TASK

- Câu 1-10: Dương Thư

- Câu 11-20: Nguyên Thảo
- Câu 21-30: Trần Thư
- Câu 31-40: Hoàng Thảo
- Câu 41-49: Thanh Thảo

DDL: 23h59ph thứ 2 ngày 19/06

1. Risk? Classification of Risk?

- Concept: The term Risk is used to describe all the accidental happening which
produce a monetary loss. For e.g.: A factory catching fire, a ship sinking etc.
- Chance of loss: is defined as the probability that an event will occur
- Classification of risk:
● Pure and speculative risks
1. Pure risk -> situation in which there are only the possibilities of loss or no loss
Ex.:Premature death, job-related accidents, damage to property from fire
2. Speculative risk -> situation in which either profit or loss is possible
Ex.: purchase 100 share of stocks,profits if the price increases, lose if the
price declines
● Diversifiable risk and nondiversifiable risk
1. Diversifiable risk: affects only individuals or small groups (car theft). It can be

reduced or eliminated by diversification →nonsystematic risk or particular

risk.
2.A nondiversifiable risk affects the entire economy or large numbers of persons or
groups within the economy (hurricane). It is also called fundamental risk.
- Government assistance may be necessary to insure nondiversifiable risk
 ● Enterprise risk encompasses all major risks faced by a business firm,
which include: pure risk, speculative risk, strategic risk, operational risk,
and financial risk
- Strategic Risk refers to uncertainty regarding the firm's financial goals
and objectives.
- Operational risk results from the firm's business operations.
- Financial Risk refers to the uncertainty of loss because of adverse changes
in commodity prices, interest rates, foreign exchange rates, and the value of money
● Enterprise Risk Management: combines into a single unified treatment
program all major risks faced by the firm:
- Pure risk
- Speculative risk
- Strategic risk
- Operational risk
- Financial risk
2. Benefits of Risk management (sách/78)
- A formal risk management program enables a firm to attain its pre-loss and post-loss
objectives more easily.
- The cost of risk is reduced, which may increase the company’s profits. The cost of risk
is a risk management tool that measures the costs associated with treating the
organization’s loss exposures. These costs include insurance premiums paid, retained
losses, loss control expenditures,outside risk management services, financial guarantees,
internal administrative costs, and taxes, fees, and other relevant expenses.
- Because the adverse financial impact of pure loss exposures is reduced, a firm may be able
to implement an enterprise risk management program that treats both pure and
speculative loss exposures.
- Society also benefits since both direct and indirect (consequential) losses are reduced. As
a result, pain and suffering are reduced.
3. Risk management? The steps of risk management?
 ● Definition of risk management: a process to identify loss exposures faced by an
organization and to select the most appropriate techniques for treating such
exposure
● Objective of risk management:
1. Pre-loss objectives
2. Post-loss objectives
● The steps of risk management ( giống câu 5)
1. Identify potential losses
2. Evaluate potential losses
3. Select the appropriate techniques for treating loss exposure
4. Implement and administer the program
4. Pre-loss objective and post-loss objective
- Pre-loss
1. The firm should prepare for potential losses in the most economical way
+ The preparation involves an analysis of the cost of safety programs,
insurance premium paid, & the costs associated with the different
techniques for handling losses
2. The reduction of anxiety
+ Certain loss exposure cause worry & fear, such as fear of fire
3. To meet anylegal obligations
+ Ex: Government regulation may require a firm to install safety devices
to protect workers from harm, to dispose of hazardous waste
- Post-loss
1. To ensure the survival of the firm
Survival means that when a loss occurs, a firm can resume at least partial
operations within some reasonable time period
2. To continue operation
The ability to operate after a loss is extremely important. Otherwise,
business will be lost to competitors
3. To ensure the stability of earnings
 Earnings per share can be maintained if the firm continues to operate.If a firm
incur substantial additional expenses to operate in another location, the perfect stability of
earnings may not be attained.
4. To continue growth of the firm
A company can grow by developing new products & markets or by
acquiring or merging with other companies
Risk manager must consider the effect of a loss to the firm’s ability to grow
5. To minimize the effects that a loss will have on other persons or society
A severe loss can affect employees, suppliers, creditors, community
5. Steps (phases) in Risk Management process
1. Identify loss exposures
2. Measure and analyze the loss exposures
3. Select the appropriate techniques for treating loss exposure
4. Implement and administer the program
6. Loss of exposure (link sách) (68)
1. Property loss exposure
Building, plants, furniture, equipment, supplies, computer software, inventory, account
receivable, mobile equipment
2. Liability loss exposures
Environmental pollution, discrimination against employees, misuse of internet & email
transmissions
3. Business income loss exposure
Loss of income from a covered loss, continuing expenses after a loss, extra expenses
4. Human resources loss exposure
Death or disability of key employees, retirement or unemployment, injuries
5. Crime loss exposure
Robberies, burglaries, employee theft & dishonesty, internet & computer crime
 6. Employee benefit loss exposure
Failure to comply with government regulations, failure to pay promised benefits
7. Foreign loss exposure
Plants, business property, inventory, foreign currency risks, kidnapping of key personnel
7. Techniques for treating loss exposures ( techniques for managing risk)
1. Risk control
Reduce the frequency and severity of accidental losses:
1. Avoidance: -> an existing loss exposure is abandoned
Ex: Build a new plant not in a flood plain, withdraw dangerous drugs from market,etc
Advantage: the chance of loss is reduced to zero
Disadvantage:
+The firm may not be able to avoid all losses
+ It may not be feasible or practical to avoid the exposure
2. Loss control:
+ Loss prevention: reduce the frequency of loss happen. Ex: driver examination, zero

