Coursework submission rules and important notes

Coursework submission rules and important notes

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This includes the following information:

• This assignment must not be provided to, or discussed with, any other person regardless of whether they are another candidate or not. If you are found to have breached this rule, disciplinary action may be taken against you.
• Important rules relating to referencing all sources including the study text, regulations and citing statute and case law.
• Penalties for contravention of the rules relating to plagiarism and collaboration.
• Coursework marking criteria applied by markers to submitted answers.
• Deadlines for submission of coursework answers.
• You must not include your name or CII PIN anywhere in your answer.
• There are 80 marks available per coursework assignment. You must obtain a minimum of 40 marks (50%) per coursework assignment to achieve a pass.
• Your answer must be submitted on the correct answer template in Arial font, size 11.
• Your answer must include a brief context, at the start of your answer, and should be referred to throughout your answer.

Each assignment answer should be a maximum of 3,200 words. The word count does not include diagrams however, it does include text contained within any tables you choose to use. The word count does not include referencing or supplementary material in appendices. Please be aware that at the point an assignment answer exceeds the word count by more than 10% the examiner will stop marking.

Top tips for answering coursework assignments

• Read the960 Specimen coursework assignment and answer, available on RevisionMate.
• Read the assignments carefully and ensure you answer all parts of the assignments.
• You are encouraged to choose a context that is based on a real organisation or a division of an organisation.
• For assignments relating to regulation and law, knowledge of the UK regulatory framework is appropriate. However, marks can be awarded for non-UK examples if they are more relevant to your context.
• There is no minimum word requirement, but an answer with fewer than 2,800 words may be insufficiently comprehensive.

To be completed before submission:

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Company Brief Description

ICEA LION Group is one of the leading financial services provider in East Africa. It is composed of 5 companies; among them is ICEA LION General insurance company that underwrites short term insurance policies. The product range underwritten by this company includes motor insurance, domestic package, travel insurance, WIBA, contractors all risk, personal accident, and marine insurance.

Significant Class of Business Underwritten

This assignment will focus on marine cargo insurance, which is tailored to provide protection against loss or damage to goods in transit by most modes of transport, including sea, road, rail, and air. The cover is based on internationally accepted Institute Cargo Clauses, which are uniformly used in global markets.

According to the Marine Insurance Act 1906 (MIA), ‘marine cargo insurance is a class of property insurance that insures property while in transit against loss or damage arising from perils associated with the navigation of the sea or air and subsequent land and inland waterways (Legislation.gov.uk., 2020).’

The company offers three areas of coverage under this cover; All Risk cover, Basic Cover, and Restricted Cover, which are issued as either Marine Open Policies suitable for frequent importers or Single Cargo Policies for single shipment customers.

Marine insurance cover is based on internationally accepted Institute Cargo Clauses, which are used uniformly in global markets and specify what risks are covered should there be damage or loss to the cargo. They include;

1. Institute Cargo Clause A and Institute Cargo Clauses Air – This is the highest level of marine cover. It covers all risks of loss of or damage to the cargo insured except for what is excluded by the policy.
2. Institute Cargo Clause B – This is not as wide as ICC A above and covers specific named risks as defined in the policy.
3. Institute Cargo Clause C – This insurance provides limited cover for loss or damage to your cargo due to specified perils only. These include; Fire or explosion, Sinking or grounding of vessels, Overturning of vehicle, ship collision with any external object, discharge of cargo at a port of distress (emergency docking), Jettison.

The principle Areas of coverage include;

Risks that could occur on the sea/in air whilst in the ordinary course of transport.

1. Perils of the sea/air e.g., storms, fire, lightning, earthquake collision, grounding of the ship, sinking, disappearance, capsizing, etc. Other specific perils may include.
2. Barratry – This is usually an act of misconduct committed by a master or crew of a vessel, which damages the vessel or its cargo.
3. Jettison– Intentional dropping or throwing overboard of cargo from an aircraft or ship for the common safety of the vessel and her cargo.
4. The risks of general average. This occurs when all stakeholders of a ship/sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo in order to save it during an emergency.
5. Man-made disasters such as theft by assailing thieves, violence and piracy of ships
6. All other like perils as defined in the policy.

Risks that could occur while in transit on land.

Marine Cargo Insurance can be extended to cover land risks incidental to the sea or air transits. These include;

1. Loss of the cargo whilst in transit.
2. Damage to the cargo whilst in transit.
3. Pilferage (theft of a few pieces or a small quantity of a relatively large shipment) or theft of goods in transit.
4. Contamination of goods by water, moisture, oils or liquid chemicals.
5. Non-delivery of cargo at destination.

This cover can also be extended to include;

1. War, Strikes and Civil Commotion. This covers loss of or damage to the cargo caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions as well as any persons acting maliciously.
2. Your typical policy has an automatic storage period of 60 days after discharge at the final destination port. This period exists to allow you to handle all customs clearance procedures. However, it is common for this period to extend past 60 days for reasons beyond your control like a port strike, the strike of transport, delay due to the assessment of duty on the goods by the customs authorities, etc. It is for this reason that you may request for a storage extension at an extra premium in order to continue enjoying the benefits of this policy.

