Phạm Thanh Hà - gửi slides sau lớp

07:00- 09:10 WED and 09:20- 11:40 FRI

hapham@ftu.edu.vn - 098 9090988
Office: Room 202, Building A
Every Wed from 1:30pm - 4:30pm
Course: 10 – 30 – 60

Insurance:
 Life
 Liability
 Non-life <= Qtrong, cần study in this course

Insurance policy (Đơn bảo hiểm)

CONTENT
1. Chapter 1: Basic concepts in Insurance
2. Chapter 2: Fundamental Legal Principles
2, Chapter 3: Marine Insurance
3. Chapter 4: Analysis of Insurance Contract
4. Chapter 5: Insurance company operation
5. Chapter 6: Introduction to risk management
6. Inviting experts
7. Mid- term exam:

REFERENCES
1. Principles of Risk Management and Insurance, George B. Reida, 14° edition
2020
2. Institute Cargo Clauses 1982 (Legal system sẽ sd)
3. Insurance in Business (Vietnamese textbook), Prof.Dr Trinh Thi Thu Hương,
2022
4. Incoterms 2020, ICC
5. Vietnam Insurance Law, 2022
CHAPTER 1: BASIC CONCEPT
1. INSURANCE

Insurer: Usually the insurance company

Insured: Buyer – to protect cargo
Insured – Premium - Policy/contract – Insurer
 Insurance premium (I): amount insured pay to insurer

Q: Main responsibility, rights of 2 parties in the Sales contract?

Main responsibility: Main right

Seller: Provide goods Receive money
Buyer: Pay Receive goods

=> Apply this correspondence to insurance contract

Q: Right of the insured ?

Main right
Insurer Receive Premium
Insured Receive compensation/indemnity from insurance company in
return if st happen to to my subject mater insured

Q: Which one is higher: Indeminty or Premium? (In the case of per customer)
Indeminty > Premium. Usually much higher

Q: How to calculate, base on what criteria for the premium?

- Scope of the coverage in terms of risks
C – 9 cases of risks
B – 11 cases of risks
A – 12 cases of risks
=> The more risks cover, higher the premium
Q: (i) Why financial protection only in terms of indemnity?
- Easier:
Subject of matter issured comes in many forms
If ask the company to compensate by a physical object, will be very hard to
do (liability insurance).
VD: Broken leg => Cannot

Q: (ii) Why it is: Risk transferring from the insured to the insurer?
Owns property => Pays insurance premium => Transfer the risk of the
property to insurer
*Lưu ý: Time of validity of insurance # other contract: Valid if only issured
pays the premium

Q: (iiii) What it means by Risk sharing? <= Most important principle

Maximum amount of money can receive: 40,000.

If issured suffer from ..% of loss => He will not receive up to 40,000
Slide – Procedures

Q: (iv) Why Business object is risk?

From pov of Isurance company: Calculate base on probability of risk occuring
Example 1 => 0.5% of risk happening
Law of Large Number
=> Cần large number size. Bigger sample size => More accurate result
14/8/2024

Risk # Loss/damage
Cause – conseequences

• Risk is defined here as uncertainty concerning the occurrence of a

loss

2.2. Chance of loss:

- is defined as the probability that an event will occur.
3. RE- INSURANCE (Tái bảo hiểm)
 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.

Normally: Insured - Original contract – Insurer

After signing contract:
POV of insurer: Want to transfer a proportion of premium to another company

VD: Original insurer transfer 20% premium to another firm => reinsurer
IF st happens, the insured suffer 10000
=> The original insurer suffer 8000, Re-insurer suffer 2000

Q: Purpose of re-insurance:
- Share risk burden with original insurer
- Value of SMI is to high =>Transfer some of financial burden (If st happens
to subject matter insured must give full compensation)

ASSUMPTIONS:
1. Original insurer transfer 100% premium
=> Broker contract

2. Orginial insurer bankrupt, transfer 60%

=> Q: Can insured claim full compensation?
=> A: No. Because the 2 contracts are independant. The orignial insurer has
no responsibility to inform the insured
However, Insured can claim re-insurer only if the original contract refered
the cut-through law

3. Re-insurer go bankruptcy, transfer 80%

=> Q: Can insured claim full compensation?
=> A: Insured would receive only 20%

VD: Sign contract CIF

Liability to buy insurance => Usually buy insurance from companies offer
lowest price => Many risks of financial capability to pay full compensation

LESSON:
 Sign with popular insurance company
 Make sure insurer has the financial capability to receive full coverage
(Mục tiêu)
 Rẻ ko phải là tốt

Điểm khác biệt của insurance contract: Tính chất đơn vụ - insured nộp tiền kí là
cấp đơn bảo hiểm (Policy)
VD: Mua bảo hiểm du lịch
Điền, nộp phí qua form => Công ty cấp bảo hiểm => Người nộp không cần
phải kí