tolerance for alcohol → reduce car accident

+ Loss reduction: reduce the severity of loss. Ex: install prinkler system → fire will be

promptly extinguished
2. Risk financing
Provide for the funding of accidental losses after they control
1. Retention
The firm retains part of all of the losses that can result from a given loss
● active retention -> the firm is aware of the loss exposure & plans to
retain part or all of it
● Passive retention -> tend to be failure to identify a loss exposure, failure
to act, or forgetting to act
2. Noninsurance transfers
Methods other than insurance by which a risk and its potential financial
consequences are transferred to another party.
It includes contract, leases, hold-harmless agreements
3. Commercial insurance
Appropriate for loss exposure that have a low probability of loss, but a high severity
of loss
8. Insurance?Nature and benefits of insurance?
● Insurance definition: A contract between two parties whereby one party called
insurer undertakes in exchange for a fixed sum called premiums, to pay the other
party called insured a fixed amount of money on the happening of a uncertain event
● Nature of insurance:
- Insurance provides financial protection against a loss arising out of happening of
an uncertain event. A person can avail this protection by paying premium to an
insurance company.
- Insurance is the risk transferring from the insured to the insurer
- Insurance works on the basic principle of risk- sharing (many insured pay premium
for the same risk -> fund -> when one insured has the risk, insurer take money from
fund to compensate => All insured share the same risk)
- The business object in the insurance sector is risk.
● Benefits of insurance (trong sách) Commented [1]: trong slide
- Transfer the risk
- Indemnification for loss - Confidence for people in the society
- GDP’s growth rate
- Reduction of worry and fear - Indemnity
- Create employment
- Source of investment funds
- Loss prevention
- Enhancement of credit

9. Principles of Insurance

- Risk (for ISR and ASR) Commented [2]: Insurance is a repayment of a random
loss
- Utmost good faith
- Insurable interest: lợi ích bh
- Indemnity
- Subrogation: thế quyền
10. Strategies: Avoid; protect; reverse and transfer in a risk management plan.
- Strategy-avoid: set up a mitigation plan, no contingency plan
● Mitigation plan consists of undertaking all possible actions to erase risk causes.
● Measures consist of undertaking strong actions if needed (redesign, new
validation,..) to eradicate risk origins.
- Strategy-protect: mitigation plan. contingency plan
● Mitigation plan consists to design the workaround solution (redundancy, new
Insurance is risk transfer
● Only uncertainty is acceptable
● Probability
● Certainty is not accepted: Ex: người già chắc chắn bệnh, tai nạn xảy ra rồi ko mua
bh đc, chưa phát hiện bệnh mới bán bh
● system implementation if failover,..)
● Contingency plans consist of measures to reduce failure to an acceptable threshold.
- Strategy-reserve: mitigation plan, contingency plan
● Mitigation & contingency measures consist on an appraisal of needed reserve:
quality, quantity, during which period.
- Strategy-transfer: mitigation plan, contingency plan
● Plans consist to define the scope of the delegated risk and responsibilities of each
partner. Prices must to be included in these plans and also the way that the third
part assume risks consequences. This is the contract between the 2 contractors.
11. Mitigation plan and contingency plan in Phase 3- Forwarding Planning Phase of a
risk management plan
- Mitigation: is the implementation of measures that consist to reduce risk impact
and probability. (for example, budget review, time extend, remove a component
feature,..)
- Contingency: is the implementation of a actions plan in case of the risk occurs or
become worse in spite of the mitigation measures

12. Principles “Risk” of insurance

– The timing or occurrence of the loss must be uncertain.

For example, you can't know your house is going to be destroyed in three weeks by a
demolition team and still get home owner's insurance.
 – In some cases: To be able to fully service major claims, small claims are not covered.
This is what the deductible is for. Only damage or loss over the amount of the deductible
is covered by the insurance policy Commented [3]: slide cô Ngân

- Insurance is risk transfer

- Only uncertainty is acceptable
- Probability
- Certainty is not accepted: Ex: người già chắc chắn bệnh, tai nạn xảy ra rồi ko mua
bh đc, chưa phát hiện bệnh mới bán bh Commented [4]: slide cô Ngà

13. Principle “utmost good-faith” in of insurance

A higher degree of honesty is imposed on both parties to an insurance contract than is imposed on
parties to other contract.
+ The insurer: must be honest about letting the insured be aware: explain all the terms and
conditions in the policy -> the insured understands all before signing: kinds of risk covered,
premium, exception cases, etc.
+ The insured: must be honest about materials, info about subject matter insured: personal
insurance-declare all the info about the person, property-real value of property, accidents
happened b4 => If fail, cannot receive compensation in the future.
→ Terry violated the principle of "utmost good faith" in insurance because he described

himself as an electrician but failed to disclose his disability, which included an ineffective right

leg. This disability directly affected his ability to drive safely and brake effectively. By not

disclosing this information, Terry misrepresented himself to the insurance company, which

prevented them from fully assessing the risks associated with insuring him.

