Marine Insurance Clauses - some insight of F.P.A and the clauses incorporating 'Free of Particular Average'.

Those in insurance field and those availing insurance coverages would well know that Marine Insurance, the most codified form of Insurance is different from other insurances. Here, there is no printed policy containing terms and conditions but a schedule to which various clauses are attached is in vogue. The changing times and dynamics of market require that the wording defining coverage need to be changed from time to time.

Presently, in Indian market, the Institute Cargo Clauses of 1982 are still used. The clauses differ based on the mode of transportation and for goods transported by sea – Institute Cargo clauses A / B / C are used. These determine the extent of coverage and terms and conditions of coverage. As one would know the Institute Cargo Clauses [ICC] were revised in 1982. The ICC (A) that we use is Cl.252 copyrighted by the Institute of London Underwriters with date as : 1.1.1982. Those following the industry are well aware that after a two year long consultation process, the latest edition of the ICC clauses became available to the Market on 1st January 2009. These clauses are known as ICC 2009.

Prior to introduction to such codified clauses, the policies were drafted by the individual underwriters to suit the risks as they perceived them. The policies would be structured to cover hazards to which the cargo would be exposed during a specified voyage. These were largely determined by the needs of the individual customer and by the experience of the marine underwriter. Then in the course of time evolved a standard document called SG Policy form which covered both ship and goods therein against named perils. The Underwriters thence were attaching additional clauses, conditions and perils which were not expressed in the form.

In 1912 the first Institute Cargo Clauses were developed, (Institute refers to the Institute of London Underwriters) and these were based on clauses in common use at the time. By the 1960s, four sets of basic clauses were in common use, All Risks, W.A. (With average), F.P.A. (Free from particular average) and the Air Cargo Clauses (All Risks). These clauses were still required to be read in conjunction with the SG policy form, to which they were attached.

Then came the revision in 1982 which was adopted by the market effective 1983 and the present revision. The 1982 revision virutually scrapped the SG Policy form and the London Market Technical and Clauses committee designed a plain policy form [known as MAR form]. The 1982 clauses were heralded as fundamentally strong, clear and accurate drafting of the intentions of the Insurers. Nothing would stay perfect for ever and the JCC (Joint Cargo Committee – made up of members of the International Underwriting Association and the Lloyds Market Association) commendably took up the job of reviewing and updating the clauses.

HOW much do you about the restricted coverage for TOTAL LOSS alone in vogue, granted by the Underwriters till 1982 (or actually 1983) and have you read or heard about the Institute Cargo Clauses (F.P.A) or (W.A) ????

TO refresh one’s fundamentals : the term ‘average’ is used in Marine to describe loss or damage. A loss may be either total or partial. The Act defines that any loss other than a total loss, is a partial loss.

The Total loss may be either an Actual total loss (ATL) or a Constructive Total loss (CTL). A particular average loss is a partial loss of the subject matter insured, caused by a peril insured against, and which is not a general average loss. Particular charges are different and these are not included in particular average.

As discussed earlier, the extent of coverage depends on ICC clause to which coverage is subjected to and the breadth of cover provided by the clauses are extended or reduced by:

a) Attaching further Institute clauses

b) By adding non-institute or company clauses which are drafted by individual underwriters reflecting their wisdom

c) By adding words or phrases to the conditions section of the policy schedule

With this lengthy introduction, here is something on the coverage offered by the erstwhile Institute Cargo Clauses (F.P.A) 1/1/63.

It had a total of 14 sets and started with Transit clause incorporating WH to WH clause. The clause read “ this insurance attaches from the time the goods leave the warehouse or place of storage at the place named in the policy for the commencement of transit, continues during the ordinary course of transit and terminates either on delivery

……………………. Whichever shall first occur.

As could be seen, the 1982 set & the present one are in tune with this, though there are some fine revisions in 2009 clause. The insurers in their wisdom have not touched the ’60 days after the completion of discharge at the final port of discharge’ ----- though a lot has changed in the Port and the way the goods are handled, transported and cleared in various countries.

Now coming to the caption “FPA” – this ‘Free of Particular Average’ literally meant that there was no cover for partial losses.

Cl. 5 of Institute Cargo Clause (F.P.A) 1/1/63 reads :-

‘warranted free from Particular average unless the vessel or craft be stranded, sunk or burnt, but not withstanding this warranty the Underwriters are to pay the insured, value of any package or packages which may be totally lost in loading, transshipment or discharge, also for any loss of or damage to the interest insured which may reasonably be attributed to fire, explosion, collision or contact of the vessel and /or craft and /or conveyance with any external substance (ice included) other than water, or to discharge of cargo at a port of distress, also to pay special charges for landing warehousing and forwarding if incurred at an intermediate port of call or refuge, for which the Underwriters would be liable under the standard form of English Marine Policy with the Institute Cargo Clauses (W.A) attached.