In the case of VN – emerging market: Dân cư đông nhưng chỉ số ít tham gia
bảo hiểm
=> Dễ bị insurance firm lợi dụng vì thiếu hiểu biết
Có một số loại bảo hiểm bắt buộc theo pháp luật:
+ Khi gây tai nạn cho người khác sẽ có ngừoi t3 trả phí cho
+ Bảo hiểm liên quan đến nghề nghiệp (Răng/luật sư)
23/08

Ex:
- Have a car $500m – value of subject matter insured
- Buy insurance from 2 companies A, B for the same type of risks:
Q: Posible to obtain double insurance?
- Yes. Because A & B are independent
- Maximum the insured can receive from all insurer = total value of
subject matter insured ($500m)
Q: how much will the 2 companies pay
- Pay according to the ratio of premium receive initially: Each $250m

Bancassurance: Combination of bank + insurance company

Insurance company take advantage of bank’s customer data:
 Customer có thể mua bảo hiểm trực tiếp từ ngân hàng mà họ đang giao
dịch thay vì phải đi tìm kiếm các công ty bảo hiểm khác
If customers receive credit package, they …… (chưa note đủ)

Other cases of double insurance: (3 case:

- Sign a sales contract with CIF: (bảo hiểm kép vô ý)
 CIF price include insurance which bought by seller
 However, I want to receive the credit package of the bank => I must
buy insurance company coordinated with the bank (Bancassurance)
 Double insurance
=> In this case, the buyer should sign sales contract according
to CFR (seller sẽ không trả insurance nữa mà người mua tự mua bảo hiểm
thông qua bank – bancassurance)

- Signing contract to many insurance company hoping that they can take
advantage by intentionally damage their subject of matter insured (bảo hiểm
kép gian lận  chuộc lợi từ nhiều insurance company)
=> intentional double insurance
- Subject matter insured have high value => Kí thêm với company khác để
yên tâm: một số bảo hiểm chỉ cover được một phần  mua thêm của bên khác để cover
toàn diện nhất cho hàng hóa

There are cases:

1. 3 companies know each other:

 2. 3 companies dont know each other: => compensation = $1,2B. The
insured taking advantage
3. 2 companies knows, the other dont know => chia ratio between 2
companies and take full from the other

In the case of double (or multiple) insurance, where the same subject (the car in this case) is
insured by multiple insurers for the same type of risk, insurers typically apply a principle of
contribution. This means that each insurer will contribute proportionally to the compensation
based on the coverage amount they provide, relative to the total amount insured.

Scenario Breakdown:

 Mr. A insures his car with three insurance companies:

o Company X: 300 million VND
o Company Y: 400 million VND
o Company Z: 500 million VND
 Total amount insured: 300 + 400 + 500 = 1,200 million VND
 Car's actual value: 500 million VND (this is the maximum compensation that can be
paid, as the total compensation cannot exceed the value of the car).
 Each insurer will compensate Mr. A proportionally to the coverage they provided, based
on the total amount insured.

Steps to Calculate Proportional Compensation:

1. Determine each insurer's proportion of the total insurance amount:

o Company X: 3001,200=25%\frac{300}{1,200} = 25\%1,200300=25%
o Company Y: 4001,200=33.33%\frac{400}{1,200} = 33.33\%1,200400=33.33%
o Company Z: 5001,200=41.67%\frac{500}{1,200} = 41.67\%1,200500=41.67%

2. Calculate each insurer’s contribution based on the car’s actual value (500 million
VND):
o Company X will pay: 500×25%=125500 \times 25\% = 125500×25%=125
million VND
o Company Y will pay: 500×33.33%=166.67500 \times 33.33\% =
166.67500×33.33%=166.67 million VND
o Company Z will pay: 500×41.67%=208.33500 \times 41.67\% =
208.33500×41.67%=208.33 million VND

Final Compensation:

 Company X: 125 million VND

 Company Y: 166.67 million VND
 Company Z: 208.33 million VND
 Total compensation: 500 million VND, which is the maximum compensation based on the
car's actual value.
Conclusion:

In this case, Mr. A’s car will be compensated up to its actual value of 500 million VND. Each
insurance company will contribute proportionally based on their share of the total insured
amount.

4o
Bạn đã nói:
1. 3 companies know each other: 2. 3 companies dont know each other: => compensation =
$1,2B. The insured taking advantage 3. 2 companies knows, the other dont know => chia ratio
between 2 companies and take full from the other
ChatGPT đã nói:
ChatGPT

Let's analyze the scenarios you've presented regarding the three insurance companies and how
the knowledge (or lack thereof) among them impacts compensation when an insured party (Mr.
A) holds multiple policies on the same car.

1. All 3 Companies Know About Each Other:

When all three insurance companies (X, Y, Z) are aware of each other's policies, the principle of
contribution applies. This ensures that Mr. A cannot receive more than the actual value of his
car, which is 500 million VND. Each company contributes to the compensation based on the
proportion of the total insured amount.