→ the insurer's denial of coverage is justified based on the principle of "utmost good faith" in

insurance. By misrepresenting her driving record and failing to disclose the speeding tickets,

she violated this principle. As a result, the insurer has the right to deny coverage based on the

insured's misrepresentation.

14. Principle “insurable interest” in of insurance

- The legal right enjoyed by the owner of a property to insure is called ‘Insurable Interest’.
The insurance will become null and void, without the insurable interest.
- The insured must be in a position to loose financially if a covered loss occurs
- Insurable interest is where you have a valid reason to insure and stand to suffer a direct
financial loss if the event insured against occurs.
- Insurable interest exists when an insured derives a financial or other benefit from the
continuous existence of an insured object
Purposes of insurable interest:
+ To prevent gambling (gambling contract)
+ To reduce moral hazard
+ To measure the amount of the insured’s loss in property insurance
-Ex1: Export the goods under CIF term:
+ Seller buy insurance for the goods => seller has insurable interest until he transfers the
ownership and insurance policy to buyer through endorsement
+ If any loss or damage happens before endorsement, buyer cannot make claims
+ If any loss or damage happens after endorsement, seller cannot make claims
Ex2:
A: owner of the house
Jan: A buys insurance contract - house
May: A sold the house to B
June: House was on fire
⇒ Khi chuyển từ A sang B, hđ bảo hiểm ko automatically chuyển sang B trừ khi A chuyển quyền
sở hữu BH sang B và insurer đồng ý. Nếu ko, hđ BH tự chấm dứt.

When must an insurable interest exist?

In case of life insurance, insurable interest is only at the inception of the policy (thời điểm bắt đầu
kí hđ), not at the time of the dead.

15. Principle “indemnity” in of insurance

The principle of Indemnity states that under the policy of insurance, the insured has to be placed
after the loss in the same financial position in which he was immediately before the loss.
2 fundamental purposes:
- To prevent the insured from profiting from a loss
- To reduce moral hazard
Applicability:
+ When the losses suffered by the insured can be measured in terms of money
+ It is practicable to place the insured in the same financial position which he occupied before the
loss

16. Principle “subrogation” in of insurance

- Subrogation (thế quyền): Transfer of rights and remedies from the insured to the insurer
who has indemnified the insured in respect of the loss.
- The principle of subrogation strongly supports the principle of indemnity. Why: Khi
đòi bồi thường thì phải bắt buộc chuyển quyền đòi bồi thường cho cty BH vì nếu ko,
individual có thể đi đòi cty và neglient 3rd party cùng lúc.
- Purposes:
Ex:

⇒ Can Mergan claim compensation from motorist? No, only the insurance company.

17. Types of insurance (này trích từ sách)

Private insurance:
- Life insurance: pays death benefits to designated beneficiaries when the insured dies.
 - Health insurance: indemnifying or reimbursing for losses caused by bodily accident or
sickness or for expenses of medical treatment necessitated by sickness or accidental bodily
injury.
- Property and Liability Insurance: Property insurance indemnifies property owners against
the loss or damage of real or personal property caused by various perils, such as fire,
lightning, windstorm, or tornado. Liability insurance covers the insured’s legal liability
arising out of property damage or bodily injury to others; legal defense costs are also paid.
Government insurance:
- Social Insurance: compulsory insurance, in which the benefits are prescribed by law and
in which the primary emphasis is on social adequacy rather than equity.
- Other Government Insurance Programs

18. Relationship: Insurance Value (V) and Insurance Amount (A)

- Insurance value - V: refers to the value of the property, on the same basis used in
indemnifying losses; that basis is usually actual cash value or replacement cost (cost to
fully repair or replace the property).
V = mkt value at the time of signing the contract - depreciation
V: include the value of the property and other additional cost. Ex: shipping cost, lắp đặt, thuê
chuyên gia, expected profit

- Insurance Amount - A: a certain amount of insurance coverage that the insured

requires in the insurance policy, it can be a part or an entire of insurance value.
Ex: Motorbike: 30mil VND
Premium is 1mil. but you require to pay only 500k. So the protection of the motorbike you receive
will only be 50%.
Can we request A>V: No because of nguy cơ trục lợi từ BH. For ex, motorbike V=30mil, but we
require A =50mil, so we can burn the motorbike to receive more 20mil than the value of the
motorbike. ⇒ Even if A>V, maximum compensation will still be V.