Commonly excluded risks

Below losses that are not payable by the insurer and excluded from the marine insurance cover;

1. Loss, damage or expense that occurs as a result of the wilful or intentional misconduct of the insured.
2. Ordinary leakage, loss in weight, volume, or wear and tear of the cargo.
3. Loss or damage due to insufficient or unsuitable packing or preparation of the cargo
4. Damage to goods, which one can foresee, is bound to occur during any normal transit, and which arises solely because of the nature or condition of the cargo (inherent vice).
5. Delay – cover will not pay for loss, damage or expense caused by delay; nor will it pay for any other consequences of the goods being delayed in transit
6. Unseaworthiness or unfitness of the container or ship/craft/vehicle/train where the insured are aware of this.
7. Risks relating to war (including loss or damage caused by mines, etc left over from previous hostilities) and damage caused by strikers, terrorists and in riots are excluded. However, it is usual for these risks to be added back in to the insurance cover by the inclusion of the applicable Institute War and Strikes Clauses mentioned above.
8. Other exclusions as specified in the purchased type of policy.

How marine policies are arranged

Marine policies may be arranged for both imports/incoming and exports/outgoing consignments in below forms.

• Single Marine Cargo Cover (Voyage policy)– An individual cargo policy for a single shipment of goods. This is suitable for one-off or infrequent importers.
• Marine Open Cargo Cover– An open marine insurance policy covers an indefinite number of movement of consignments. Unlike the voyage policy above which is issued individually, here the client declares successive shipments to us, and they automatically get covered under the open marine insurance contract. For purposes of efficiency, we manage these declarations via a portal system.

The policy remains in force until cancelled and is usually appropriate for customers with frequent shipments.

Significant rating factors used to calculate the risk premium for Marine cargo insurance policies

When calculating the risk premium for this class of business, various factors are put into consideration. Below is are some of the factors that are considered when rating marine cargo policies;

1. Cover required
2. Terms/ Warranties
3. Type of policy
4. Claims experience
5. Gut feeling
6. Basis of evaluation
7. Packing
8. Conveyance

I will focus on packaging, conveyance and cover required for the purposes of this assignment.

Cover required – There are three main levels of cover distinguished by applicable Clauses: Institute Cargo Clauses A, B and C. Institute Cargo (C) and Institute Cargo (B) cover named perils while Institute Cargo (A) covers “All risks”. Depending on the cover requested for the goods, the rating could be quite different.

Packing – the mode of packing of the cargo is also material when rating and determining premiums for a marine insurance cover. Cargo packed in a container should attract discounted rates. Poor and or insufficient packing is a specific exclusion under the Institute Cargo Clause (A). Mode of packing is not standard, it depends on the type of goods. Superior packing improves the underwriter’s risk.

Conveyance – This refers to the mode of transit; whether by Sea freight or Airfreight, as well as incidental Rail or Road. Airfreight is largely safer and quicker than Sea Freight and thus attracts lower rates. Similarly Rail transport records lower losses than Road transit and is thus looked at more favourably by underwriters.

Analysis of how each of these rating factors influence underwriting policy and practice, for marine insurance.

Underwriting refers to the risk selection process by an Insurance Company that decides whether to issue a policy requested by a prospective customer or not, through this process the company also decides what terms and conditions to apply, as well as the amount of the premium to be charged.

This selection process is carried out by an underwriter whose primary responsibility is to ensure that no risk will cause major problems for the company in the future, the risk selection process undertaken by the underwriter are meant to achieve maximum profit for the insurance company Underwriting can also be referred to as risk selection which is the determination of the level of risk associated with the subject matter to be insured, based on the level of risk, the application for insurance can be accepted, delayed or rejected. Implementation or not of a very dependent on the underwriting process that identifies the feasibility of the insured candidate.

Each of the above mentioned rating factors influences underwriting as per the below analysis;

Cover Required

Marine cargo insurance cover is offered in three basic sets which constitute cargo clauses A, B and C. The clauses were developed by the International Chamber of Commerce as a means of insurance for cargo while on transit from the original location to its final destination. Marine cargo insurance is similar to other insurance policies in that, the higher premium you pay the more coverage you get. The three clauses are briefly described below:

Institute Cargo Clause A is considered to be the widest insurance coverage among the three and the insured is expected to pay the highest premium because the insured gets total coverage. This cover is recommended For goods of high value, goods that are prone to robbery for example, iPhones, iPads and laptops, as well as goods being shipped from a port with a high risk of robbery or being delivered to a port with a high risk of robbery.

Institute Cargo Clause B is a more restrictive coverage than ICC A, the insured is expected to pay moderate premium because it provides partial coverage where only the more valuable items on the cargo are covered.

Institute Cargo Clause C is the most restrictive coverage and the insured will pay the lowest premium compared to those insured under ICC A & B since the coverage offered on the cargo is much less than in the two previous clauses.

In conclusion, it is evident that the clause the level of cover falls under will influence underwriting of that policy. ICC A will require more expertise and concentration when underwriting as compared to ICC B & C.