 Total insured amount: 1,200 million VND (300 from X, 400 from Y, and 500 from Z)
 Car value: 500 million VND
 Each company contributes according to its proportion, as explained previously:
o Company X (25%): 125 million VND
o Company Y (33.33%): 166.67 million VND
o Company Z (41.67%): 208.33 million VND

Thus, the total payout is 500 million VND, with each insurer paying their respective share.

2. None of the Companies Know About Each Other:

In this scenario, the insured (Mr. A) may attempt to exploit the situation by claiming the full
insured amount from each company, which would total 1.2 billion VND (300 million from X, 400
million from Y, and 500 million from Z), far exceeding the actual value of the car (500 million
VND).

 Since the insurers do not know about each other, each could theoretically pay out the full
amount they insured.
 This is an example of insurance fraud, where the insured is taking advantage of the fact
that the companies are unaware of each other’s policies.
In practice, if this fraud is discovered, Mr. A could face serious legal consequences, including
denial of claims and potential criminal charges.

3. Two Companies Know, One Doesn't:

In this case, two of the companies (let's assume X and Y) are aware of each other's policies,
while the third company (Z) is unaware.

 X and Y will split the compensation based on their proportion of the total insured amount
(300 million and 400 million):
o X (300/700) = 42.86% → 214.3 million VND
o Y (400/700) = 57.14% → 285.7 million VND

So, X and Y together pay out 500 million VND in total (the value of the car).

 Z, unaware of X and Y, may still pay out the full 500 million VND, since they don't know
the car is already covered. Thus, Mr. A could receive:
o 500 million VND from X and Y combined, and
o 500 million VND from Z.

This would result in Mr. A receiving a total of 1 billion VND, which exceeds the car’s value.

Again, this is a form of fraud, and if discovered, it could result in severe consequences for Mr. A.

Conclusion:

1. If all insurers know about each other, they contribute proportionally, and the insured
only receives compensation equal to the car’s actual value (500 million VND).
2. If none of the insurers know about each other, the insured may attempt to exploit the
situation by collecting more than the car’s value, but this is fraudulent behavior.
3. If some insurers know and others don’t, the insured may receive overcompensation by
splitting the payout between the known companies and receiving a full payout from the
unaware company, which is also a form of fraud.

In all cases of overcompensation, the insured party could face legal repercussions if the fraud is
detected.
=> The role of Co-insurance: the insurered actively share risk
#re-insurance: Company actively share risk to another (Đối tượng distribute là
company)

Example when the insured does not receive compensation:

Life insurance: Parent pays for children to receive
Life, liability => Matter
Property => Subject

9. INSURANCE VALUE-V
V = value of property + reasonable cost

Example of reasonable cost:

  FOB (free on board): shipment cost  freight
 Insurance premium
 Expected value
 Reasonable cost = F + I + expected value
 V = C (FOB price) + I + F (+a) = 110% (expected value = 10%)

10. INSURANCE AMOUNT – A

 Insurance value and amount : A is always < or = V
 Example:
A = $80.000
V = $100.000
I = 5000/y
I = 4000
Loss/damage = $10.000 (partial loss)
Indemnity = 10.000 x A/V = 8000

Should we buy insurance when A >V

 The max we can receive is equal to V (A = 120.000; V=100.000)  lỗ
 never buy this insurance
11. LIMITATION OF LIABILITY
Them same concept as the Insurance value. However, the limitation of
liability is used In liability and non-life insurance; and the insurance value is
used in property insurance

11. INSURANCE RATE

Possibility of risk happening = insurance rate
CHAPTER 02: FUNDAMENTAL LEGAL
PRINCIPLES
Sensitive to make the contract with all principles. Each sector contains
different legal principles

INSURANCE IS A REPAYMENT OF A RANDOM LOSS

 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.
 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.

Only insurance for a random loss

Are there some certain loss that insurer still offer?

 Life insurance  people must live (uncertain is the time people die)
 Still contains the uncertain time

UTMOST GOOD FAITH

A higher degree of honesty is imposed on both parties to an
insurance contract than is imposed on parties to other contract

 Nguyên tắc trung thực tuyệt đối

 Most sensitive
 Between insured and insurer
Example: Car: brand, design, owner, condition,…  that the insurer can
make decision
Material Information is that information which enables the insurer
to decide:
 whether he will accept the risk and;
 if so, at what rate of premium and subject to what terms and
conditions
Breach of duty of utmost good faith arises in two ways:
 Non-disclosure of material facts- oversight, proposer thought it’s not
essential etc.
 Misrepresentation- Intentional.
This case is the example fall into: nondisclosure of misrepresentation
intentionally
 Van is modified  no disability in driving (the answer is negative)
 Accident occur due to: fell monetarily asleep

 Misrepresent
 Want to hide the traffic violation convictions (lỗi giao thông)
 The insurer would not pay the indemnity
Về phía người mua cần phải cẩn thận vì the issurance company có thể hide một số principles
với người mua. As soon as you buy the insurance  you would lost money  make sure that
you understand about the terms and conditions, do not hide any information to the company
and other party do not do the same

INSURABLE INTEREST
 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.

