurers, which are called: with liability for all risks, with liability for private casualty; without liability for damage, except in cases of wreck. The developed groups of tariff rates correspond to them.
The all-risks clause is the broadest, but by no means covers “All Risks”. These conditions exclude damage and loss of cargo from any kind of military action, weapons of war, piracy, confiscation, arrest or destruction at the request of the authorities (these risks can be insured for an additional fee); the risks of radiation, intent and gross negligence of the insured or his representatives, violation of established rules for transportation, forwarding and storage of goods, and inappropriate packaging are excluded; the influence of bilge air or special properties of the cargo; fire or explosion, if, without the knowledge of the insurer, substances hazardous to explosion and spontaneous combustion were simultaneously loaded onto the ship; shortage of cargo when the outer packaging is intact (shortage); damage to cargo by rodents, worms, insects; slowdowns in cargo delivery and falling prices.
The insurance condition with liability for a private accident, unlike the first one, has a firm list of risks for which the insurer is liable. Naturally, the insurer's liability is less here. Risks that are not covered by the “All risks” condition are also excluded from liability under this condition.
The condition of insurance without liability for damage, except in cases of a crash, according to the list of insured events in which losses are payable, and according to the set of exclusions from insurance coverage, generally coincide with the conditions with liability for a private accident. The difference is that under the latter condition, the insurer under normal conditions is liable only for cases of complete loss of all or part of the cargo, and is responsible for damage to the cargo only in the event of any incident (generally referred to as a wreck) with the vehicle (vessel).
Under all three conditions, the insurer reimburses losses and expenses for general average, necessary and expedient expenses incurred to salvage the cargo and reduce the loss.
Here it is necessary to clarify the terms “private” and “general” accidents. An accident is usually understood as any breakdown that can occur with equipment and structures on land; with vehicles at sea: breakdowns, explosions, fires, ship collisions, grounding, etc.
In maritime law, the word “accident” has received a different interpretation: an accident does not mean the incident itself, but the losses and expenses caused by this incident to the maritime enterprise. These losses are divided into general average losses, which are distributed among all participants in the maritime enterprise, and private average losses, which fall on the owner of the damaged property.
General average loss Losses incurred as a result of intentional, reasonable and extraordinary expenses, contributions or donations made in order to save the ship, freight and cargo transported on the ship from the general danger for them are recognized (Article 232 of the MCC).
Thus, in order for a loss to be recognized as general average, four conditions are necessary: intentionality, reasonableness, emergency and the purpose of the action is to save the cargo, vessel and freight from general danger. If at least one of these conditions is not met, the loss will be recognized as a private accident.
The most typical cases of general average:
a) losses caused by throwing the cargo overboard (the ship ran aground in a storm, it is in danger of destruction, in order to refloat it is necessary to lighten the ship). Art. 234 of the Code of Labor Code establishes that general average will include losses “caused by the throwing overboard of cargo and accessories of the ship, as well as losses from damage to the ship and cargo when taking measures for general rescue, in particular, due to the penetration of water into the hold through hatches open to throwing out the load, or through other openings made for this purpose”;
b) losses caused by extinguishing a fire that occurred on the ship, but these will not include losses from burnt cargo, which is a private accident of their owner;
c) losses associated with the refloating of the vessel. If the ship runs aground for rescue purposes, then all costs will be attributed to general average losses; if by chance, only those losses that were caused by measures to refloat the vessel will be included in general average losses;
d) expenses and losses associated with the forced entry of a ship into a port of refuge.
General average losses are distributed between the ship, cargo and freight in proportion to their value. Each of the insurers of the cargo, vessel or freight, respectively, unconditionally compensates for its share of losses.
The institution of general average is one of the most complex in maritime insurance law.
The presence of general average is determined by adjusters, who also distribute the costs associated with it. The calculation for the distribution of general average is called average and is drawn up by adjusters at the request of interested parties.
The total value of property involved in covering a general average loss is called contribution capital.
When drawing up averages when the requirements of the law are incomplete, average adjusters are guided by international customs of merchant shipping. The set of such customs in determining general average is the York-Antwerp Rules of 1974.
All losses that do not fall under the definition of general average are classified as private average losses. These losses are borne by the owner of the property on which they occurred, or by the one who is responsible for causing them.
The insurer is generally liable for losses only up to the insured amount. However, general average losses are compensated even in cases where the total amount of payments may exceed the insured amount.
When accepting the cargo, the consignee is obliged to reimburse the carrier for all necessary expenses incurred by him at the expense of the consignor, and in the event of a general average, make an emergency contribution or provide reliable security (based on the right of lien, the carrier may delay the delivery of the cargo until payment of the appropriate amount). When determining general average, the following documents are taken into account.
A written statement by the consignee, where he undertakes to pay the share of expenses falling on him in the order of distribution under general average.
A cash deposit may be made as security for general average payments.
By agreement of the parties, a bank guarantee can replace a cash deposit. In some cases, a counter-guarantee from a more reputable bank may be required.
Emergency commissioners(surveyors) draw up a document that contains a description of the causes and amount of loss in any insured event, as well as other data that allows us to judge the existence of the insurer’s liability - an emergency certificate.
According to international law (Article 229 of the Labor Code), after payment of insurance compensation, the right of claim against the guilty party is transferred to the insurer (within the limits of the amounts paid) - right of recourse. In this case, the policyholder must promptly ensure that the insurer receives such a right by transferring his powers to him.
