appearance of insurance certificate/declaration

[NormandDArcy]

The documentary credit states “insurance policy/certificate for 110 pct of the invoice value covering all risks”.
We received a document physically typed on the insurance company’s letterhead. The text is not the customary lengthy text appearing either in printed matter or printed text from what appears to be a template. This is a short text on 8x11 paper used primarily for letters.
The entire text reads: Heading: Marine Insurance Certificate. This is to certify that (beneficiary’s name) has affected a marine insurance policy No.XXX with (insurance company name) effective 01June2004. Insured value (in compliance with credit) currency (in compliance with credit) goods description (in compliance with credit). Terms and conditions: covering all risks. We hereby declare for insurance under said policy, the interest specified above so valued subject to the terms and conditions and payment of claim: in the event of loss or damage for which the company may be liable immediate application for survey should be made to (insurance company in applicant’s country). Claims payable in (applicant’s country).
It is then hand signed and the insurance company’s name is typed above the signature. It is dated prior to the AWB date.
Verifying conformity against ICC500 articles 34, 35 and 36, this document appears to comply yet it appears to be more of a declaration. If this is a declaration –even though head marine insurance certificat- is it acceptable (34d)? There is no mention as to the negotiability of this document, nor who the beneficiary of the “certificate” is yet claims are payable in the applicant’s country as is the survey . Note the document has not been endorsed. There is no mention as to the expiry of the insurance policy.
I look forward to comments from fellow bankers as to the acceptability or not, of such a document as an “insurance policy/certificate

[KimChristensen]

Dear Normand,

I really hate insurance documents. Their formats, templates, wordings are so different. I surely understand your concern.

However – without any liability / responsibility and in my personal capacity:

I simply can not think of a reason to refuse the document that you so precisely describe. To me it sounds “spot on”.

I may start a storm here, but I would not make a distinction between a certificate and a declaration.

Best regards
Kim

[NormandDArcy]

Kim,
Thanks for your reply, it was much appreciated.
I wonder if this certificate/declaration does not need to show an insured party? The incoterm in this case is CIP which means that the risk passes once the goods are delivered to the carrier. Hence it should follow that the insurance should then somehow or another, be able to also be transfered: either by it being in negotiable form or by assuring the consignee. ISBP point no. 195 makes some semblance of stating this point. So...could this document be found discrepant because of this?
Again, comments from all would be appreciated.

[KimChristensen]

Dear Normand,

Yes, that is a tricky one. If I were to guess as to the intention of ISBP 195, it would be to secure that once the benni receives the documents, then he will be able to make a claim under the insurance.

I am not an insurance expert, but in this example, I would surely expect that the benni would indeed be able to make a valid claim, if he is in procession of the document, and can justify that the damaged goods belongs to him. Or saying it another way: There is nothing in the document to the contrary.

I would also like to hear other views on this one.

Best regards
Kim

[NigelHolt]

Kim

In view of Kim’s desire for other views, here goes on a purely personal basis without liability / responsibility:

From the information available it does not appear to me that the insurance document is payable to bearer, rather it appears to me that the insured party is the beneficiary. Therefore, per para’s 194 & 195 of Pub. 645 I believe it requires endorsement by the beneficiary.

Incidentally, given the provisions of sub-Art34d I am surprised that Norman is concerned by that the ‘document appears to be more of a declaration’.

Kim, hope you had a trouble free trip back to Copenhagen and enjoyed the Survey. See you next year in Prague perhaps.

Jeremy

[KimChristensen]

Dear Jeremy,

I thought that you would say that I accept that this may be the safest way to go about this. I would however observe that, the document does not state to whom it is issued (i.e. bearer as is the scenario in 194), but who has affected the insurance. This may not be the same person – especially since Incoterms is CIP.
As always I respect your view though, but would not consider to do any difference in “real life”.

Truly enjoyed the Survey. How could I otherwise when you were there as well Had a nice flight home as well. Prague? We will see about that…but I sure hope so.

Best regards
Kim

[NormandDArcy]

Kim/Jeremy
Thanks for your views. My concern is really that the document does not indicate who can claim on it. Ended up calling the insurance company who advised that they normally mention the beneficiary of the certificate (either the dc benef or app) but because the dc benef had not advised them of this info they omitted it altogether on the certificate but were expecting dc benef to advise them "eventually". Insurance co. ended up issuing new document to bearer and DC benef endorsed it.

[NigelHolt]

Norman,

Please to hear of the satisfactory outcome.

Incidentally, it is always appreciated by me when an 'enquirer' has the courtesy to thank me for my contribution, whether or not it is of any use.

Regards, Jeremy

[KimChristensen]

Hi Norman,

Your feedback is highly appreciated, also pleased that your case turned out well.

This got me thinking however, on two things:

1) Since this is actually issued by an insurance company, why do they use a “form” intended for letters, and not use a template designed for making insurance certificates?

2) If there are some “insurance experts” amongst the readers of this string of postings, I wish they would enlighten me.
Norman describes that the certificate has been issued without a beneficiary to the certificate. What is the effect of this?
a) is it than no one can make a claim, or
b) that the party affecting the insurance can make a claim (or endorse the document), or
c) that any holder can make a claim

If I were to compare this to a negotiable bill of lading, i.e. issued “to order” – not mentioning to who’s order, it would be generally accepted in the industry that this would mean “to order of shipper”, and his endorsement would be accepted when transferring title. However technically such document not mentioning to whose order it is issued would in fact be ambiguous (not thinking in D/C terms here).
Is this similar when it comes to insurance documents?

Thanks in advance
Kim