Example: Your house is fired, you are one who suffer from the risk  the
owner has insurable interest  you do not buy insurance for other property

However, it is sensitive to mention about this: The insured must be in a

position to loose financially if a covered loss occurs.

Purposes:
 To prevent gambling (gambling contract), (A gambling contract is an
agreement between parties where they wager on an uncertain event with the hope of
winning money or something of value.)
 To reduce moral hazard (rủi ro đạo đức)
 To measure the amount of the insured’s loss in property insurance

Examples of insurable interest:

 Property and Casualty insurance: ownership of property
 Potential legal liability
 Secured creditors
 Contractual right

Insurable risk:
 Capable of financial measurement
 A large enough amount of similar risks
 Not be against public policy
 Reasonable premium

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

When must an insurable interest exist?

  In property insurance, the insurable interest must exist at the time of
the loss:
 The insured must incur his financial loss
 You may not have an insurable interest in the property when the
contract is first written but may expect to have one in the future, at the
time of possible loss

Q: when insurable interest must exist at the time of loss

- At time of loss: exist insurable interest
- At initial time: in insurable interest
VD: CIF contract
- Seller has responsibility in:
o Loads good on board, vessels at port of loading  the insurance usually starts
from this point
o After this point, the cargo is belongs to the buyer
o Khi cargo thuộc về buyer  là người owner, có insurable interest  nếu có loss
thì phải hỏi insurance company
o Nhưng: seller là official part who sign the insurance contract, nhưng đã giao hàng
tại port of loading nên không có responsibility
o Nhưng, người mua cũng không kí với insurance company  thì phải làm gì để
make a complain?
o Kí hậu chuyển nhượng: Endorsement procedure  người bán chuyển nhượng
quyền hạn trong hợp đồng insurance cho buyer  lúc này có thể question
insurance company
o Vận đơn đường biển người chuyên chở đã cấp cho người gửi hàng  chứng
minh là đã nhận hàng  người cầm chứng từ gốc nên có hàng, có quyền làm
chuyển nhượng bất cứ ai next step
o Chuyển nhượng mọi quyền lợi từ người bảo hiểm này sang người khác
o Trong trường hợp này, người bán chuyển hđ bảo hiểm cho người mua  người
bán xuất hàng lên tàu tại cảng xếp hàng quy định là hết nghĩa vụ (transfer risk)
o CIF: nguowfi basn mua bhiem, nhưng mua hộ cho buyer (vì offer giá người mua
đã bao gồm bảo hiểm)
x----------------------x-------------------------------------------------------x
seller port of load buyer
(CIF)

At initial time:
- VD: mua nhà: có nhà trong khoảng 1-2 tháng tới  vẫn có thể mua
- Insurer có thể offer kể cả khi mình không own the property –> if something happens,
you are the one who have to deal with  have to prove that you own the property  if
no, cant receive the indemnity
Indemnity
 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.
 The insurer agrees to pay no more than the actual amount of the loss. 🡺 the insured
should not profit from a loss
Indemnity lớn nhất mình nhận được là V => Gía trị bảo hiểm (A) = Gía trị của đối tượng bảo
hiểm + Các chi phí hợp lí khác
First, we have to consider if the loss belong to the scope of coverage.
Next: compare A and V
A = V => FULL
A < V => A/V
…
Purposes:
– To prevent the insured from profiting from a loss
– To reduce moral hazard
Basic method for indemnifying the insured is based on the actual cash value of the damage at the
time loss
Depreciation: khấu hao

Applicability:
o When the losses suffered by the insured can be measured in terms of money
o It is practicable to place the insured in the same financial position which he occupied before
the loss
• In Marine Cargo where valued polices are issued, there is only commercial indemnity- the
value declared for insurance is accepted at the time of loss.

• Example: a negligent motorist fails to stop at a red light and smashes in to Mergan” s car,
causing damage in the amount of $5000. If she has collision insurance on her car, her company
will pay the physical damage loss to the car and then attempt to collect from the negligent
motorist who caused accident.
• Alternatively, Mergan could attempt to collect directly from the negligent motorist for the
damage to her car