Conveyance

This refers to the mode of transit; whether by Sea freight or Airfreight, as well as incidental Rail or Road.

Apart from the age and safety of the vessel, the cost of cover may be affected by whether it is being transported by air or by sea. Air shipments are obviously cheaper due to its express nature.

Airfreight is considered to be cheaper and quicker than sea freight and thus goods being transported via these modes are underwritten differently. Premiums for air freight are also lower than the premiums charged to cover goods transported via the sea. In addition Rail transport is considered to be safer compared to road transport of covered goods, as such underwriting differs when underwriting cover for goods transported via the two different ways. Cover for goods being transported by rail will be charged a lower premium than cover for goods being transported via roads. Underwriters will tend to treat cover for goods being transported by air and rail favourably than cover for goods being transported by sea and by road

Packing

The safer the cargo, the better the premium rate. Goods secured in containers while aboard a ship are more secure as compared to goods transported in the open. Other safety aspects of packing may include whether the cargo is fastened in cartons or pallets. Packaging is one of the major factors that affects the insurance premium. Proper packaging can minimise risk exposure and help you to maintain a good claim history. With a good claim record, the insured can enhance their bargaining power as a customer by offering a more favourable premium for the marine cargo insurance. Apart from saving on premiums, you can also avoid punishment for the delay of cargo delivery to the consignee due to the detaining of goods by the customs caused by improper packaging. In addition to packaging, Marking is an important part of packaging. Marking refers to providing information about the consignee, transport route and quantity, this makes it easy for underwriters to underwrite marine cargo insurance.

Recommendations to improve underwriting policy and practice by rating factors, for marine insurance.

Conducting underwriting audits – in order to improve quality and consistency in underwriting marine insurance, the insurer needs to conduct underwriting file reviews also referred to as underwriting audits. These audits help determine the effectiveness of underwriting staff as Well as determine whether underwriting guidelines are followed consistently. Underwriting audits will help the insurer identify training gaps of its underwriting staff. Performing underwriting audits will highlight deficiencies in the underwriting processes, therefore the insurer can identify areas that require improvement. The insurer can determine the need for additional coaching, improving documentation and enhancing quality reviews.

Optimizing profits and achieving competitive advantage – The insurer needs to take note of even the smallest variances, take note of pricing, underwriting, claims and distribution channels in order to ensure the company remains profitable. By studying the competitive landscape in which it operates, the insurer can look for ways to improve performance and in turn achieve competitive advantage.

Risk assessment – by comprehensively assessing the risk, an insurer is able to accurately select, assess and rate risk and hence achieve profitability. By combining and aligning efficient underwriting processes, multiple sources of information, diverse staff talents and technology the insurer is able to improve its underwriting and eventually its profitability.

The insurer can collaborate with other insurers offering Marine insurance cover to push policy makers and regulators into creating a conducive business environment that supports the growth and profitability of insurance companies. For example the regulators can set minimum premium rates to be charged for a particular class of business hence the insurer can be protected from unfair competition from competitors who want to charge the lowest rates possible in order to attract customers.

Use of technology and digitalization in underwriting and claims processing- Large proportions of marine insurance claims errors occur due to human error hence by improving technology and digitalizing the claims process the insurer is able to reduce this errors.by use of technology the insurer would be able to track goods online as well as monitor and control goods temperature of the goods in transit for goods that are sensitive to temperature changes. This in turn will improve the probability of a loss occurring and in turn improve the companies efficiency and profitability.

Organizing for trainings and seminars of underwriters – the insurer should continuously offer training to its underwriters as well as ensure that there is structure in place to cascade knowledge from the experienced underwriters and management to the junior inexperienced underwriters. This will ensure that the company only accepts quality business in its books.

Referencing must be completed before submission

All sources must be referenced in the body of your answer as well as in your reference list. See the 960 Specimen coursework assignment and answer for examples of how to reference correctly in text and in your reference list.

References

• gov.uk. (2020). Retrieved 25 August 2020, from https://www.legislation.gov.uk/ukpga/Edw7/6/41/data.pdf
• Rose, F. (2013). Marine insurance: law and practice. CRC Press.
• co.uk. (2020). Providing Business & Property Insurance Solutions since 2000 – Insurance2day Insurance Services Ltd. Retrieved 25 August 2020, from https://www.insurance2day.co.uk
• Hatchek, H (2019) Advanced Underwriting 960 CII, London

Glossary of key words

Analyse

Find the relevant facts and examine these in depth. Examine the relationship between various facts and make conclusions or recommendations.

Construct

To build or make something; construct a table.

Describe

Give an account in words (someone or something) including all relevant characteristics, qualities or events.

Devise

To plan or create a method, procedure or system.

Discuss

To consider something in detail; examining the different ideas and opinions about something, for example to weigh up alternative views.

Explain

To make something clear and easy to understand with reasoning and/or justification.

Identify

Recognise and name.

Justify

Support an argument or conclusion. Prove or show grounds for a decision.

Outline

Give a general description briefly showing the essential features.

Recommend with reasons

Provide reasons in favour.

State

Express main points in brief, clear form.