Auto Accident Attorney Ny

Non-Proportional treaties

These treaties can be further classified into: •Excess of Loss Treaty •Stop Loss Treaty •Aggregate Excess of Loss Treaty

Excess of Loss Treaty This arrangement is basically a form of reinsurance whereby, the direct insurer sets a monetary limit to the amount he is prepared to bear of any one loss as a result of any one event, on the class(s) of business concerned. He thus arranges by way of reinsurance to be relieved of the amount of loss, which exceeds that limit for any one event. Excess of Loss Arrangement helps to reduce the ceding company’s exposure on individual risks more efficiently than proportional reinsurances. It also deals more effectively with the problems of accumulations and catastrophe risks. There are two types of Excess of Loss covers: (i) Working Covers (ii) Catastrophe Covers

Working Covers Under this cover, the ceding company as well as the reinsurer agree to protect the normal exposure of the business covered, i.e. normal losses which occur with some regularity.

Catastrophe Covers This cover protects the ceding company against the risk of accumulation in the event of one catastrophe. For e.g. total losses, cyclone, earthquake, port godown fires, explosions in the port area, etc. When this cover is attracted, the event involves more than one risk by the very nature and extent of cover it affords.

Stop Loss Treaty Stop Loss reinsurance makes it possible to limit the ceding company’s loss ratio to an agreed percentage. The loss ratio of the ceding company is stopped at an agreed percentage. If in any one accounting year, the loss ratio exceeds that percentage, then the reinsurers pay the difference. There is an upper limit of liability under the treaty. This limit is also expressed in the form of a loss ratio.

Aggregate Excess of Loss Treaty An Aggregate Excess of Loss Treaty works on the same principle

as a Stop Loss Treaty, but instead of expressing the loss ratio limit as a percentage of the annual premium, it is stated in actual figures. Thus, the treaty may cover annual losses in excess of Rs. 5 crores upto a further Rs. 4 crores. The ceding company pays all losses upto Rs.5 crores but not more than Rs.4 crores. Any amount in excess of Rs.9 crores will revert to the ceding company.

Maritime Frauds

An international trade involves several parties – exporter, importer, ship owner, charterer, ship’s master, officers and crew, insurer, banker, broker or agent, freight forwarder. Maritime fraud occurs when one or more of these parties succeed, unjustly and illegally, in obtaining money or goods from another party. An example of a fraudulent act would be the sinking of an over-insured vessel carrying a highly valued non-existent cargo.

Types of frauds$

Maritime Fraud has many guises and its methods are open to infinite variation. Majority of these crimes can be classified into four categories: Scuttling of ships Documentary frauds Cargo thefts Fraud related to the chartering of vessels

Scuttling Frauds Scuttling Frauds are also known as “rust bucket” frauds. This involves deliberate sinking of vessels in pursuance of fraud against both cargo and hull interests. With occasional exceptions, ship owners in a situation commit these crimes where a vessel is approaching, taking into account: Age of the vessel Its condition Prevailing freight market The crime can be aimed at hull insurers alone or against both hull and cargo interest.

Documentary Frauds This type of fraud involves the sale and purchase of goods on documentary credit terms. Some or all of the documents specified by the buyer to be presented by the seller to the bank in order to receive payment, are forged. Bankers pay against documents. The forged documents attempt to cover up the fact that the goods actually do not exist or that they are not of the quality ordered by the buyer.

Cargo Thefts There are several variations in the modus operandi of cargo thefts. In a typical example, the vessel, having loaded a cargo, deviates from its route and puts into a port of convenience. The cargo may be discharged and sold on the quayside. Such an act is often accompanied by a change of the vessel’s name or a subsequent scuttling in order to hide the evidence of theft. The whole process of investigation is proved difficult, as by the time the loss is known, the cargo disappears and the actual recovery of goods is unlikely.

Fraud related to the chartering of vessels This is also known as “charter-party fraud”. Establishing a chartering company requires modest initial financial commitment and is usually subject to little regulation. After chartering a ship, the fraudulent charterer canvasses for cargo at low freight rates on a pre-paid basis. Soon after the ship sails, the charterer disappears with the collected freight leaving the ship owner to take care of the cost of the voyage.

Maritime fraud and marine insurance

Cargo Insurance

In case of the insurance of cargo, Clause 4.7 of ICC (B) and (C) excludes: “deliberate damage to or deliberate destruction of the subject-matter insured by the wrongful act of any person or persons.” If the insured desires these risks to be covered, he may request the cover from his insurers, who may grant the same at their discretion subject to additional premium.

Hull Insurance

Under the Institute Hull Clauses, loss/damage to the insured vessel caused by, inter alia, the following perils is covered: Violent theft by persons from outside the vessel Piracy Barratry of master, officers or crew

Definition: ‘Barratry’ is defined as including every wrongful act wilfully committed by the master or crew to the prejudice of the owner, or the charterer, as the case may be.

Precautionary measures for fraud prevention

Measures for Exporters and Importers

The checks and precautions that buyers and sellers should be aware of and should be able to implement are: Care should be exercised when dealing for the first time with unknown parties. Careful inquiries should be made as to their standing and integrity before entering into a binding agreement. Shipment should be by well-established shipping lines. In India, vessels approved by GIC should be preferred. The cargo owner should be wary: If the freight rate is too attractive. If the ship owner owns one vessel only (‘singleton’). If the vessel is over 15 years of age. If the vessel has passed through various owners.

Payment by irrevocable documentary credit, confirmed by a bank in seller’s country, provides the best safeguard to the seller. If the seller has any doubt about the authenticity of letter of credit, he should immediately consult his bank before parting with the goods. As far as the buyer is concerned, he should ensure that he receives the documents, he has stipulated in his documentary credit application. He must consider carefully which documents he requires. For e.g., an independent “loading certificate” would add significantly to his protection as would detailed instructions on which shipping line or forwarding agent is to be used. The buyer may stipulate for a “report on the vessel” from an independent third party to ensure that the subject cargo is in fact loaded on the specified carrying vessel. Conference or national lines bills of lading should be used and marked “freight prepaid” with the amount of freight clearly stated in the bill of lading. Services of dependable and well-known forwarding agents, who are also members of a national association, should be engaged. Buyers and sellers should attempt to identify: Whether the carrying vessel is on charter Who the charterers and owners are Whether chartering is done only through agents of reputable institutions

Conclusion

In nearly all incidents of maritime fraud, it is evident that dishonesty of one party is combined with misplaced trust and shortsightedness of the other. Traders should be aware of low freight rates. There is no such thing as a “bargain”. In business, everything, including the bargain, has a price tag.