Subrogation
• Transfer of rights and remedies from the insured to the insurer who has indemnified the insured
in respect of the loss.
• The right of an insurer which has paid a claim under a policy to step into the shoes of the
insured so as to exercise in his name all rights he might have with regard to the recovery of the
loss which was the subject of the relevant claim paid under the policy up to the amount of that
paid claim. The insurer’ s subrogation rights may be qualified in the policy.
Eg: có 2 contract
  Với carrier: Transport contract
 Với insurer: Insurance policy
Hague Rules 1923
Hauge Visby Rules 1968
Giả sử trong quá trình vận chuyển, bên vận chuyển gây ra hỏng hóc, khi đó Owner sẽ có 2 lựa
chọn:
1. Make claim against carrier
2. Make claim against insurer (more popular)
Vì theo Hauge Visby Rules 1968, có nhiều exceptions for carriers => khó để make claim against
carrier (even sometimes it’s impossible) + longer time khi claim carrier
Claim against insurer is simplier, more convenient and faster
Insuser after giving compensation can make a claim agaisnt carrier based on subrogation but
insurer needs to consider whether he should make a claim against carrier
Trên lý thuyết, owner có thể claim cả 2 bên nhưng tổng số tiền nhận ko được vượt quá giá tị tài
sản => tuy nhiên khó thực hiện vì chỉ có 1 bộ original document, nhưng nếu claim cả 2 bên thì
phải nộp cho cả 2

• Subrogation means substitution of the insurer in place of the insured for the purpose of
claiming indemnity from a third person for a loss recovered by insurance.
• Purposes:
– Prevent the insured from collecting twice for the same loss
– Is used to hold the negligent person responsible for the loss
– Help to hold down insurance rate
Eg: Cargo owner claim insurer company and receive $8000, but after that the insurance company
claim cargo and receive $12000 => insurance company có thể nhận khoảng chênh đó mà ko cần
chia cho cargo owner vì cargo owner từ đầu đã chọn claim insurer company

Claim bên bảo hiểm gần như chắc chắn sẽ thành công, tuy nhiên khi claim bên carrier sẽ ko
chắc chắn sẽ claim được (có trường hợp trong hàng hải gần như ko thể có khả năng claim được)
– do có quy định về các trường hợp miễn trách cho bên chuyên chở

Làm sao bên bảo hiểm có thể khiếu nại được carrier ?
🡺 Bên insured phải có nghĩa vụ cung cấp tất cả chứng từ liên quan để support bên bảo hiểm có
thể khiếu nại bên carrier. Bên insurer sẽ cân nhắc dựa trên bộ chứng từ được bên insured cung
cấp – giấy chứng nhận về tổn thất hàng hóa, hợp đồng, … => từ đó quyết định có nên làm
subrogation hay không.
CHAPTER 3: MARINE INSURANCE
1. Introduction
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.
Needs for marine insurance
• Exporters and importers face all the time uncertainties of loss of their goods.
• Insurance is used to protect their financial interests against such risks and actual losses.
• Without adequate insurance and protection of the interests of those with goods in transit,
international trade would be negatively affected.
• Liability of carriers to the goods is very limited

History of marine insurance

Lloyd’s – the largest shipping market in the world

Classification
 Marine cargo insurance: covers export- import goods carriage by sea and related-
reasonable costs
 Hull insurance: (bảo hiểm thân tàu) 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

2. Risk in marine insurance

Definition
Probability or threat of a damage, injury, liability, loss, or other negative occurrence, caused by
external or internal vulnerabilities, and which may be neutralized through pre-mediated action.
Marine risks are the risks that occur on the sea/ the risks of the sea/ the risks related to an ocean
voyage.

 Risks are of many kinds

 Different risks mean different losses
 And different risks are covered by different clauses
 And different insurance clauses mean different premiums
 So we need to have a good understanding of the different risks and losses before we know
how to effect insurance
Types of risks
2.1. Base on the causes
  Acts of God: vile 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)
 Risks caused by particular actions of people: thieve, robber
 Risks caused by other sources
2.2. Base on the insurance technique
a) Insured common perils: the risks that are normal insured in original insurance clauses:
Main risks:
 Stranding (Mắc cạn): 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 getting off
the stranding. – Là khi tàu đi vào chỗ nước nông, đáy tàu chạm đáy biển và muốn thoát
ra phải cần đến ngoại lực
 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.
o Ví dụ: trong 1 cơn bão, đôi khi cần phải vứt bỏ đi 1 số cargo để cứu cả con tàu, và
số hàng bị vứt đi này là Jettison, và công ty bảo hiểm đồng ý trả cho điều này
o Jettison usually happens => it conflicts the principle of Random lost (vì đây là tự
bỏ đi, ko phải ngẫu nhiên); why insurance comp still agree ?
Because: Without jettison => higher loss, and main purpose of jettison is to
protect the vessel => the insurance company agrees that although jettison is not
random but its main purpose is safety => agree compansate
 Missing: (Ship missing, NOT cargo missing)
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 (arisen in independent clauses, not in orginal clauses like A, B, C – because it does not
happen regularly, and if it happens, there is certain scope of coverage)
At lease we should buy insurance for goods in one orginal clause
c) Absolutely Excluded Perils:
risks that are not insured in any circumstances:
• loss damage or expense attributable to wilful misconduct of the Assured (happens because of
the mistake of the insured)
• 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.
III. Losses
Loss is seen as consequence
• Losses sustained by the insured due to the risks listed above come from not only the loss of the
goods or the damage dine to the goods, but also from the expenses the insured sustained in
rescuing the goods in danger.
• The losses and the damages done to the goods can fall into total loss and partial loss
• Total loss includes Actual Loss and Constructive Total Loss
• Partial Loss means that the loss or damage dine to the goods is only partial. Partial loss can be
either general average or particular average