Sea protest. In the event of any incident during a voyage associated with natural forces, the captain of the ship, in order to relieve himself of responsibility for possible damage to the cargo or on the ship, at the first port of arrival, submits a maritime protest to the competent government body, outlining the most important circumstances of the maritime incident and measures, adopted by the ship's command to prevent possible adverse consequences of such an incident. Thus, in this statement, the captain proves that the crew took all measures for the safe completion of the voyage and the safety of the cargo, and if this failed, then the natural forces of nature are to blame and the captain protests against all claims that may be brought against him or the shipowner (Art. 286 KTM).
The captain or officer of the watch enters in chronological order all the facts and circumstances related to the regulations on the ship (about the ship itself, cargo, crew, etc.) in the ship's log. A separate log is kept for the engine room, where the operation of the machines, commands received and executed are recorded.
When determining the presence of general average, all these documents are decisive.
So, an insurance contract concluded only on the basis of one of the above conditions, even the broadest (“All risks”), does not fully cover all possible dangers that may occur during sea transportation. Therefore, the insured or another person at whose risk the part of the dangers of transportation not covered by insurance remains, must take care of additional (at his own expense) insurance in addition to what is usually provided for in trade contracts on a CIF basis.
Relations between the parties upon the occurrence of an insured event are common with any type of insurance. The difference lies only in the need to complete a number of formalities and provide documents of different nature to confirm the existence of an insured event.
First of all, the insured must treat the object of insurance as if it were insured, and upon the occurrence of an insured event, take all measures to save it and preserve the damaged (expenses for these purposes, as stated above, are reimbursed by the insurer), provide the insurer with the right of recourse to the guilty party and promptly notify the insurer of the incident.
To receive insurance compensation, the policyholder (or beneficiary) must document his interest in the insured property (for example, the existence of an insurance contract), the existence of an insured event, and the amount of his claim for loss.
In marine insurance, to prove interest in the insured cargo, it is necessary to submit bills of lading, railway invoices and other transportation documents, invoices and invoices, if, according to the content of these documents, the insured or his representative has the right to dispose of the cargo. When insuring freight, presentation of charter parties and bills of lading is required. The existence of an insured event is confirmed by the following documents: a sea protest, an extract from the ship's log and other acts indicating the causes of the insured event, and if the ship goes missing - reliable information about its departure from the last port and the expected date of arrival at the next port. To prove the amount of the claim for loss, emergency certificates drawn up by the emergency commissioner, examination reports, assessment and other documents drawn up in accordance with the law and customs of the place where the loss is registered are presented; supporting documents for expenses incurred, and if there is a requirement to pay a share in the general average - a reasonable calculation and average statement.
Shipowners liability insurance
With the development of merchant shipping, the ever-increasing quantity and variety of cargo transported by sea, the expansion of the geography of trade voyages, the saturation of sea routes with various watercraft, and the increasingly equipped ports with the most complex and expensive auxiliary structures, the amount of material liability of ships for possible damage (by mistake or accident) increased. physical or moral damage to third parties.
Such risks are partially covered by a regular marine comprehensive insurance contract. True, under this agreement the insurer accepted for insurance the liability of shipowners for collisions of ships, but only within 3/4 of the amount of possible damage, and 1/4 remained at the risk of the shipowner as a kind of deductible. Therefore, shipowners had to look for a way out of the situation, which they found by uniting into unique organizations that aimed to compensate for such losses on a collective basis. This is how mutual societies for ship hull insurance appeared - clubs for mutual insurance of shipowners. The form of mutual insurance was that the insurers - ship owners - created a common insurance fund, from which losses incurred by one or another member of the club were compensated.
Protection Risk Insurance. Subsequently, such clubs, in addition to insuring 1/4 (25%) of the share of liability in the event of a collision of ships not covered by contractual insurance, began to accept responsibility for other risks, the occurrence of which was caused by a number of historical factors. Thus, in 1846, England (the historical ancestor of merchant shipping and marine insurance) adopted an act providing for stricter requirements for shipowners in connection with their liability for compensation for damage associated with loss of life or bodily injury. The reaction to this was the creation of a number of clubs or associations to protect the interests of shipowners, accepting for insurance the risks associated with the operation of ships called “protection risks.” Accordingly, the societies were called defense clubs.
Indemnity insurance. In 1870, the owner of a ship that sank with cargo near the Cape of Good Hope after it passed the cargo's destination port was found responsible for the loss of the cargo. This court decision prompted the clubs to accept shipowners' liability for the safety of cargo accepted for transportation as insurance. This type of insurance protection is called compensation insurance or indemnity insurance.
Protection and indemnity risk insurance has long been carried out by separate clubs. Protection risks included: liability insurance in case of death and injury to ship crew, passengers, and port workers; 25% (1/4) of damage caused to another vessel in a collision; damage to fixed and floating objects; expenses for removing the remains of sunken property from the waters of ports and fairways.
Compensation risks included mainly the risks of shipowners' liability for the safety of goods accepted for transportation and in general with the use of ships for the transportation of goods: various fines imposed on shipowners due to errors or omissions of the captain and crew members by customs, emigration, sanitary or local authorities, a share of general emergency expenses due from the ship or cargo when general average is caused by the error or negligence of the ocean carrier.