19. The fact “Insurance is a repayment of a random loss”

 - The timing or occurrence of the loss must be uncertain.
Ex: you can't know your house is going to be destroyed in three weeks by a demolition team and
still get home owner's insurance.
- In some cases: To be able to fully service major claims, small claims are not covered. This
is what the deductible is for. Only damage or loss over the amount of the deductible is
covered by the insurance policy.
Case study: thường mắc bệnh mới tìm đến BH (ko phải random loss) -> có những hđộng phi pháp
(nhờ vả mqh) -> how insurance companies prevent?
+ Require health check before insurance
+ Có tgian chờ: phát hiện bệnh trong tgian chờ thì sẽ ko đc hưởng

20. Reinsurance
Practice where an Insurance company (the insurer) transfers a portion of its risks to another (the
re-insurer).
Legal right of the policyholders (insureds) are in no way affected by reinsurance, and the insurer
remains liable to the insureds for insurance policy benefits and claims.
Use when: Some properties has very high value -> risky for insurer to be fully responsible ->
may transfer a part to re-insurer

21. Double insurance

- Situation in which the same risk is insured by two overlapping but independent insurance
policy.
- It is lawful to obtain double insurance, and the insured can make claim to both insurers in
the event of a loss. However, the insured cannot profit (recover more than the loss
suffered) from this arrangement because the insurers are law bound only to share the
actual loss in the same proportion they share the total premium.
- Công thức: V * insurance amount cua tung BH/tong insurance amount
 22. Co-insurance
Coinsurance is a risk-spreading procedure wherein the insured risk is distributed among two or
more insurance companies, each bearing a proportional share of the risk and obligating itself
directly to the common insured.
Differences between co-insurance and re-insurance: in co-ins, the insured sign multiple
contract with multiple insurers, while in re-insurance, the insured only signs one contract with
the insurer.
%insurer1 + %insurer2 +%insurer3 <=100%
If > 100%, the insured might benefit from the insurance.

23. Marine insurance. Notice for shipper

● Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport
or property by which cargo is transferred, acquired, or held between the points of origin
and final destination.
- Classification:
• Marine cargo insurance: covers export- import goods carriage by sea and related- reasonable
costs

• Hull insurance: covers material loss of or damage to hull and machinery, a portion of costs for
collision liability, and other reasonable costs.

• Protection and indemnity insurance: provide cover to shipowners against third- parties liabilities
in connection with the operation of vessels

Slide cô Ngà:

● Property Insurance
- Hull Insurance: Loss or damage to the vessel itself
- Cargo Insurance: Loss or damage to the cargo
- Freight Insurance: Loss of freight income

● Indemnity Insurance: Liability of ship owners

- Collision liability insurance: Liability of insured vessel for damage resulting from
collision
- Protection and indemnity insurance: Liability for bodily injury including death or property
damage and unexpected vessel related expenditures

24. Marine risks

- risk of the sea, in the sea
● Based on causes:
- Acts of God: bad weather, thunderstorm and lightening, tsunami, earthquake, flood,
volcanic eruption, etc.
- Perils of the sea: ship striking upon the rocks, ship sinking, ship collision, colliding
with iceberg or other objects
- Risks caused by Social- political actions: war, SRCC (strikes, riots, civil, commotions-
đình công, bạo loạn, nội chiến)
 - Risks caused by particular actions of people: thieve, robber
- Risks caused by other sources.
● Based on the insurance technique:
a) Insured common perils: the risks that are normal insured in original insurance
clauses:
- Main risks: (the loss is large)
+ Stranding: a vessel is stranded when, in consequence of some accidental or unusual
occurrence, she comes in contact with the ground or other obstruction, and remains
hard and fast upon it. The vessel needs an external force in order to get off the
stranding.
+ Sinking
+ Fire or explosion
+ Collision
+ Jettison: To throw part of the cargo or gear of the vessel overboard to lighten the
load and save the vessel. The owner of the jettisoned goods is entitled to a "general
average," i.e., the loss is shared by the owners of the vessel and the owners of the
cargo which was not thrown away.
+ Missing: British law: 3 times of ship’s itinerary in normal conditions (no longer than
6 months, no shorter than 3 months)
- Auxiliary risks: theft, rain, leakage, breakage, dampness, heating, hooking, rusting
b) Relatively Excluded Perils: risks that are not included in standard insurance clauses:
War, SRCC
c) Absolutely Excluded Perils: risks that are not insured in any circumstances:

• loss damage or expense attributable to wilful misconduct of the Assured

• ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear of the
subject- matter insured

• loss damage or expense caused by insufficiency or unsuitability of packing or preparation

of the subject-matter insured

• loss damage or expense caused by inherent vice or nature of the subject-matter insured
• loss damage or expense proximately caused by delay, even though the delay be caused by
a risk insured against

• loss damage or expense arising from insolvency or financial default of the owners
managers, charterers or operators of the vessel

• loss damage or expense arising from the use of any weapon of war employing atomic or
nuclear fission and/or fusion or other like reaction or radioactive force or matter.

25. “Missing risk” in marine insurance Commented [5]: slide cô Ngà

Missing: the vessel/cargoes disappear after a period of time

- French Law: 6 months for short trip, 12 months for long trip
- UK Law: 3 times of the voyage, no less than 2 months and exceed 6 months
- Vietnamese Law: 3 times of the voyage, no less than 3 months

26. Constructive Total Loss. Notice for the insurer

● constructive total loss (tổn thất toàn bộ ước tính)

is found in the case where the actual loss of the insured goods is unavoidable, or the ship
or the consignment has to be abandoned because the cost of recovery would exceed the
value of the ship and the consignment in sound condition upon the arrival of the port of
destination.

chi phí sửa chữa lớn hơn value

● Notice of abandonment (NOA): is a notice in which the insured commits to give up

all of his right related to the subject- matter insured to the insurer in order to be
fully compensated.