Actual total Loss: means the whole lot of the consignment has been lost or damaged or found
valueless upon arrival at the port of destination => can receive full compensation
+ Valueless: does not have original function, cannot be used sold or recovered in any ways
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
+ Unavoidable: will happen for sure
Eg: Air conditioner unfortunately broken and cannot repair in transportation process =>
constructive total loss
+ The cost to repair the ship would exceed the value of the good => don’t want to repair it
Constructive total loss sooner or later will become actual total loss
If I want to make a claim against insurance company about constructive total loss during the
process, may be I just receive 20% compensation. So if I want full compensation, I have to wait
it to become total loss
From perspective of insurance company: can take advantage of the rest of the consignment
 In order to match the need of cargo owner and insurance company => Notice of
abandonment (NOA – Thông báo từ bỏ hàng): 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.
 Cargo owner can receive full compensation immediately, earlier instead of waiting the
ship reach final destination and insurance company can take advantage of the rest part of
the consigment
Requirements:
– Where notice of abandonment is accepted the abandonment is irrevocable (once you have
signed this document, nothing can be changed). 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
Constructive total loss (Tổn thất toàn bộ ước tính) => giúp full compensation diễn ra sớm
hơn và ở phía công ty bảo hiểm, họ có thể take advantage of phần lô hàng còn lại, tuy nhiên
ko phải bắt buộc, nếu cty nhận thấy có thể tận dụng lô hàng thì có thể chấp nhận NOA để có
quyền sở hữu hàng hóa để có thể chuyển nhượng lô hàng đó cho bên thứ 3 hoặc tận dụng lô
hàng đó. Cty bảo hiểm cần phải trả lời bằng văn bản (email …) là chấp nhận hay ko chấp
nhận NOA
Partial loss
• Particular Average: losses of each insured interest individually due to acts of God or Perils of
the sea
+ Individually: we not have total loss, for ex just 1 kind of good
• 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.
Eg: cost to stop the fire
Reasonable costs will be paid if the crew member successfully rescue the subject matter insured,
so what happen if they are not successful? YES because
+ no one can make sure that the rescue action will be successful or not
+ Encourages everyone to save the goods => reduce the responsibility of the insurance company
General Average
• General Average: the losses/ damages caused by special expenses and sacrifices that
intentionally and reasonably conducted to save the vessel, cargo and freight from a threat in the
common ocean voyage.
Eg: Jettison
Forecast: there is a storm soon => without any action, we will have actual total loss => if they
throw smth to lighten the vessel => speed up => the action of sacrificing smth to save the whole
is called general average act
• 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.
=> General Average are for the common safety of all of the interests (cargo, vessel, freight)
Example:
• Cargo, freight:
– Jettison from underdeck.
– Jettison from on deck.
– Water or other means used to extinguish a fire on board ship.
– Discharge and re-shipment for the purpose of floating a stranded ship when in a position of
peril
• Essential features
– The loss must be voluntary
– It must be properly made (reasonably made)
– It must be extraordinary in its nature (it cannot happen in normal condition)
– The object of the sacrifice or expenditure must be nothing other or less than the common
safety of ship and cargo
– There must be imminent danger (wwithout any immediate action, the total loss will happen),
and the object must be the attainment of safety
– The loss must be the direct result or reasonably the consequence of the act causing it
Eg: The ship must stop at one port to repair the main entry. After repairing, the ship need to
come back to the original point (GA) to continue the journey => direct result of the GA is extra
salary, fuel cost …
Contents:
– GA Sacrifices: to sacrifice properties for the rest ones.
 – GA Expenditures: consequent costs of GA act or expenditures concerning GA act:
• Salvage cost (from the perspective of cargo owner, they not sure whether it is real cost to their
cargo because they only stand at 2 ports, not follow the transportation process, the ship owner
may add some additional cost)
• Temporary repairs cost
• Cost at port of refuge
• Wages and maintenance of master, officers and crew reasonably incurred and fuel and stores
consumed during the prolongation of the voyage occasioned by a ship entering a port or place of
refuge or returning to her port or place of loading
• Interest of 7% shall be allowed on expenditure, sacrifices and allowances in general average
until three months after the date of issue of the general average adjustment

• Ship-owner/ master’s liabilities:

