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Company Operational Manual(COM) Insurance 5.5 Insurance Indication Placement Renewal |
Doc No.: COM 5.5
Revision: 1 Date: 15 Oct 2024 Issued by: DPA Approved by: MD |
1 APPLICATION
This document applies to Insurance Department, Business Development, Brokers, Fleet Groups, and Vessel Accounts/Accounts Payable.
2 PURPOSE
The purpose of this document is to provide instructions regarding the following processes:
- Insurance placement for a vessel under the company
- Renewal of various insurance policies
- Insurance policies co-assureds
3 INSURANCE INDICATION AND PLACEMENT
3.1 Process workflow
The workflow for this process is illustrated in Figure 1 below.
Figure 1. Insurance Indication and Placement Process
3.2 Responsibilities within the workflow
| Function | Responsibility |
|---|---|
| Customer | Initiate the workflow with request for insurance indication. Approve firm quote if insurance to be placed under the technical management company. |
| MD | Inform Insurance of request and advise Customer accordingly of indication/quote obtained. |
| Legal team/Marine Superintendent | Obtain insurance indication, quote, and necessary documentation. |
| Brokers | Provide indication/quote and necessary documentation. |
3.3 Customer activities
3.3.1 Request for budget
The process is initiated by the Customer who will request for an insurance indication for the vessel. Details to be provided are as follows:
- Type of vessel (e.g., Tanker, Bulk Carrier, Container vessel, etc.)
- Gross Tonnage
- Deadweight
- Year of Build
- Trading Area
- Flag
- Total number and nationality of crew
- Insured value
- Loss of Hire (LOH) Daily Rate (if required)
- Limit for K&R insurance (if required)
- Type of cargoes to be carried (if known)
3.3.2 Review of indication
Customer will decide on whether the vessel’s insurance to be placed under the technical management and advise Managing Director of decision.
3.3.3 Confirmation to proceed with insurance placement
Customer’s approval on the firm quotation is required before insurance placement and they will be required to sign the necessary entry application forms.
3.4 Managing Director activities
3.4.1 Request for insurance indication
MD shall provide the details (refer section 5.1) to Legal Team for the request.
3.4.2 Provide owners with insurance indication
MD shall provide the desktop indication to Owners and advise Insurance department if firm quote is required.
Note:
- Brokers normally provide a desktop indication at the first request which is non-binding and for budget purposes only. It is important to state a disclaimer and advise the prospective Owners that the subsequent market quote may differ to various degrees to the Broker’s desktop indication which cannot be viewed as final.
3.4.3 Obtain owner’s confirmation on firm quote
MD shall:
- Advise Legal Team/ MTSI of Owner’s confirmation of the firm quote and instructions to proceed with insurance placement
- Provide copy of BIMCO Ship Management Agreement
- Advise on estimated date of takeover
3.5 Legal Team/ MTSI activities
3.5.1 Request for insurance indication
Insurance department shall check that all required details are available and submit request for desktop indication to Brokers. The standard request shall be for P&I (Protection and Indemnity), FDD (Freight, Demurrage, and Defence), H&M (Hull and Machinery), HI (Hull Interest), and War Risks. If indication for LOH is required, the daily rate shall be provided.
Guidance:
- Indication for other insurances such as Extended LOH and K&R (Kidnap and Ransom) are upon Owner’s specific request only.
3.5.2 Advise MD on desktop indication
Legal Team/ MTSI shall:
- Provide the desktop indication to MD
- Include any conditions and deductibles as mentioned by the Brokers
- Always state the disclaimer (see note below)
Note:
- Desktop indication is basis fleet conditions and statistics, and is subject to warranted approval of Ownership, no IGA (International Group Agreement) implications, and receipt of further underwriting information such as Owners/Operators etc. It is important to state the disclaimer that the subsequent market quote may differ to various degrees to the Broker’s desktop indication which cannot be viewed as final.