• Requirements:

- Where notice of abandonment is accepted the abandonment is irrevocable. The

acceptance of the notice conclusively admits liability for the loss and the sufficiency
of the notice.
 - NOA is unnecessary when the consignments have already reached final destination
and are in actual total loss.

chỉ gửi NOA khi là CTL

27. General Average and Procedure to Calculate G/A Contribution

● GA:

There is a general average act when, and only when, any extraordinary sacrifice or
expenditure is intentionally and reasonably made or incurred for the common safety for
the purpose of preserving from peril the property involved in a common maritime
adventure.

ex:

● Procedure:

Step 1: Determine GA value, which consists of GA sacrifices and expenditures

- If goods are sacrificed in GA act, value of the goods is calculated based on loading/
unloading value or the one in commercial invoice. It includes insurance premium
and freight, except one case when cargo owner is not liable for paying the freight.

Step 2: Determine total value of contributing interests: consists of value of all interests in
vessel that were saved by GA act, including properties sacrificed in GA act.

- Those damages belong to particular average occurred before the GA act are not
included in contributing value/ after the GA act are included in contributing value.

Step 3: Determine contributing rate:

Rate = total GA value/ total Contributing value

Step 4: Determine contributing value of each interest

C = Contributing rate X contributing value

Step 5: Determine financial result (actual income/ expenditure of ship owner/ cargo owner
after deducting value of the properties or expenditures spending in GA act
 28. Abandonment of subject matter insured. Commented [6]: hổng bik cú bé

29. Rules are applied in solving G/A

– York Rules 1864

– York- Antwerp 1924

– York- Antwerp 1950, 1974, 1990, 1994, 2004

30. Particular Average and General Average

● Particular Average: losses of each insured interest individually due to acts of God or
Perils of the sea

• Insurer’s liability: compensate for both of the losses and reasonable costs caused by
particular average.

- Goods: Reasonable costs are the cost used for saving cargo or reducing its damaged
measurement.

risk happens to just the SO, chỉ bồi thường riêng lô hàng đó.

● ở GA, the owners of the property saved must contribute to the owners of the property

sacrificed (coi câu 25)

31. Coverage and exclusions of ICC 1982/QTC1990 Clause A

Clause A = clause B + Auxiliary Risks

- Auxiliary Risks: theft, rain- water, leakage, breakage, dampness, heating, hooking,

rusting, malicious damage (not by insured), piracy… ← can choose to buy 1 of

these

most economic: u can choose to buy B or C and 1 of auxiliary risks

32. Coverage and exclusions of ICC 1982/QTC1990 Clause B

Clause B = clause C + 4
– earthquake volcanic eruption or lightning

– Washing overboard

– entry of sea, lake or river water into vessel craft hold conveyance container liftvan or place of
storage

– total loss of any package lost overboard or dropped whilst loading on to, or unloading from,
vessel or craft.

33. Coverage and exclusions of ICC 1982/QTC1990 Clause C

C clause: this insurance covers loss of or damage to the subject- matter insured reasonably
attributable to: 7

- Stranding, sinking, fire or explosion, collision: traditional main risks

- Discharge of cargo at a port of distress/ refugee

- Overturning or derailment of land conveyance: during 2 sub-periods: from seller’s premise to

port of loading, from port of unloading to buyer’s premise

- Sacrifice in and contribution to GA and reasonable expenditures

Modern main risks:

- Jettison: throwing something away onto seabed, ground or other vessel

- Missing

- Such proportion of losses sustained by ship owners as is to be reimbursed by the cargo owners
under the contract of affreightment “Both to blame Collision” clause => explain
34. ICC1982/QTC1990 clause A and B? Commented [7]: nì so sánh ai hiểu gì làm đó t cũm ko
bít đáp án chính xác là gì :3
35. Coverage of ICC 1982/QTC1990 War Clause and Strike Clause Commented [8]: này hơi lạ tại slide ko có cô cũng ko
giảng gì hết chỉ bảo 2 cái này mún mua thì mua ko thì
th
36. “Transit clause” of ICC1982/QTC1990

Transit Clause “from warehouse to warehouse”

- Stage from port of discharge to final warehouse: insurance policy terminates either:
 + On safely delivery to the final warehouse, or

+ On the expiry of 60 days after completion of discharge

- Departure warehouse: place of storage at the place named herein for the commencement of the
transit (insurer is liable for damage since the goods are loaded on transport, not based on departure
warehouse)

- Final warehouse:

+ Final warehouse owned or managed by the assured, or

+ Store other than in the ordinary course of transit, or

+ Store using for allocation or distribution, or

+ Store named in insurance policy

37. Kinds of the insurance contract for cargoes transported by sea (4 kinds of insurance
contract for cargoes transported by sea?)
- Voyage policy: insurance policy/ insurance certificate
- Open cover policy: large export/import oriented industry usually prefer open cover
agreement as they have to make numerous regular shipment who would otherwise
find it very inconvenient to obtain insurance cover separately for each and every
shipment. A marine cargo open cover insurance policy is an agreement between a
merchant and an insurance company to insure all goods in transit within the
agreement, until either party cancel the agreement
- Valued policy: have the exact amount of money, state the insurance amount, value,
rate -> know how much should you pay the ins com in the beginning
- Unvalued policy: same as open cover, agree on certain term and conditions and
later on we based on the practice to calculate the exact amount, normally we agree
on just insurance rate and later on we have exact info on insurance amount,
insurance value