– Form GA Notice
– Arrange survey service to assess the measure of damage
– Send average bond and average guarantee (document sent to the insurer, in case the
cargo owner bought insurance for the cargo, normally the insurance company agrees to
pay for the cargo…)
– Arrange GA adjuster
– Form Sea Protest (if applicable)
• Cargo owner’s liabilities:
– Declare value of the goods (the most important thing => because the amount of money
they have to pay for GA is based on the value of goods => higher value of property, pay
more)
– Receive average bond and average guarantee
Khi có general average => carrier là ng tuyên bố, cung cấp minh chứng thông qua camera hoặc
nhật kí hàng hải để các chủ hàng phải đóng góp vào tổn thất chung
Về phía chủ tàu: muốn các cargo owner đóng góp càng nhiều càng tốt
Nhưng cargo owner ko thật sự rõ đó có phải tổn thất chung hay ko, phần hàng đc hi sinh có hợp
lí hay ko
 Các chủ tàu bắt buộc các chủ hàng kí vào average bond: sẽ chi trả đóng góp tiền vào tổn
thất chung thì các chủ tàu mới giao hàng
Và yêu cầu chủ hàng phải có bảo lãnh từ ngân hàng để tránh chủ hàng ko trả tiền
Trong trường hợp chủ hàng đã mua bảo hiểm cho hàng hóa của mình rồi thì insurance company
sẽ là ng chi trả toàn bộ tiền bảo hiểm cho GA => chủ tàu gửi bank guarantee cho company

York- Antwerp, 1994, 2004 KHÁC NHAU NTN

• Amendments of York- Antwerp Rules 2004:
– Rule VI: salvage remuneration is not included in GA
– Rule XX: A commission of 2 per cent. on GA disbursements, other than the wages and
maintenance of masters, officers and crew and fuel and stores not replaced during the voyage is
not included in GA
– Rule XXI: Interest shall be allowed on expenditure, sacrifices and allowances in GA until
three months after the date of issue of the general average adjustment. Each year the Assembly
of the Committee Maritime International shall decide the rate of interest which shall apply. This
rate shall be used for calculating interest accruing during the following calendar year.
– Rule XXIII: limitation of claims (time allowed for 2 parties to make claim about GA): 1 year
after the date upon which GA adjustment was issued or 6 years from the date of termination of
the common maritime adventure. These periods may be extended if the parties so agree after the
termination of the common maritime adventure

GA adjustment
– Arrange a GA adjuster
– Contributing interests: vessel, cargo, unpaid freight/freight at risk
Freight: reasonable income of carrier, ship owner

Calculation:
– 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.

 The GA value is the total value of sacrifices and expenditures made in a General Average act.
 If any goods are sacrificed (e.g., jettisoned to save the ship), the value of those goods is
calculated based on:

 Loading/Unloading Value: The value at the time of loading or unloading.

 Commercial Invoice: The value specified in the commercial transaction.
 This value also includes insurance premiums and freight costs (unless the 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
Tính giá trị tài sản trên tàu ngay trước khi xảy ra tổn thất chung (nếu có PA xảy ra trước thì sẽ
phải trừ PA đó đi, còn nếu PA xảy ra sau thì sẽ phải tính cả PA)

- 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

Ex: A ship valued at $100,000 is transporting goods worth $100,000, with the ship owner
collecting $5,500 in freight charges at port of loading. During the voyage, the ship ran
aground, incurring repair costs of $5,000, and the goods sustained damage valued at
$6,500. To refloat the ship, cargo worth $15,000 had to be jettisoned into the sea.
Additionally, the ship was operating above capacity, leading to a boiler breakdown that
required $4,500 in repairs. The ship returned to port, declaring a general average loss.
Now, let's allocate the general average lass.

Freight được trả rồi => safe => ko được tính vào contribution value
GA Value = 15000 + 4500 = 19500
Contributing value of ship = 100000 - 5000 = 95000
Contributing value of cargo = 100000 – 6500 = 93500
Total contributing value = 95000 + 93500 = 188500
GA rate = 19500 / 188500 = 0.1034
Contribution of ship = 0.1034 x 95000 = 9827 b
Contribution of cargo = 0.1034 x 93500 = 9672
Financial result (ship) = -9827 + 4500 = -5327 (tàu phải đóng 9827, thu về 4500)
Financial result (cargo) = -9672 + 15000 = 5328 (hàng đóng 9672, thu về 15000)

II. Marine cargo insurance

1. Cargo needs to be insured

B clause
● C
● earthquake volcanic eruption or lightning (Act of gods but more civil level)
● Washing overboard (bị sóng đánh trôi khỏi tàu)
● Entry of sea, lake or river water into vessel craft hold conveyance container
liftvan or place of storage (rain water will not be included in clause B, only
covered in clause A)
● total loss of any package lost overboard or dropped whilst loading on to, or
unloading from, vessel or craft.
ICC ver 1963:
- WA: only mention the total loss of the whole consignment and the
insurer only take responsibility if there is a total loss, còn đối với B thì chỉ
cần có loss
 In case you have total loss of any package, you can receive insurance from
insurance company

A Clause:
● B
● Auxiliary risks (unpopular risk - rarely happens): theft, rain- water, leakage,
breakage, dampness, heating, hooking, rusting, malicious damage (not by
insured), piracy…

