Страхование международных торговых операций INSURANCE OF FOREIGN TRADE

Страхование международных торговых операций INSURANCE OF FOREIGN TRADE OPERATIONS Лектор: Финогенова Юлия Юрьевна Lector: Ylia Yr. Finogenova

План курса/ Course structure date Тема/ Topic 06 Feb’ 1. Управление рисками в международной торговле / Risk management in the international foreign trade operations 2. Договора страхования, разновидности полисов страхования грузов / Forms of cargo insurance agreements Case 1. RM & FT Business processes 13 Feb’ 3. Страхование грузов, факторы влияющие на стоимость страхования / Typical conditions of cargo insurance contracts, cargo insurance pricing Case 2. Cargo insurance (Pricing&Underwriting) 20 Feb’ 4. Особенности урегулирования убытков при страховании грузов/ Handling of claims in cargo marine insurance 5. Роль и функции посредников при страховании международных торговых операций/ The role of intermediaries in the insurance of foreign trade operations Case 3. Handling claims Test 1. /Discussion 27 Feb’ 6. Морское страхование / International marine insurance 7. Страхование ответственности перевозчиков (автотранспорт)/ Carrier’s liability insurance (auto transportation) Test 2. /Discussion 06 March 8. Страхование кредитов и иностранных инвестиций/ Insurance of international investments and credits. 9. Управление финансовыми рисками/ Fundamentals of financial risk management Presentations 13 March Presentations/ Written exam

Assessment Scale Max (points) Each class (points) Participation 12 2*6 Test 1 10 Test 2. 10 Class task 1 (risk management) 5 Class task 2 (cargo insurance 7 premiums calculation) Class task 3 (handling claims) 5 Presentation 16 Sub-total: 65 Written exam 35 TOTAL: 86 – 100 points – excellent 71 – 85 points – good 55 – 70 points - satisfactory Less than 55 points – unsatisfactory 100

1. Risk management in the international foreign trade operations

Risks Classification Strategic - These concern the long-term strategic objectives of the organization. They can be affected by such areas as capital availability, sovereign and political risks, legal and regulatory changes, reputation and changes in the physical environment. Operational - These concern the day-today issues that the organization is confronted with as it strives to deliver its strategic objectives. Financial - These concern the effective management and control of the finances of the organization and the effects of external factors such as availability of credit, foreign exchange rates, interest rate movement and other market exposures. Hazards - Natural hazards and different unexpected sources of potential harm Compliance - These concern such issues as health & safety, environmental, trade descriptions, consumer protection, data protection, employment practices and regulatory issues.

Applying traditional insurance in Risk Management Process Strategic Risks Financial Risks Operational Risks Hazards NOT YES

Risk Management Tools Loss Control Loss reduction activities Loss Financing Retention and self – insurance (reserves) Loss prevention activities Loss Avoidance Loss Transfer Internal Risk Reduction Diversification Investments in the information Insurance Hedging Other contractual risk transfers Risk hedging

Characteristics of insurable risks Accidental Not excessively catastrophic Unintentional Definite Economically affordable Calculable frequency and the severity of losses

Insurance programs foreign trade organizations INSURABLE RISKS Hull Damage, total destruction or loss of the carrying conveyance Cargo Damage, total destruction or loss of the cargo Carrier’s Liability to the third parties for the financial losses

Who are interested in transportation of cargo insurance? • Importers, buying on FOB & CPT conditions • Exporters, selling on CIF conditions • International traders (buying in one country and selling to another country) • Goods producers, purchasing raw materials and selling finished goods • Distributors • Transportation and Stock Companies, who has a contract liability to insurance clients’ cargo

2. Typical conditions of cargo insurance contracts. Open cover& single policies. Insurance pricing

The process of insurance contract concluding Application for insurance Client (Insured) Insurer Contract become valid: From the moment of paying the full premium or its first contribution (Article 957 Civil Code) Insurance Contract = Insurance Policy + Insurance Conditions (Rules) Endorsements/ Floaters

Разовый и генеральный полиса страхования грузов / Single vs. Open cover Insurance policies

Разовый полис страхования/ Single (or specific) insurance policy Особенности/ Features: Ø Заключается на конкретную перевозку/ Valid for one shipping Ø Действителен от 30 – 60 дней с момента поступления денег на счет страховщика/ Valid for a period from 30 to 60 days from the date of insurance premium payment Ø В течение срока действия полиса – страхователь обязан предоставить подтверждающие перевозку документы/ Fact of shipment must be confirmed by the insured Ø Деньги перевели – перевозка откладывается – возвращение денег (минус оговоренная СК комиссия)/ In case of delay in delivery, insurance premium can be retuned by the insurer to the client (minus insurance fees)