38. An insurance policy with a certificate of insurance (sea cargo) Commented [9]: ko hiểu đề lun

39. Way to issue cargoes under CIF, CFR, FOB Incoterms 2020 Commented [10]: ko hiểu đề
Commented [11R10]: How to insure cargoes under
40. Type of marine hull insurance. Subject matter insured of marine hull insurance CIF, CFR, FOB Incoterms 2020
 3 subject matters of insured:

1. Hull and machinery insurance is to protect the shipowner’s investment in

the ship. It is basically a property insurance which covers the ship itself,
the machinery and equipment. The owner will be protected for losses
caused by loss of or damage to the ship and its equipment
2. Furthermore, the insurance covers some liabilities, normally collision
liability with another ship (known as RDC – “Running Down Clause”)

– and sometimes also liability for colliding with other objects than
another ship (known as FFO - “Fixed and Floating Objects).

3. The third part of the insurance is cover for salvage and general average
contributions.

types of marine hull insurance:

41. Coverage of ITCH (Hull) 1995

1. This insurance covers total loss (actual or constructive) of the subject-matter

insured caused by
- perils of the seas rivers lakes or other navigable waters
- fire, explosion
- violent theft by persons from outside the Vessel
- jettison Commented [12]: jettison trc đó học là ném hàng còn
trong hull insurance jettison là ném các trang thiết bị
- piracy trên tàu

- contact with land conveyance, dock or harbour equipment or installation Commented [13]: va chạm vs thiết bị trên mặt đất, va
chạm vs cần cẩu, cầu tàu (berth)
- earthquake volcanic eruption or lightning
- accidents in loading discharging or shifting cargo or fuel

2. This insurance covers total loss (actual or constructive) of the subject-matter

insured caused by
- bursting of boilers breakage of shafts or any latent defect in the machinery or hull
- negligence of Master Officers Crew or Pilots
 - negligence of repairers or charterers provided such repairers or charterers are not
an Assured hereunder Commented [14]: bất cẩn của những ng sửa chữa
hoặc thuê tàu mà những ng này ko phải là những ng đc
- barratry of Master Officers or Crew bảo hiểm, còn bất cẩn mà đc bảo hiểm thì ko đc bồi thg,
này là bất cẩn của ng khác
- contact with aircraft, helicopters or similar objects, or objects falling therefrom ex: đi sửa tàu ng sửa tàu bất cẩn, còn chính tôi sửa thì
tôi ko đc phép bất cẩn
provided that such loss or damage has not resulted from want of due diligence by
the Assured, Owners, Managers or Superintendents or any of their onshore
management.
42. responsibility of the hull insurer in a collision accident? Give an example?
- Insured vessel: loss/damage of ship itself, machinery and equipment
- Other vessel: The Underwriters agree to indemnify the Assured for three-fourths
of any sum or sums paid by the Assured to any other person or persons by reason
of the Assured becoming legally liable by way of damages for:
+ Loss of/damage to ship itself, machinery and equipment
+ Loss of/damage to cargo and other property on other vessel
+ Delay to or loss of use of any such other vessel or property thereon
+ General average of, salvage of, or salvage under contract of, any such
other vessel or property thereon.
+ general average of, salvage of, or salvage under contract of, any such other
vessel or property thereon,
+ where such payment by the Assured is in consequence of the vessel hereby
insured coming into collision with any other vessel.
-> That above amount of money is not exceeded three- fourth insurance
amount of insured vessel.
- This Clause shall in no case extend to any sum which the insured shall pay for or
in respect of:
+ Removal or disposal of obstructions, wrecks, cargoes or any other thing
whatsoever
+ Any real or personal property or thing whatsoever except other vessels or
property on other vessels
 + The cargo or other property on, or the engagements of, the insured vessel
+ Loss of life, personal injury or illness
+ Pollution or contamination of any real or personal property or thing
whatsoever (except other vessels with which the insured vessel is in
collision or property on such other vessels).
43. responsibility of marine cargo insurers in a collision accident? Give an
example?
- If cargo owner has not received compensation:
+ Loss/ damage in colliding accident
+ Proportion of liability under the contract of affreightment “Both to Blame
Collision” Clause
- If cargo owner has already received a portion of compensation:
+ The rest part of Loss/ damage in collide accident
+ Proportion of liability under the contract of affreightment “Both to Blame
Collision” Clause