Subsequently, the clubs or associations for defense and reparation merged into single clubs for mutual defense and reparation.
In addition to carrying out the insurance operations listed above, clubs take, if necessary, measures to prevent the arrest of insured ships and issue bank guarantees for this. To protect the interests of their members, clubs have representatives or correspondents in various ports who monitor the progress of loading and unloading operations and take appropriate measures if claims against shipowners arise.
Mutual liability insurance of shipowners has become widespread. Currently, there are about 70 clubs in the world, the largest of which are considered to be clubs in England, Sweden, Norway, and the USA. One of the most important principles of the clubs is that they do not pursue the goal of making a profit from their operations, but are intended only to protect their members from losses incurred.
The governing body of the club is the board of directors, elected from representatives of shipowners. The Council meets as needed to resolve fundamental issues of insurance and financial policy.
Current work, in particular settlements of insurance premiums, payment of losses, etc., is carried out by firms or management firms specializing in the field of maritime law, shipping, and insurance.
The financial base of the clubs consists of contributions from its members, from which insurance funds are formed, intended to pay possible claims against shipowners - members of the club to cover the costs of running the business.
The amounts of insurance premiums are based on the average statistical indicators of loss for a number of years and depend on the composition of the fleets included in a particular club - the type of vessel, its gross registered tonnage, navigation area, the volume of insurance liability, as well as the requirements of national legislation regarding the liability of shipowners for the actions of the ship's crew and its agents.
Insurance premiums are divided into three categories - preliminary, additional and emergency.
At the beginning of each policy year (which usually begins at noon on February 20 of each year and ends at noon on February 20 of the following year), the club's board of directors sets the amount of the advance premium based on estimated amounts. If, after the end of the operating (policy) year, it becomes clear that there are more claims submitted than the preliminary contributions collected, the board of directors makes a decision on the club members making additional contributions to cover the deficit.
In the event of catastrophic losses that the club's funds are insufficient to cover, emergency contributions are resorted to.
If the case goes well, when preliminary contributions more than cover all claims, next year the contributions will be adjusted accordingly.
The scope and types of liability of shipowners that are covered by insurance in mutual insurance clubs usually depend on the rules of a particular club in each individual case. Although each of these rules states that the nature and size of the insurance risks and insurance conditions can be agreed upon by the club and the shipowners, in reality this happens extremely rarely and each club adheres to the rules established by it. This is partly due to the fact that the rules take into account mandatory (mandatory) norms of national legislation that cannot be changed by agreement of the parties, and also due to the fact that when the insurance conditions change in favor of shipowners, it is necessary to revise the amount of the insurance premium towards its increase.
Thus, although mutual insurance clubs may insure various types of liability, each club limits its scope of liability only to the risks defined in the rules of these clubs.
Mutual insurance clubs in various combinations and volumes assume responsibility for the following risks.
Liability for loss of life, bodily injury, illness and repatriation. Under this type of insurance, the club reimburses the shipowner for expenses incurred in connection with the funeral, hospitalization and treatment of any persons on board the ship. Losses resulting from the loss or damage of personal belongings belonging to these persons are also subject to compensation. An insured event will be considered negligent actions or omissions on board the ship or inept handling of cargo. The costs of repatriation of crew members of the insured ship are also reimbursed; wages and other types of earnings not received by crew members as a result of the practical or constructive total loss of the ship; expenses for the deviation of the ship from the course (deviation) and in connection with the need to disembark a sick or injured crew member, as well as port expenses and the shipowner's costs for fuel, provisions, wages, insurance and other monetary costs associated with waiting for the replacement of a retired crew member (otherwise the vessel will be considered unseaworthy) to ensure the safety of the continuation of the voyage.
Liability for collisions with other vessels is one of the main risks insured by clubs. It is understood that 3/4 of the liability for collisions with other ships is covered by contractual comprehensive insurance (hull, machinery, equipment and rigging of the vessel), and 1/4 of the liability remaining at the risk of the shipowner is insured by the club. The Club insures this remaining 1/4 of the shipowner's liability, including costs and expenses associated with damage caused by collision to any other vessel, regardless of whether the shipowner's liability is insured under a comprehensive insurance policy that includes a collision clause. The club may accept for insurance the shipowner's liability in excess of 1/4 of the liability for loss to another ship, provided that such excess is not subject to compensation under the comprehensive insurance policy.
If a loss occurs that is subject to compensation by the club, the club's management reserves the right to determine the actual value (insurable value) of the vessel for which it should have been insured under a comprehensive insurance policy, and compensation between the insured amount and the actual (insurable) value of the vessel. The amount of loss not paid by the club is reimbursed by the shipowner himself.
In addition to insuring liability for collisions with other ships, the clubs insure the shipowner's statutory obligation to compensate another shipowner for the costs of raising the ship if it sank; removal of shipwreck remains; the cost of installing light or other signs to indicate such remains, as well as losses caused by the insured vessel to the port, dock, berth, pier or other other fixed or movable (except for ships) object.
If a claim for indemnity arises as a result of a collision between two vessels belonging to the same shipowner, then he is entitled to compensation for damages from the club as if the vessels were owned by different shipowners. Such a rule in insurance practice is referred to as a “clause for ships belonging to one shipowner.” If both ships are to blame for the collision, then a procedure is provided for eliminating losses on the basis of counterclaims of the ships against each other.