Генеральный полис (договор) страхования/ Open cover Applicable when: Ø систематическом страховании разных партий однородного груза, перевозимого в течение определенного срока на сходных условиях/ is issued once by the insurer under contract to cover all shipments (of cargo with similar characteristics) made by the exporter over a period of time (one year usually) В генеральном полисе оговариваются следующие осн. условия/ Open policy conditions: ü Номенклатура груза или видов грузов/Cargo characteristics; ü Примерный график поставок и маршруты перевозок/ shipments periods and transportation routes; ü Статистика убытков страхователя/ Client’s loss statistics; ü Вид транспорта/ Type of vehicle; ü Лимит страховой суммы по одному транспортному средству/ Limits of sum insured by one vehicle; ü Планируемый оборот компании в течение года/ Forecasted trade turnover of a company during the year ; ü Условия страхования и тарифные ставки/ Insurance conditions & rates

Генеральный полис (договор) страхования/ Open cover I Stage 1. Specification of main conditions of insurance agreement 3. Premium payment: Client Insurer 2. Signing the open cover agreement (policy) , with the rules (conditions) of policy attached • Advanced, • In the end of the agreed period, • Before each delivery II Stage. Information about delivery 1. Insurer Client Cargo shippment 3. 4. да Bill + insurance certificate Insurance premium payment 2. Do the cargo characteristics correspond to the open cover conditions?

Sum insured (cargo) • Максимальная страховая сумма по данному по договору/ Max sum insured by open policy on annual basis • Лимит ответственности Страховщика по каждой застрахованной отправке / Max limit by each single delivery • Дополнительные условия/ additional conditions can be specified, например: «Партии грузов стоимостью свыше _____USD заявляются Страхователем не позднее, чем за 2 дня до начала предполагаемой отправки»

Генеральный полис при массовых отправках/ Open cover (often deliveries) During the month: Cargo shipments Client Insurer Бордеро – подробные сведения об отдельных отправках*/ List of shipments’ details Акцепт (Страховой сертификат) / Issue of insurance certificate for each accepted shipment В конце месяца страхования (обычно - не позднее пятого рабочего дня месяца, следующего за отчетным)/ in the end of month - Bill (страховая сумма по всем перевезенным грузам * тариф) - Deposit deduction * - По требованию страховщика - копии документов (инвойсов, коносаментов и т. п. ), подтверждающих стоимость каждой единицы товара и их количество по каждой отправке

Генеральный полис/ Open cover Преимущества/ Advantages: - сокращаются административные расходы на ведение дел/ decreasing the administrative costs - все грузы автоматически застрахованы в течение 1 года (с возможностью пролонгации)/ all the shipments automatically insured - дешевле разового (примерно на 20 – 30%)/ chipper than the single policy Недостатки/ Disadvantages: - привязка на год к конкретной страховой компании/ cooperation only with one insurer during the whole year Страховая сумма/ Sum insured: Страховая стоимость груза/ invoice cost of cargo + Все документально подтвержденные расходы для осуществления перевозки*/ All the transportation expenses * - расходы на фрахт, таможенная пошлина, расходы на вооруженное сопровождение и т. д.

What factors influence on the amount of the insurance rate and cost of insurance? Ø Insurance Conditions (А, В, С - ICC) ØType of the cargo and the probability of its damage Ø Packing quality and its meet to the character of cargo Ø Character of Transportation Ø Type of the Vehicle Ø Seasonal Factors Ø Distance, expeditors accompaniment Ø The number of re-loadings in transit Ø Length of the period of insurance

3. Typical conditions of cargo insurance contracts

A, B, C Clauses of ICC - Institute Cargo Clauses (Institute of London Undewriters) Insurance premium (in % of the Sum insured) С = 0, 2 – 0, 4% А = 0, 6 – 0, 8% В = 0, 4 – 0, 6% А All risks B Risks and Insurance coverage exclusions C

Cargo insurance conditions Clauses cover all risks of loss of or damage (All risks) Clauses cover the risks of loss of or damage except (list 1) (With particular average) Clauses cover the risks of loss of or damage except (list 2) (Free from particular average) Risks of storage