44. A P&I club with an insurance company. (=Compare a P&I club with an
insurance company?) Commented [15]: nì kiểu ko có 1 đáp án chính xác á,
ai hiểu gì ghi đó nên hum bít làm sao hết
45. Insurable risks of P&I insurance
- Liability in collision accident: insures for the rest part of collision liabilities that
excluded from Hull insurance
- LIABILITY FOR DAMAGE TO CARGO
- DEATH AND PERSONAL INJURY
- REPATRIATION OF SICK OR INJURED CREW AND HOSPITAL
EXPENSES
- LOSS OF CREW MEMBERS’ PERSONAL EFFECTS
- STOWAWAYS, REFUGEES AND PERSONS SAVED AT SEA
- POLLUTION
Commented [16]: rõ ràng tổn thất chung bảo hiểm thân
- WRECK REMOVAL AND OBSTRUCTION tàu đã chi tra, sao còn trong P&I?
này là trh ko đòi đc đóng góp từ chủ hàng, chỉ đòi đc
- GENERAL AVERAGE CONTRIBUTIONS chủ tàu -> vậy P&I sẽ chi trả cho -> túm lại cái gì ko đòi
đc ng khác thì kiếm P&I
 - FINES Commented [17]: quan trọng
vi phạm phát luật ko đc cty bảo hiểm chi trả, những P& I
+ breach of immigration laws có giúp đỡ trong 1 số trh thui (4trh)

+ inaccuracies in cargo documentation

+ accidental pollution
+ smuggling or infringement of customs laws

46. The rate-making function of insurers

- Ratemaking refers to the pricing of insurance and the calculation of insurance premiums
- A rate is the price per unit of insurance
- An exposure unit is the unit of measurement used in insurance pricing
+ Premium = rate x exposure units
- Total premiums charged must be adequate for paying all claims and expenses during the
policy period.
- Rates and premiums are determined by an actuary, using the company’s past loss
experience and industry statistics
- Actuaries also determine the adequacy of loss reserves, allocate expenses, and compile
statistics for company management and state regulatory officials

47. The steps in the underwriting process.

● Agent as First Underwriter
- Underwriting starts with the agent
- The agent is told what types of applicants are acceptable, borderline, or prohibited.
● Sources of Underwriting Information
- The underwriter requires certain information in deciding whether to accept or reject an
applicant for insurance.
- Information for underwriting comes from:
+ The application
+ The agent’s report
+ An inspection report
+ Physical inspection
+ A physical examination and attending physician’s report
+ MIB report (Medical Information Bureau report)
● Making an Underwriting Decision
- After reviewing the information, the underwriter can:
+ Accept the application and recommend that the policy be issued
+ Accept the application subject to restrictions or modifications
+ Reject the application
- Many insurers now use computerized underwriting for certain personal lines of insurance
that can be standardized

48. Insurance company’s underwriting management.

- Underwriting refers to the process of selecting, classifying, and pricing applicants for
insurance
● Statement of Underwriting Policy
- A statement of underwriting policy establishes policies that are consistent with the
company's objectives
- The underwriting policy is stated in an underwriting guide, which specifies:
+ Acceptable, borderline, and prohibited classes of business
+ Amounts of insurance that can be written
+ Territories to be developed
+ Forms and rating plans to be used
+ Business that requires approval by a senior underwriter
● Basic Underwriting Principles
- Attain an underwriting profit
- Select prospective insureds according to the company's underwriting standard
+ Reduce adverse selection against the insurer
+ Adverse selection is the tendency of people with a higher-than-average chance of
loss to seek insurance at standard rates. If not controlled by underwriting, this will
result in higher-than-expected loss levels.
- Provide equity among the policyholders
+ One group of policyholders should not unduly subsidize another group

49. Production in insurance companies

- Production refers to the sales and marketing activities of insurers
+ Agents are often referred to as producers
 + The key to insurer’s financial success is an effective sales force
● Agency Department
- Life insurers have an agency or sales department
+ This department is responsible for recruiting and training new agents and for the
supervision of general agents, branch office managers, and local agents.
- Property and liability insurers have marketing departments.
+ To assist agents in the field, special agents may also be appointed. A special agent
is a highly specialized technician who provides local agents in the field with
technical help and assistance with their marketing problems. For example, a
special agent may explain a new policy form or a special rating plan to agents in
the field.
● Professionalism in Selling
- The marketing of insurance has been characterized by a trend toward professionalism
+ An agent should be a competent professional with a high degree of technical
knowledge in a particular area of insurance and who also places the needs of his
or her clients first
- Several organizations have developed professional designation programs for insurance
personnel:
+ The American College: CLU (Chartered Life Underwriter - life and health
insurance), ChFC (Chartered Financial Consultant - financial services)
+ The American Institute for Chartered Property and Casualty Underwriters: CPCU
(Chartered Property Casualty Underwriter - property and casualty insurance)
+ Certified Financial Planner Board of Standards, Inc.: CFP (Certified Financial
Planner - financial planners)
+ National Alliance for Insurance Education & Research: CIC (Certified Insurance
Counselor - property and liability insurance)

50. the basic objectives in settlement of a claim?

- The objectives of claims settlement include:

+ Verification of a covered loss Commented [18]: This step involves determining
whether a specific person or property is covered under
+ Fair and prompt payment of claims the policy, and the extent of the
coverage.
 + Provide personal assistant to the insured Commented [19]: For example, the claims adjustor
could assist the agent in helping a family find temporary
- Some laws prohibit unfair claims practices, such as: housing after a fire occurs.