As noted above, marine insurers under a comprehensive insurance agreement can accept insurance not for 3/4, but for all 4/4 of liability for collision of ships, including in the policies the modified collision clause of the Institute of London Insurers.
Liability for damage caused to stationary or floating objects, - liability of the shipowner for damage caused by his ship to the port, dock, pier, pier, pier, land, water or any other fixed and moving objects, with the exception of another ship and the property located on it. The scope of insurance coverage under this rule includes the shipowner's liability for pollution of waters and coasts as a result of leakage of oil products.
Considering the volume of oil and petroleum products transported by sea, as well as the strict international regulations on environmental protection, insurance of this kind is very dangerous.
Under international rules, if an oil spill threatens to pollute a coastline under the jurisdiction of a government or otherwise poses a risk of harm, the tanker owner must remove the oil or pay the cost of removal and cleanup of the coastline. However, the tanker owner's liability is limited to $100 per gross registered ton of the tanker's capacity, with a maximum total liability of $10 million for each tanker and for each incident.
Suffice it to recall the catastrophic consequences of tanker accidents, which caused irreparable damage to coastal waters and the coast of some regions of France and England due to spilled oil.
Of particular concern to international public organizations is the transportation of petroleum products under the so-called flags of convenience - Panamanian, Liberian, Singapore, etc., where the register requirements for the seaworthiness of ships are significantly reduced. Owners of ships flying these flags, i.e. having a home port in one of these countries and undergoing a registration inspection there, along with tax benefits, they “save” on safety precautions, a qualified team, etc.
The United Nations Conference on Trade and Development (UNCTAD) published a study in 1978, from which it follows that up to 1/3 of the ships of the entire world fleet are covered with a flag of convenience.
Liability for damage to vessels not caused by collision. The shipowner's liability is insured for loss and damage to another ship or property on it, including expenses associated with it caused by a cause other than a collision and resulting from negligence in navigation or control of the ship, or from other negligence expressed in action or inaction on board or in connection with the insured ship. Risks of this kind include damage caused by improper maneuvering of the insured vessel, which led to the grounding (in order to avoid a collision) of another vessel, or its collision with a third, or a pile-up on the pier, etc. This does not include damage caused by a wave raised by the insured ship, fire, the source of which was this ship, an explosion that occurred on board, anything falling overboard, etc.
Liability under towing contracts. The shipowner's liability arising from the terms of the towing contract is insured, in which his ship can be either towed or towed. Losses and damages occurring during towing and being the responsibility of the shipowner are indemnified, but only to the extent that such liability is not subject to indemnification under hull insurance policies.
This rule is based on the fact that first of all the liability associated with the rules and conditions of entry into the relevant ports in which towing is necessary or commonplace is insured.
Liability under guarantees and contracts. According to this rule, the shipowner's liability can be insured for damage caused to the life and health of any individuals, as well as any property, except for cargo transported on the insured ship. This refers to contracts and guarantees related to the hiring by shipowners of cranes, lighters and other loading and unloading mechanisms and transportation facilities.
Responsibility for removing the remains of the shipwreck. Liability of this kind is one of the significant risks that shipowners are exposed to. It is imposed regardless of the presence of their own guilt and the guilt of their employees. Under this type of insurance, clubs are reimbursed for the costs of raising, removing and destroying the remains of a shipwreck or installing lighting or other warning signs to indicate the location of the remains of the insured ship that has been wrecked. The club's liability arises in cases where the listed actions are necessary by law, as well as if the specified expenses can be recovered from the shipowner in court. The cost of the ship's stores, materials and the remains themselves salvaged as a result of lifting must be deducted from the amount of insurance compensation.
Expenses due to quarantine. Quarantine and emergency expenses associated with the occurrence of an infectious disease on board the ship. Such expenses include:
the costs of disinfecting the ship and persons on board the ship in accordance with the requirements of public health legislation, rules and regulations of the relevant authorities;
the cost of fuel consumed or the cost of towing the vessel to a specially designated place where the ship must remain during quarantine, and towing the vessel from such a place, including the cost of fuel consumed during quarantine;
direct costs of entering a place or port of refuge and leaving a ship from such a place or port, if the only reason for the call was the occurrence of an infectious disease on board the insured ship.
Responsibility for the safety of transported cargo. The club insures the liability of shipowners for loss, damage and shortage of cargo or other property transported by the insured vessel. At the same time, the club insurance rules provide for the possibility of choosing insurance coverage:
a) liability for loss and shortage of cargo;
b) liability for damage to cargo.
In practice, shipowners usually insure the risk of cargo loss in full on the terms of both parts.
When insuring liability for damage to cargo, the shipowner has the right to compensation for additional expenses for unloading, selling damaged cargo and selling depreciated goods in excess of the expenses that the shipowner usually makes under the contract of carriage. Additional expenses incurred by the shipowner are reimbursed by the club in the amount of 50%, provided that the shipowner cannot recover them from anyone else.
The club reimburses expenses for damage to cargo or other property, as well as in connection with this cargo or property transported on other means of transport, but for which the shipowner is responsible under the terms through bill of lading or the corresponding contract of carriage.
Loss of freight is only recoverable if the freight is included in the claim paid by the shipowner.