3.5.3 Request brokers for firm quote
Legal Team/ MTSI shall:
- Request Brokers for firm quotation upon receiving instructions from MD
- Liaise with MD or Owners if any additional information is required
- Advise Brokers of Owner’s confirmation and instructions to proceed
3.5.4 Insurance cover notes and documentation
Legal Team/ MTSI shall:
- Check BIMCO agreement for details of co-assureds to be indicated in policies
- Obtain Owners signature on the entry application forms and provide to Brokers
- Advise and update Brokers of takeover schedule. Once the vessel has been taken over, inform Brokers of actual date and time for final cover notes to be issued
- Check that final cover notes and invoices tally with the firm quotation provided and co-assureds in order
- Forward cover notes and invoices to Owners and Fleet Group, keeping Vessel Accountant in copy for invoice payment
3.6 Brokers’ activities
3.6.1 Desktop indication
Brokers shall provide desktop indication for:
- H&M, HI, War Risks, LOH: Premium is basis rate against insured value. Deductible for H&M to be indicated
- P&I: Estimated total call consists of advance call and deferred call. Advance call premium is basis rate per gross tons and deferred call is usually estimated at 25% of advance call
- FDD: Advance call premium is as per company fleet level and deferred call usually estimated at 25% of advance call
- K&R (If required by Owners): No annual premium as premium is on a per transit basis. Transit rate premium is basis limit per insured event
3.6.2 Firm market quotation
Brokers shall obtain firm market quotation and advise Insurance department. Where applicable, the quotation shall comprise of the following details:
- List of underwriters and their respective share amounts
- Premium rate
- Claims Lead
- Deductibles
- Total premium
3.6.3 Insurance cover notes and documentation
Brokers shall arrange for the following documents to be issued:
- H&M, HI, LOH, War Risks cover notes and invoices
- P&I, FDD Certificate of Entry and invoices
- Bunker CLC, CLC92 and Wreck Removal Blue card
- MLC Certificate of Financial Security (issued by P&I Club)
- Letter of Undertaking/Loss Payable clause to be included (if required)
- K&R cover note (if required)
Guidance:
- Brokers normally provide preliminary/draft cover notes prior to takeover of vessel. The full cover notes and invoices will be provided after confirmation of takeover.
4 INSURANCE POLICIES RENEWAL
4.1 Types of policies
The insurance policies covered by this process are as follows:
- P&I
- H&M
- LOH
- Extended LOH
- War Risks
- K&R
- General Insurance
- Marine Open Cover
- Cash in Transit
- ITIC
- D&O
4.2 Process workflow
The workflow for this process is illustrated in Figure 2 below.
Figure 2. Insurance Policies Renewal Process
4.3 Responsibilities within the workflow
| Function | Responsibility |
|---|---|
| Legal Team/ MTSI | To request for quotation and enforce insurance coverage for the respective policy |
| Brokers | To provide the most competitive quotation and issuing the policies after renewal |
| Owners/MD | To approve premium quotation |
| Vessel Accounts/Corporate Accounts | To process premium payment |
4.4 Insurance activities
4.4.1 Procedures for obtaining quotations
Insurance shall:
- Initiate for quotation (for existing and new) insurance policies two months prior before expiry
- Once premium quotations are received from Brokers, Insurance will analyze and compare with past year rates if there are premium savings or rates to be improved further
- Allocate corresponding premium quotation to Owners/Tech Manager for their consideration and approval
- Once approval is received to proceed with the insurance coverage, Insurance Department to notify Brokers to confirm renewal
- Once the policies and invoices are received, Insurance will forward to relevant Owners, Fleet Group and Vessel Accountant
4.5 Brokers’ activities
4.5.1 Assisting and providing renewal notice for policies arrangement
Brokers shall:
- Provide insurance renewal quotation for Owners/MD consideration
- Once approval is obtained from Owners/MD, Insurance will inform Brokers to proceed to effect the insurance coverage
- Once Insurers confirm insurance coverage, Brokers will provide Cover Notes/Policies together with the premium invoice for payment
4.6 Owners/Managing Director (MD) activities
4.6.1 Approval of quotations
Owners/MD shall:
- A quotation for new insurance coverage or renewal notice will be given to Owner/MD for their comments and consideration
- Once the premium quotation is approved by Owner/MD, Insurance will inform Brokers to proceed to effect insurance coverage
- Once the insurance policies are received from Brokers, Insurance will forward to the respective Owner/MD for their records
4.7 Vessel accounts / accounts payable activities
4.7.1 Payment process
Vessel Accounts/Account Payable shall:
- Process payment for invoice received
- Provide Proof of Payment (if required)
5 INSURANCE POLICIES CO-ASSUREDS
5.1 Process workflow
The workflow for this process is illustrated in Figure 3 below.
Figure 3. Insurance Policies Co-assureds
5.2 Responsibilities within the workflow
| Function | Responsibility |
|---|---|
| Owners | To provide vessel’s insurance policies to Fleet Group |
| Insurance | To obtain the vessel’s insurance policies and ensure that co-assureds stated in the policies are in accordance with the Ship Management Agreement |
5.3 Owners activities
5.3.1 Vessel’s insurance policies
Owners shall:
- Forward valid vessel’s insurance policies (i.e. P&I, H&M, and War Risks and others) to Fleet Group for vessel placement onboard and Insurance Department for records
5.4 Insurance department activities
5.4.1 Requesting of vessel insurance policies
Insurance department shall:
- Request Fleet Group for the vessel insurance policies upon takeover or the renewed policies upon expiry
5.4.2 Checking vessel insurance policies
Insurance department shall:
- Check if co-assureds in the policies are in accordance with the BIMCO agreement
- If co-assureds are not included in the policies, Insurance Department will advise Fleet Group to include the missing co-assureds from Owners
- Once it is done, a revised or endorsement to the policies will be provided from Owners from their Insurers/Brokers