This clause shall operate during the whole period covered by the Policy’.

Now anyone reading the present day clauses would understand that Insurance has evolved so much over the years.

Would be too happy to have your feedback on this and some discussions on marine clause and coverages

With regards – S Sampathkumar.

Miners trapped - Chile could rejoice - China is sullen

Cruel are the ways of life for some, as some celebrated in Chile, some of the same profession at China have suffered the worst.


Much has been written about the mining accident that occurred at San Jose copper gold mine at Chile on 5th Aug 2010, the miraculous survival of those 33 miners for close to 70 days and the dramatic resuce from underground by rescue capsule. The whole nation rejoiced and their President personally oversaw the entire planning and operations. The Sanjose Miners were trapped at approx 700 meters (23000 ft) deep and about 5 km away from the mine entrance. There earlier had been some accidents and one death. Reports state that the rescue operations costed between US $ 10 to 20 million, some covered by private donations and rest funded by state owned mining corporation Coelco and the Govt. itself.


Mother Earth is rich in natural resources and mining is the extraction of valuable minerals from the earth. There are variety of things mined from the base metals, coal, salt, potash, petroleum, natural gas to precious metals, uranium, diamonds and…… mining activity has been going on for hundreds of years – much has improved over the years – improvement in equipment and safety standards, yet accidents do occur. Some nations have been crying hoarse of the negative impact on the environ and safety has always been a concern and challenge.


Whilst Chileans rejoiced, China has not been so lucky. Recently China launched massive rescue effort involving 300 rescuers for reaching the trapped miners after a gas leak at the pit in Yuzhou. The accident left more than 2500 tonnes of coal dust. China had earned notoriety on the safety standards of the mining industry.



Unlike Chile, there has not been availability of much details of the tragedy that struck at Henan Province of China. China is one of the major producers of coal from mining – roughly 45% of the world’s coal but unfortunately has much higher % of fatalities per tonne of coal than other big producers which includes India.
Though 37 have tragically dided, the China’s central television news channel has not made much mention in the news.

Obviously there are references to Chile incident and criticism on Chinese authorities mounted. The Govt. had taken some efforts to improve the safety standards which included closing of small private mines. Earlier this year a coal pit in Shanxi province was flooded – 115 were rescued but 36 could not be. It was reported that the miners survived by eating sawdust, tree bark, paper and even coal. Some strapped themselves to the walls of the shafts with their belts to avoid drowning while they slept.
The recent one in Henan was an explosion in the pit of a mine owned by Pingyu Coal and Electric based in Yuzhou city. Though some of the trapped miners could be located, tonnes of coal dust had to be cleared before the mine shaft could reach anywhere near them. The blast occurred as workers were drilling a hole to release pressure from a gas buildup to decrease the risk of explosions, according to safety officials. The blast is reported to have unleashed more than 2,500 tonnes of coal dust. Though the type of gas was not specified, methane is a common cuase of mind blasts and coal dust is explosive.

The gas level inside the mine was 40%, far higher than the normal level of near 1%, CCT reported. The type of gas wasn't specified, but methane is a common cause of mine blasts, and coal dust is explosive. There are reports that an unknown number of illegal mines still exist to profit from the fast-growing economy's huge appetite for power. China's economy remains reliant on coal for about two-thirds of its energy needs.

The hopes were fading and at first 26 were confirmed dead – there were reports later that five more bodies were recovered and the total toll was put at 37.  In a stunning piece of statistics, mining fatalities correlate with the country’s level of economic development with accidents reported to be more common in poor nations. Even when the safety standards are vastly improving, the % of those die in Australia is far less than those in Russia; though it is clear that safety cannot be linked to GDP. The comparison is not like for like as Aussie mines are more open cast and the accident ratio is very high in underground mines.
History also points arm at China – the worst coal mining disaster occurred way back during the II WW. On Apr 26, 1942 a coal dust explosion killed 1549 minders at Benxihu Colliery in Liaoning Province. The city was under Japanese occupation since 1931 until 1945. mining had been on in that colliery since 1905. It is stated that invading Japanese forced the workers to work under poor conditions and upto 12 hour shifts or longer. The explosion sent flames bursting out of the mine shaft entrance, hundreds were trapped and suffocated to death.