Failure to receive the share due from the cargo under general average. The club may insure the risk of receiving, in general average or salvage compensation, a share falling on the cargo or another participant in the maritime enterprise, which the shipowner had the right to receive, but did not receive due to a violation of the contract of carriage or charter.
Vessel's share of general average. Insurance of the ship's share of general average and salvage costs is additional. It comes into force in the event that general average contributions insured under a comprehensive insurance policy are not subject to reimbursement in full, since when distributing general average expenses, the adjuster may establish a discrepancy between the actual value of the vessel and the insured amount, namely when the insured value of the vessel exceeds its insured value amount. In this case, the shipowner under the comprehensive insurance policy will receive only a proportional share of the amount due to him under general average, and the club will have to compensate the difference.
Fines. Clubs accept for insurance various fines imposed on the shipowner by the relevant authorities, courts, arbitrations and other competent organizations: for failure to comply with safety regulations on board the ship established in accordance with the laws, decrees, and regulations of any country; for non-delivery of cargo, delivery of excess cargo and non-compliance with cargo declarations and other documents on the vessel and cargo; for smuggling of goods by the captain, crew members, agents and other persons for whose actions the captain of the ship is responsible; for violation of customs laws and regulations relating to the design, its modification and re-equipment of the vessel; for violating immigration laws.
Franchise application procedure. Taking into account the possible liability of shipowners for various risks, the clubs leave the responsibility of their policyholders to cover minor losses as a deductible.
Thus, the costs of shipowners in connection with the illness of crew members, including the costs of repatriation and changes in the course of the ship (deviation), are reimbursed in the amount by which they exceed $ 120 in each individual port for ships with a capacity of 2,500 gross register tons or more and $60 for ships under 2,500 gross register tons.
For liability for loss, damage to cargo and liability in connection with the cargo, for the share of cargo in general average and for salvage expenses, the shipowner is compensated for losses with a withholding of $0.12 per gross registered ton of the ship's capacity or $720 for each general cargo transported on a ship in one voyage (whichever is less) and $0.12 per gross registered ton of capacity or $240 for cargo that is not general (whichever less amounts).
For all types of fines, the first $120 per fine is not reimbursed.
The total amount of club payments for one incident is also limited. For example, for the tanker fleet in the event of a collision, damage to floating and stationary objects, damage or shortage of cargo and legal expenses, the club’s liability limit is $35 million. An additional limit of $20 million has been established for the risk of water pollution with oil products. In addition, tanker owners who are parties to the agreement on compensation for the costs of pollution of the coastal strip with oil products, for their part, limit their liability under this agreement to 15 million dollars. For dry cargo ships, the liability limits of clubs are much smaller and range from 50 thousand to 6 million dollars depending on the lines they serve.
Review of claims. When an insured event occurs, the shipowner must notify the club or its agents about the incident and submit emergency certificates, examination reports, calculations, justification and other documents related to the loss. It remains the responsibility of the shipowner to take all measures to prevent or reduce losses and possible expenses. container transport service(CTS) required the creation of specialized rolling stock: container ships, extended four-axle railway platforms for the simultaneous transportation of three 20-foot containers, automobile semi-trailers and tractors; construction of specialized container stations and terminals (berths), equipped with high-performance heavy-duty transhipment facilities, special container trucks, etc.
Container transportation has become an independent type of cargo transportation and is now widely provided with the possibility of continuous sequential transportation by sea, rail and road vehicles.
For the transit of such large-capacity containers through the territory of our country, an international Trans-Siberian container line has been created.
Container insurance has certain specifics. The object of insurance is the containers themselves as containers for the goods placed in them, however, they are part of the ship, are intended for subsequent removal from the ship in places of transshipment and transportation of the goods contained in them on other means of transport or for storage and, therefore, cannot be insured for terms and conditions of ship insurance. Their insurance is carried out under special insurance contracts, usually concluded on standard English terms. The scope of insurance coverage may vary. Container insurance can be provided both on an all-risk basis and on narrower terms that cover the risk of loss of containers, the containers' share in a general average, the costs of salvaging containers, preventing and reducing losses.
With a relatively low cost of containers - from 2 to 10 thousand dollars per piece, depending on the size and material of manufacture - their total cost on board a medium-duty container ship is 3 - 4 million dollars, and on large ships it reaches 10 million dollars ., which is already a significant risk.
It is believed that the greatest depreciation of a container occurs in the first years of operation and amounts to 30% after the first year, another 20% after the next two years, and another 10% each after three and five years.
When insuring the risk of loss or damage to containers, insurers usually limit their liability for one shipment to certain limits both during sea transportation and separately during land transportation. In addition, to exempt the insurer from minor losses, a deductible is applied in various amounts on the order of $100 - $500. An indispensable condition for insuring containers is the presence of a clear image of serial numbers and other identification marks on them.
When insuring containers on an all-risk basis, the insurer assumes responsibility, within specified limits, for the risks of their complete loss and damage during the insurance period, including transportation of containers on deck.
The insurer is not responsible for natural wear and tear or gradual deterioration in the quality of containers, as well as for their loss, damage and possible expenses caused by flight delays or the natural properties of the insurance object.
The insurer's liability for the loss of container mechanisms occurs in the event of complete loss of the container, however, in some cases the insurer's liability for their damage may be provided.