ICC 1982 (FINAL : Scope of cover - ICC 1982)

•A, B, C are official clauses

•Special Clauses: WR, SRCC
•Exclusions:
–Contraband
–Willful misconduct of the assured
–Deviation
–Delay
–Inherent vice or nature of subject- matter insured
–Unseaworthiness of vessel
–Insolvency or financial default of the owner or the operator of the vessel

2.2.2. Duration:
● Stage from port of discharge to final warehouse: insurance policy terminates either:
o On safely delivery to the final warehouse, or
o On the expiry of 60 days after completion of discharge (hàng vẫn chưa đến
destination, nhưng sau 60 ngày công ty bh cũng sẽ hết responsibility)
● Departure warehouse: place of storage at the place named herein for the commencement
of the transit
● Final warehouse: (From port of loading to final warehouse, the risk is really high
according to statistics)
o Final warehouse owned or managed by the assured, or
o Store other than in the ordinary course of transit, or
o Store using for allocation or distribution, or
o Store named in insurance policy
eg: September 11, the ship reached the final port (discharging port), it takes 1
month for goods to reach the final warehouse. At that time the contract is
terminated.
Until Nov 10, the goods cannot reach final warehouse even that Nov 10 the
contract will be terminated
=> should put the name of final warehouse in the contract
3. Marine cargo insurance policy
Who can buy a marine cargo insurance policy?
 ● Contract of sale: Legal contract for exchange of goods, services or property to be
exchanged from seller to buyer for an agreed upon value
● The contract of sale determines who buy the policy
● The most common contracts of sale are: FOB, CFR and CIF
o FOB: Buyer pays freight, buyer arranges insurance
o CFR: Seller pays freight, buyer arranges insurance
o CIF: Seller pays freight, seller arranges insurance
Different kinds of marine cargo policy
• Voyage policy: insurance policy/ insurance certificate
o Insurance policy (contract): include all terms
o Insurance certificate: only state some terms,
In terms of value, they are the same
• 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 (instead of signing many policies, they just need to sign 1
which is called open cover policy)
• Valued policy (You already define V)
• Unvalued policy (eg: during the transportation of process, the value of the subject
matter is changeable => cannot define the V => cannot calculate the insurance
premium, so you can deposit an amount first => after that, recalculate)
4. Content of marine cargo policy
Insurance value
V = C + I + F + (a) = CIF + (a) (1)
I = V x R = CIF x R (2) (V is CIF)
Replace (2) to (1)
CIF = C + CIF x R + F
CIF(1-R) = C + F
V = CIF = (C+F)/(1-R) (a=0)
V = (C+F)(1+a)/(1-R) (a=10% of CIF)
(a): expected profit

Insurance amount
A≤V
A = V = (C+F)/(1-R) (a=0)
A = V = (C+F)(1+a)/(1-R) (a=10%)

Insurance premium
I = A (V) x R = (C+F) R/(1-R)
I = (C+F)(1+a)R/(1-R)

Example:
• A consignment: 100 000 MT
• FOB (Sing): $100/MT, R: 1%, F: $10/MT
• The consignment was carried, according to CIF Incoterm 2010. Situation of the goods At
the port of destination:
o 100 MT: fired
o 50 MT: wet due to sea water, reduce 50% in quality
o 20 MT: wet due to rain water, reduce 100% in quality.
Phải xác định clause => CIF Incoterms 2010: ng bán mua bảo hiểm hộ cho ng mua nên sẽ mua
theo điều kiện tối thiểu: clause C
=> tổn thất thuộc C clause
o 100 MT: fired

Insurance Value
= (C+F)/(1-R) = (100x100000 + 10x100000) / (1-0.01) =
hoặc cách 2 thì sẽ tính V cho 1 đơn vị hàng hóa (1MT) rồi nhân 100 sau (tips: nếu có tổn thất bộ
phận, sẽ tính V cho 1 đơn vị hàng hóa rồi nhân lên)
V = (100+10)/(1-0.01) = 111.11
A = V x 100 = 11111.11
20/09/2024

IV. Marine Hull insurance (slide 119)

Deductible rate: usually use when property value is high for the insurance company
VD: 2%
If the loss or damage = 2.5%
 Có 2 cách dòi compensation:
- 2.5% hoặc only 0.5 %

Main Types of Marine Hull Clauses

Collision: rủi ro đâm va
- Trường hợp 1: đâm va vào vật thể j đó  tự đâm tự chịu
- Trường hợp 2: 2 tàu đâm va vào nhau
o Đi gần nhau, sương mù dày nên đâm  bên nào tổn thất thì tự xử lí
o Bên nào sơ suất thì bên có lỗi bồi thường
o 2 tàu đều có lỗi
- Vd:
o cả 2 đều có lỗi thì chia 50/50 (nước mỹ)
o nước anh: mỗi bên có lỗi là bao nhiêu phần tram: tàu a có lỗi ¼ thì B là ¾,.. --?
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