Cargo insurance conditions All risks (A) Damage, total destruction or loss of the whole cargo or any part thereof (1) Expenses and contributions allowed in general average (2) All necessary and properly incurred expenses for salvage of the cargo (3) With particular average (B) Damage, total destruction or loss of the whole cargo or any part thereof as a result of the listed risks + (2) + (3) Free from particular average (C) Total destruction or loss of the whole cargo, or any part thereofas a result of the listed risks + (2) + (3)

Comparative analysis of ICC coverages

List of risks insured against • fire, lightning, storm, whirlwind and other natural disasters, • wreck or collision of vessels, aircraft or other conveyances, or their impact against any fixed or floating objects, • grounding of a vessel, collapse of bridges, explosion, damage to a vessel by ice, wetting by overboard water, and also due to measures taken for salvage or extinction of fire • missing carrying conveyance • accidents during loading, stowage, discharge of the cargo and in taking in fuel by the vessel Крушение (standing) или столкновение (collision) судов, самолетов и др. транспортных средств между собой Удара транспортных средств о неподвижные или плавучие объекты (by contact with any fixed or floating objects) Посадка судна на мель (grounding) Обвал мостов (collapsing of bridges) Повреждение судна льдом (damage by ice) Подмочки забортной водой (wetting by sea or river water) Меры по тушению пожара (extinction of fire) + Пропажа без вести Перевозочного средства (missing carrying conveyance ) + Cпасение груза (salvage)

Standard Exclusions in Coverage All three sets of clauses exclude : q warlike operations or warlike measures of any nature and consequences thereof q direct or indirect effect of nuclear explosion, radiation or radioactive contamination q malice or gross negligence of the Insured or Beneficiary, or their representatives, q effect of temperature, of the air in hold or of specific properties and natural characteristics of the cargo, including shrinkage; q improper packing or corking of the cargoes q fire or explosion in consequence of loading of explosive or spontaneously igniting substances and objects, with knowledge of the Insured or Beneficiary q shortage of the cargo while the outer packing is intact q damage to the cargo caused by worms, rodents and insects q delay in delivery of cargoes and fall in prices; neither are indemnified any other indirect losses incurred by the Insured

Average insurance rates for particular risk categories, in %

Cargo risk categories

Additional exclusions for B and C Clauses q flood and earthquake; q sweating of the hold and wetting of the cargo by atmospheric precipitation; q depreciation of the cargo in consequence of contamination or damage to packing while the outer packing remains intact; q jettison and washing overboard of the deck cargo or cargo transported by deckless vessels; q theft or non-delivery of the cargo.

Structure of Insurance Premium = Sum at risk (Sum Insured) * Gross Rate = Net Rate (Rate) Purpose: (Main part of rate) + Making enough insurance reserves to cover the loss Loading (Additional part of rate) Cover insurer’s costs Pay % to agents % of profit from operation Calculation of Net rate is based on: • Loss ratio (number of units insured/amount of coverage paid) • Probability of the event (frequency of losses in the past)

Deductible (безусловная франшиза) and stop loss (условная франшиза) provisions (ways to decrease insurance rates) Deductible - used in conjunction with insuring terms. It is a specific dollar amount, or percentage of the insured value of the shipment, which will be deducted from all losses recoverable under a policy. Stop loss – provision assumes the covering of the loss above a specific amount

Coinsurance Property Coinsurance Formula Amount of Recovery = Value of Loss X Amount of Carried Insurance ───── Amount of Required Insurance - Deductible

Ограничение ответственности страховщика - Франшиза Страховщик не покрывает ущерб до тех пор, пока убыток не превышает размера франшизы Условная ФРАНШИЗАчасть возможного ущерба страхователя, которая остается Безусловная «на риске» самого страхователя и не подлежит возмещению страховщиком Размер франшизы всегда вычитается из размера покрываемо го страховщико м убытка

Суброгация/ Subrogation Суброгация (Subrogation) - право страховщика на предъявление к третьей стороне, виновной в наступлении страхового случая, претензий с целью получения возмещения за причиненный ущерб. Право на регресс возникает у страховщика после оплаты им законного убытка и в пределах уплаченной им суммы. Liabilities of a guilty party to the suffered party/ prescriptive right (срок давности) Insurable event Insured INSURER Перемена лица в уже существующем обязательстве/ Change of a party in the existed obligation The size of obligation stays the same.