If the container is damaged, but the damage does not lead to its complete destruction, the amount of insurance compensation should not exceed the reasonable cost of repairing it. If there is a subsequent complete loss of a damaged container, the repair of which was not made before its destruction, then the insurer is responsible only for the complete loss of the container and should not pay any amounts for the failed repair, even if these amounts were confirmed earlier.
In cases where the cost of restoration of a container exceeds its insured amount, it is considered that the container has suffered a complete structural loss and, accordingly, the loss is compensated as for a complete loss.
General average and salvage costs are usually recoverable in accordance with the laws of the container owner's country or, if provided for in the charter agreement, in accordance with the York-Antwerp Rules. Moreover, if the indemnity amount exceeds the insured value of the containers, the insurer undertakes to pay the indemnity amount.
If the charter agreement includes a clause on mutual fault in a collision, according to which the owners of containers are obliged to compensate the carrier for the part of the losses falling on the containers collected from the carrier by the owners of another vessel, the insurer, under the terms of insurance of containers “against all risks”, undertakes to compensate the insureds (owners of containers) for the payments them amounts, but only in the proportion in which the loss is subject to compensation under the terms of insurance. A special clause stipulates that this insurance should not serve as a source of profit for carriers or depositaries.
The transfer of rights or interest under the policy or the transfer of amounts payable under the terms of the insurance cannot be made or recognized by the insurer without the appropriate notice of such transfers dated and signed by the insured or his representative and an endorsement on the policy before payment of the loss or return of the insurance premium.
In case of sale (alienation) of a container, insurance is considered canceled from the date of its sale. When the insurance contract is canceled by the insurer, a proportional share of the net premium is subject to return, and when the contract is canceled by the policyholder, the premium agreed upon by the parties is subject to return.
A special clause in the terms and conditions of container insurance against all risks exempts the insurer from liability for losses caused by confiscation, seizure, arrest, prohibition or detention and their consequences, as well as attempts to commit such actions. In addition, within the meaning of this clause, the insurer is not responsible for the consequences of enemy actions or military operations, regardless of whether the outbreak of hostilities has been announced or not.
The insurer is also exempt from liability for losses associated with the consequences of civil wars, revolutions, armed uprisings, riots, civil clashes and piracy.
The insurer is not responsible for loss or damage to containers, as well as possible expenses for losses directly or indirectly caused by ionizing radiation and contamination by radioactivity from nuclear fuel or nuclear fuel combustion waste; exposure to radioactive, toxic, explosive and other properties of nuclear compounds and their components.
The terms and conditions for insuring containers against all risks also stipulate that the insurer is not responsible for loss or damage to containers and for possible expenses for losses caused by confiscation, nationalization, seizure, requisition and caused by strikers, lockout participants or persons taking part in labor conflicts, uprisings and civil unrest.
Thus, as is usual for other types of insurance, the entire range of risks falling under the concept of war and strike are excluded from insurance coverage. By agreement of the parties, some of them may be included in insurance coverage for an additional premium.
The conclusion of an insurance contract is made on the basis of a written application from the insured, which must contain basic data about the object: type of container, volumetric indicators, cost, name of the carrier vessel, date of departure of the vessel, point of departure, destinations and transshipments, etc.
The burden of proof is on the insured to prove that loss or damage to the insured container resulted from exposure to a covered peril. Unless otherwise provided in the insurance contract, losses from damage to containers are indemnified in an amount not exceeding the cost of restoring damaged or lost parts, minus the percentage of natural wear and tear of these parts at the time of the accident.
To resolve disputes that arise, the contract provides for the place and procedure for arbitration.
When insuring containers on other terms, which are usually abbreviated as “from total loss”, only losses incurred by the destruction of containers are indemnified, as well as the share falling on the containers due to general average, the costs of salvaging containers and preventing or reducing losses payable under the terms of insurance. The costs of repairing containers (except in cases of general average) are not subject to reimbursement under this insurance condition. Otherwise, both types of conditions are the same.
When insuring containers (accepting liability and setting premium rates), you should keep in mind that the cost invariably increases every year.
As with any work with heavy cargo, work on handling, transportation, transshipment and storage of containers may be associated with causing material or physical damage to third parties, which by law must be compensated by the guilty party.
Therefore, in addition to insuring containers against loss or damage, insurers accept the risk of civil liability of container owners or tenants for damage that may be caused to the person or property of third parties in connection with the use of containers. Coverage is provided on the terms of civil liability insurance, taking into account the specifics of the insurance object.
In this case, insurers usually limit their liability by establishing certain limits when accepting risk. Limits are set separately: for injury or death of one person; for destruction or damage to the property of third parties; for causing injury or death to several persons and/or destruction or damage to the property of several persons under one insured event.
After studying Chapter 25, the student will:
know
- the concept of “foreign economic activity”, features and forms of foreign economic relations;
- the essence and role of insurance for foreign economic activity;
- the main factors determining the risks of foreign economic activity;
- basics of international insurance classification;
- types of insurance most in demand in the process of foreign economic activity;
be able to
- characterize the functions of insurance of foreign economic activity;
- provide the main characteristics of the risks associated with the implementation of foreign economic relations;
- determine the feasibility of choosing a specific method of insuring foreign economic risks;
have an idea
On methods of risk insurance in the process of foreign economic activity.