The world over it is the poor who always suffer and the price of human lives are many a times different.

Regards – Sampathkumar.

The Story of Transportation in Indian City

For many getting housing, buying a flat and for that purpose getting a loan of 20 lakhs from a financial institutions is the ultimate thing and most part of life goes with the EMI (equated monthly instalment) calculation and amortization schedule. You may not know the city that was founded on the village Khadki, which was changed to Fatehnagar. Subsequently it got its present name of Aurangabad from where Aurangzeb ruled. The name meaning ‘built by the throne’ has many historic monuments and is also known as the ‘city of Gates’. The city Aurangabad is in the Aurangabad district of Maharashtra.

Vehicle manufacturer Daimler entered the Indian market and set up Mercedes Benz India Ltd in 1994. The Company was later renamed DaimlerChrysler India P Ltd after the merger of parent company Daimlet with Chrysler, again it became Mercedes Benz India in 2007. The company is based in Pune. C Class and E class are assembled locally while others are fully imported from Germany. These are luxury cars treated as status symbols and have many variants such as C Class (sedan only); E class (Sedan, Coupe and Cabrio) and CL, CLs GL, M, R and more. Reportedly, it recorded sales of 2402 vehicles in the first six months of 2010.

The new version of E class sedan is reportedly available at around 65 lakhs and the new version E class Cabriolet is the seventh offering within the E class range by the company in Indian market. The earlier versions of E class were priced between 42 lakhs and 50 lakhs. The latest is an attempt aimed at strengthening the stakes in luxury car market. Some market data has it that Mercedez Benz has beaten compatriot BMW in the race to the top spot in luxury car segment – perhaps this has also contributed to the sudden increase.

In the city of Aurangabad, 150 variants of Mercedes were sold on a single day; together they are worth 65 crore. The news item (MSN India) stated that it started as a jest over an early morning jog and ended up creating a record of sorts in the history of automobile giant, as 150 vehicles were handed over to people from different walks of life in a single transaction. Certainly this delivery to the aurangabad residents should weigh amongst the biggest and highest car deal that took place in India. People buying luxury car worth not less than 50 lakhs cannot be of different walks but only one class of society – the rich and famous.  

The MD and CEO Wilfried Aulbur said that this is the beginning of a new chapter in the history of Indian automobile industry. These men are primarily entrepreneurs in their 30s and 40s which means that the average age group of luxury car buyers has dropped. What was sold were in Tenorite Grey, Calcite White, Obsidian Black, Iridian Silver and Carneol Red colours, the swanky lot of 17 S-class, 74 E-class, 39 C-class, six GL and 18 M-class vehicles. The State Bank of India had sanctioned over Rs 44 crore for 116 of the customers within a record time of seven days.

One of the buyers was reported to as saying that it started with seven of them joking about buying a Mercedes. Then they approached the company at Chakan plant, after which a car rally was held in Aurangabad. The word of mouth news made the team of 115 by mid April and then it became this group of 150. As a natural fall out, MB setup a special service centre in Walunj near Aurangabad with capacity to handle 100 cars a month.

The S class is a series of largest sedans produced by MB. This classification was officially introduced in 1972 and this class debuted many of the company’s latest innovations, interior features and safety systems which included the first time seat belt pretensioners. Pretensioners preemptively tighten the belt to prevent the occupant from jerking forward in a crash. Mercedes-Benz first introduced pretensioners on the 1981 S class. In the event of a crash, a pretensioner will tighten the belt almost instantaneously. This reduces the motion of the occupant in a violent crash. Like airbags, pretensioners are triggered by sensors in the car's body, and most pretensioners use explosively expanding gas to drive a piston that retracts the belt. The name "S-Class" derives from the German word "Sonderklasse" of which "S-Class" is an abbreviation. Sonderklasse means "special class" (or rather: "In a class of its own"), and in automotive terms thus refers to "a specially outfitted car." Although used colloquially for decades, following its official application in 1972, five generations of officially-named S-Class sedans have been produced.