+ Refusing to pay claims without conducting a reasonable investigation

+ Not attempting to provide prompt, fair, and equitable settlements
+ Offering lower settlements to compel insureds to institute lawsuits to recover
amounts due

51. the steps involved in the settlement of a claim?

● Notice of loss
- The claim process begins with a notice of loss, typically immediately or as soon as possible
after a loss has occurred.
● Investigation of the claim
- Next, the claim is investigated
+ An adjustor must determine that a covered loss has occurred and determine the
amount of the loss
- Some questions may be raised before a claim is approved:
+ Is the person an insured under the policy?
+ Did the loss occur during the policy period?
+ Is the cause of loss covered under the policy?
+ Is the damaged property covered under the policy?
+ Is the amount of loss or damage covered under the policy?
+ Is the location where loss occurred covered under the policy?
+ Are there any exclusions that apply to the loss?
+ Does any other insurance apply to the loss?
+ Is the claim fraudulent?
● Filing a Proof of Loss
- The adjustor may require a proof of loss before the claim is paid
● Decision Concerning Payment
- There are 3 possible decisions:
+ The claim can be paid:
+ The claim can be denied: For example, the policy does not cover the loss
 + The claim may be valid but there may be a dispute between the insured and insurer
over the amount to be paid. In the case of a dispute, a policy provision may specify
how the dispute is to be resolved.

52. the sources of information that a risk manager can use to identify loss exposures?

- Invoice
- Risk assessments
- Risk analysis questionnaires: risk manager has to answer numerous question that identify
major and minor loss exposures
- Physical inspection: a physical inspection of company plants and operations can identify
major loss exposures
- Flowcharts: show the flow of production and delivery that can reveal production
bottlenecks where a loss can have severe financial consequences for the firm
- Financial statement: identify major assets that must be protected, loss of income exposures,
and key customers and suppliers
- Historical loss data: historical and departmental loss data over time can be invaluable in
identifying major loss exposures
- Regulatory Requirements: Risk managers consider regulatory requirements and
compliance obligations specific to their industry or geographical location. Laws and
regulations may outline certain risks that organizations must address or disclose, providing
guidance on loss exposures that need to be managed.
- Insurance Policies and Coverage Analysis: Risk managers review the organization's
insurance policies and coverage terms to understand the scope of protection offered. They
assess potential gaps in coverage and evaluate the adequacy of policy limits and
deductibles. Insurance policies often highlight specific loss exposures and risk mitigation
measures that need attention.

53. difference between agents and claim adjusters?

- An insurance agent often has authority to settle small first-party claims up to some
maximum limit Commented [20]: This approach to claims settlement
has several advantages: it is speedy, it reduces
adjustment expenses, and it preserves the
policyholder’s goodwill.
 - A company adjustor is usually a salaried employee who will investigate a claim,
determine the amount of loss, and arrange for payment.
- An independent adjustor is an organization or individual that adjusts claims for a fee Commented [21]: Property and casualty insurers often
use independent adjustors when a catastrophic loss
- A public adjustor represents the insured and is paid a fee based on the amount of the occurs
in a given geographical area, such as a hurricane, and
claim settlement a large number of claims are submitted at the
same time.
Agents Claim adjuster Commented [22]: A public adjustor may be employed
by the insured if a complex loss situation occurs and
Agents, also known as insurance agents or Claim adjusters, also known as claims technical
assistance is needed, and also in those cases where
insurance brokers, act as intermediaries between adjusters or claims examiners, are the insured and insurer cannot resolve a dispute
insurance companies and policyholders. responsible for investigating, evaluating, over a claim.
and settling insurance claims.

Agents primarily focus on selling insurance Claim adjusters may be employed directly
policies to individuals or businesses. by insurance companies or work for
independent adjusting firms that provide
In some cases, agents can commonly function as claims handling services on behalf of
adjusters in the case of small property losses. insurers. Some adjusters are also employed
Many agents have been granted draft authority by third-party administrators or self-
by their companies, which means they are insured entities.
authorized to issue company checks in payment
of losses up to some stipulated amount. Even in
cases in which the amount of the loss exceeds the
draft authority, agents may handle the settlement
of the loss.

54. alternatives to Traditional Reinsurance?

- Some insurers use the capital markets as an alternative to traditional reinsurance

- Securitization of risk means that an insurable risk is transferred to the capital markets
through the creation of a financial instrument, such as a catastrophe bond or futures contract
- Catastrophe bonds are corporate bonds that permit the issuer of the bond to skip or reduce
the interest payments if a catastrophic loss occurs
+ Catastrophe bonds are growing in importance and are now considered by many to
be a standard supplement to traditional reinsurance.

55. investments in both life insurance and property and liability insurance are different?

- Because premiums are paid in advance, they can be invested until needed to pay claims
and expenses
- Investment income is extremely important in reducing the cost of insurance to
policyowners and offsetting unfavorable underwriting experience
- Life insurance contracts are long-term; thus, safety of principal is a primary consideration
- In contrast to life insurance, property insurance contracts are short-term in nature, and
claim payments can vary widely depending on catastrophic losses, inflation, medical costs,
etc

56. Exercises