Insurance of foreign economic activity: concept and functions
In modern conditions, the economy of each country inevitably becomes increasingly dependent on the economies of other countries. This is manifested in the variety of connections between countries. Nowadays, a separate state practically cannot exist separately from other countries, without entering into various relationships with them. Economic relations between countries are no longer limited to foreign trade, they include the movement of capital between countries, currency relations, labor migration, and scientific and technical exchange.
Foreign economic activity(FEC) is one of the areas of economic activity of the state, enterprises, firms, closely related to foreign trade, export and import of goods, foreign loans and investments, and the implementation of joint projects with other countries.
Foreign economic relations represent trade, scientific, technical, production and other economic relations of countries with foreign countries. On the basis of foreign economic relations, an international division of labor is carried out, making it possible to achieve savings in social labor in the process of rational production and the exchange of its results between different countries.
International exchange of goods is considered economically profitable only if, thanks to the import of goods, it is possible to save on their production and make a profit.
If the structure of exports and imports is correctly formed, international exchange of goods can be beneficial to many countries. The priority in foreign trade is the development of exports, since the purchase of imported goods can be carried out in the presence of either foreign currency or a competitive product.
To obtain the greatest economic effect, it is necessary to export high-tech products that allow obtaining maximum foreign exchange earnings per unit of labor input, and those goods that have the highest labor input per unit of investment should be imported.
Currently, the main forms of foreign economic relations include the following.
- 1. Trade. Through this form, the purchase and sale of consumer goods is carried out: clothing, shoes, perfumes, haberdashery, cultural goods, as well as food products and raw materials. There is also a trade exchange of products for industrial consumption: components, parts, spare parts, rolled products, bearings, assemblies, etc. It is possible to purchase goods and equipment for public consumption: urban transport, equipment for hospitals, clinics, sanatoriums, resorts, medicines, devices and equipment for environmental protection. The purchase and sale of intellectual work products is carried out: licenses and know-how, engineering products.
- 2. Joint entrepreneurship. This form of foreign economic relations can be implemented in the industrial sphere: in plants, factories, enterprises; in agriculture, science, education, medicine, transport, construction, credit and financial sphere, culture and art.
- 3. Provision of services. Intermediary, banking, exchange services, insurance, tourism, and international cargo transportation are widely used in international business. The volume of services provided by computer networks available in developed countries of the world is growing rapidly.
- 4. Cooperation, assistance. Scientific, technical and economic cooperation is becoming increasingly widespread in foreign economic relations. Scientific, cultural exchange and sporting events are being strengthened and spread 1 .
Insurance is currently the most economical, rational and accessible mechanism for protecting the interests of participants in foreign trade activities. Along with other elements, insurance is an indispensable requirement of international trade contracts in economic and legal aspects.
Insurance of foreign economic activity is associated with the need to cover damage caused by previously foreseen adverse events that are possible in the practice of foreign trade activity.
The object of foreign economic activity insurance is the property interests of its participants. The specific features of foreign economic activity include the fact that the interaction of participants may be subject to the legal regulation of different countries, as well as international legal regulation.
Foreign economic activity insurance (FEA) is not a type of insurance that requires a special license. In this case, the insurer is differentiated based on the activities of policyholders in the domestic or international market. Because of this, the objects of foreign trade insurance are similar to the objects of insurance within the country.
Various types of insurance in foreign economic activity can be carried out in both voluntary and mandatory forms. In any case, the contracts stipulate the insurance procedure, which is an indispensable condition for the validity of the contract (agreement) between participants in foreign economic activity, and for most types of insurance, standard insurance conditions have been developed.
The following types are of particular importance in foreign trade insurance: cargo insurance; carrier liability insurance; marine; aviation insurance; financial risk insurance.
In countries with developed market economies, insurance plays an important multifaceted role. In this regard, four functions of insurance for foreign economic activity can be distinguished: loss compensation function, social function, investment function and preventive function.
Damages function lies in the fact that through the insurance mechanism a significant share of losses resulting from fires, natural disasters, man-made disasters and other random events of an unfavorable nature is compensated. Reimbursement received from insurance companies is usually used to restore lost and damaged property, which ultimately contributes to economic growth. At the same time, it is important to understand what the benefits of those entering into insurance relationships are. Uninsured victims are forced to collect the necessary amount of funds in a short period of time to compensate for losses, which can cause them serious financial difficulties. Having an insurance contract allows you to smooth out such large expenses, i.e. By regularly paying relatively small premiums, insurance participants receive a guarantee that they will not suddenly have to incur large costs to eliminate the consequences of any accidents. Thus, insurance allows you to plan in advance the costs associated with the negative consequences of unexpected events.
Social function Insurance of foreign economic activity is manifested through the use of insurance to solve social problems of society. Insurance organizations provide great assistance to the insured in the event of accidents and illnesses, finance the treatment and rehabilitation of victims, and compensate the latter for lost income.
Essence investment function Insurance of foreign economic activity is manifested in the fact that with the help of insurance, the organization of insurance protection of investors from possible losses is carried out. This makes it possible for foreign investors to receive guarantees of the safety of their investments and thereby contributes to an increase in the volume of investments in the country.
Warning function insurance of foreign economic activity is implemented in reducing the degree of risk and destructive consequences of an insured event through financing from the insurance fund of various measures to prevent, localize and limit the negative consequences of insured events 1.
This insurance function manifests itself in two aspects:
- 1) insurance organizations direct part of the received contributions under insurance contracts to the formation of special reserves for preventive measures. Funds from these reserves are used to finance measures aimed at preventing accidents, fires, accidents, etc.;
- 2) insurance organizations require their clients to take certain measures themselves aimed at reducing the likelihood of insurance events occurring.
Insurance of foreign economic risks is a complex of types of insurance that protect the interests of domestic and foreign participants in certain forms of international cooperation. Includes:
Insurance of export-import cargo and vehicles carrying them: ships, aircraft, vehicles, etc.;
Export credit and investment insurance;
Transport insurance is property insurance and is divided into insurance of transport as property (a set of devices and mechanisms) and insurance of civil liability of the owner of the vehicle as a source of increased danger.
Cargo insurance (cargo insurance) is a sub-branch of transport insurance. The objects of insurance are property interests associated with the safety of the transported cargo from the effects of many risks arising during transportation. The scope of insurable interest includes not only the cargo, but also the transportation fee and the expected profit. In insurance practice, there are two principles for forming insurance coverage in an insurance contract, i.e., a set of insured risks. The first principle is based on the exclusion method, i.e. the contract states that the cargo is insured against all risks with the exception of some of those listed. The second principle is based on the inclusion method, i.e. The contract lists all insured risks. One of the general conditions of insurance is a deductible, which limits the insurer's liability in terms of the amount of the indemnified loss. It allows you to exclude from the insurer's liability certain types of losses that are practically inevitable when transporting certain goods (losses associated with broken and scrap cargo, especially susceptible to such damage, with spills, loose goods transported unpackaged) and relieves the insurer from considering minor losses . Insurance contracts indemnify losses caused by accidents and dangers of transportation.
The purpose of export credit insurance is:
When insuring export loans - protection of financial institutions from possible losses in connection with the financing of export loans;
When insuring export contracts, it protects domestic enterprises from losses during the execution of an export contract, either before sending goods, or before providing services, or after sending (risk of credit obligations).
The object of insurance is commercial loans of the exporter-insurer to importer-counterparties and/or advance payments of the importer. The insurers are firms or banks of the exporting country associated with the provision of a loan to a foreign buyer. There are two options for insuring the exporter: in case of insolvency (bankruptcy) of a foreign buyer and insurance against the risk of delay in payment before actual insolvency occurs.
The insurance company, having received a premium (insurance premium) from the policyholder, legally carries out a set of measures to study, evaluate and manage the insured risk, and in the event of insolvency of the importing counterparty or delay in payment after a certain period, reimburses the policyholder in the manner prescribed by the contract for unpaid amounts on invoices receivable for goods supplied on credit and services provided. When insuring the risk of non-payment, the policyholder's own participation in losses (deductible) is provided for, which is expressed as a percentage of the insured amount (usually set at 5-20%). The excess cannot be insured separately or with another insurer. The policyholder is also obliged to provide the insurer with all the information and documents that the insurer needs to determine the fact of insolvency and assess the amount of loss. Export credit insurance often involves long-term cooperation between the insurance company and the exporter. This involves the insurance company issuing master policies that provide coverage for all contracts entered into during that period. The benefits of export credit insurance for a Russian exporter are as follows:
Assistance from specialists in assessing the reliability of potential partners when entering new markets;
Constant monitoring of the financial condition of foreign clients and timely notification of their financial condition;
Ability to increase the number of clients and sales volume;
Possibility of increasing competitiveness through the use of more flexible forms of payment (installment payment);
The ability to export directly to end consumers, bypassing reliable intermediary wholesalers, which increases the profitability of the operation.
There is a distinction between export credit insurance against political and commercial (economic) risks. The amount of insurance payments for the first insurance often exceeds the receipts of insurance premiums, which makes it unprofitable. Therefore, it is carried out by specialized institutions and societies owned by the state; losses are covered from the state budget. With increasing political instability in the country in respect of which insurance coverage is provided, the amount of insurance amounts decreases and insurance rates increase. Commercial risks include the final insolvency of the private buyer, his failure to pay the debt within the agreed period, refusal to pay after the goods have been shipped to him, etc. Insurance of such risks is usually carried out at the expense of the insurer without attracting state budget resources. The insurance conditions stipulate that the foreign buyer must pay at least 15-20% of the contract value, and an insurable loan is provided for the remaining amount. The size of insurance premiums depends on the volume of the insured operation, insurance risks, the country of the importer, the type of buyer, and the insurance period.
More on the topic Insurance of foreign economic activity:
- Chapter 4.1. FINANCIAL AND LEGAL BASIS OF THE ACTIVITIES OF STATE AND MUNICIPAL ORGANIZATIONS: CORPORATIONS, COMPANIES, INSTITUTIONS AND ENTERPRISES
- Characteristics of foreign economic activity and directions of its development
- Forms and methods of regulation of foreign economic activity
- 9.1. FOREIGN ECONOMIC ACTIVITIES OF THE COMPANY: MAIN DIRECTIONS
- § 1. Features of the implementation of entrepreneurial activities by the state corporation Vnesheconombank and international organizations IBEC and IIB
- The concept and application of special administrative and legal regimes for carrying out economic activities
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