the e class cabriolet

Mercedes is known for its safety innovations and S class were the first in Europe to incorporate airbags. Its safety features include innovations in active safety (avoidance) passive safety (collision protection) and holistic safety (integration of both); it also ABS braking. In 2005, a new infrared night vision feature was introduced (improves visibility during nighttime conditions). Presafe, a safety feature was introduced in 2002. It provides a safety net approach in preventing accidents. In case of a rollover, the feature unlocks the doors and lower the windows allowing easy exit or easy access to inside. It is touted as one of the safest cars on the UK roads. A special armounred version of S class has the capability to withstand military grade small arms fire and certain explosive devices. This S Guard is widely used at the diplomatic level to protect world leaders and used by Governments to transport leaders and dignitaries.
Most of the Mercedes vehicles are fitted with modern gadgets such as convenience telephone which enable communication without compromise. This device is a compatible mobile phone and a holder connected to the exterior aerial via a fixed interface in the centre console. The functions of the phone can be accessed via the screen – incoming test messages and call lists will also be displayed. The integral Bluetooth interface allows wireless connection with the compatible mobile phone and a call to anybody can be safely made through the controlling unit.
As compared to Aurangabad, Chennai, the capital city of Tamilnadu is a metropolitan city with estimated population of over 8.2 million people. The city largely depends on Metropolitan Transport Corporation that operates around 3000 buses within the city limits. It is claimed that 5.86 million passengers use this facility every day. Their LSS buses are 50 paise costlier than ordinary ones; Express buses are 1.5 times costlier than ordinary; Deluxe is double the LSS fare, M Service has flat rate and there are some Volvo A/C buses where the fare is 2.5 times of deluxe fare with minimum of Rs.10/- In many bus stands where there would be milling crowds, it is a common sight of people skipping LSS bus for saving that 50 paise.


India is a Nation with vast diversities, as they say….


Regards – Sampathkumar S

The Second One dayer at Vizag - Will India Beat Aussies

The second ODI is to be played at the scenic Vizag. Visakhapatnam is a major port and large city in Andhra Pradesh on east coast of India. Cradled in the foothills of Eastern ghats, this city is nestled among hills and faces Bay of Bengal to the east. It also houses the Eastern Naval command. It is the jewel of the east coast. It has a nice weather and was a popular holiday resort of the erstwhile Vizianagaram kingdom.

The picturesque ground, set on the outskirts of Visakhapatnam amidst scenic hills, is a happy haunting ground as India has won both the matches played here. In 2005 India beat Pak by 58 runs when Dhoni belted one of his better innings on his way to 148. In the next Lankan lions were wounded by 7 wickets in Feb 2007.

Today it is to be a day night match and there is lot at stake for youngsters from both side. Shikhar Dhawan in all likelihood will make his ODI debut – when will the day of reckoning for Saurabh Tiwari comes remains to be seen, perhaps during this series itself, which will be good for the team. The probable Indian Team : : 1 Murali Vijay, 2 Shikhar Dhawan, 3 Suresh Raina, 4 Yuvraj Singh, 5 Virat Kohli/Rohit Sharma, (I would have Tiwary here) 6 MS Dhoni 7 Ravindra Jadeja (how and why ???) 8 R Ashwin, 9 Praveen Kumar, 10 Ashish Nehra, 11 Munaf Patel(never my favourite – touted as someone who can bowl fast but bowls military medium and never takes crucial wickets)
For the visitors the tall left armer Mitechell Starc is about to make his debut, if Bollinger is declared unfit. Aussies line up could be : 1 David Warner, 2 Tim Paine (wk), 3 Michael Clarke (capt), 4 Shaun Marsh/Callum Ferguson, 5 Michael Hussey, 6 Cameron White, 7 Steve Smith, 8 James Hopes, 9 Nathan Hauritz, 10 Clint McKay, 11 Doug Bollinger/Mitchell Starc.
The crucial all rounder spot is constantly going to Ravindra Jadeja who seemingly has great backing but no performance to reflect his so called potential. Already he has spoiled a couple of matches.. This is about the right time for lesser players to grab the opportunity – Ravichandran Ashwin must cement his place with good performance following his stellar role in CL for CSK. Jadeja continues to bemuse – a bowling average of 41.55 and a batting average of 31.47 at a strike rate of 76. Understand that he walks in at a stage when a finish or some quick runs are required. That spot should go to somebody like Yusuf Pathan who can smack a quick fire 30 and liven the crowd with a couple of huge sixes. For somebody who is not contributing and who is not a big hitter, the no. of opportunities continuously provided is baffling. My son says he would have Irfan Pathan at this spot even for his batting prowess and his bowling would only be a bonus.

Ashwin is known to be a good bat also in local level – he has wide variety including the carom ball and looks a more mature and complete bowler. Besides he has the brave heart to bowl whenever the captain wants him – whether at the start of the match or at the death – both not natural for a spinner.We are yet to see the potential of dangerous Warner who can turn the tide with lusty hitting. Shaun Marsh also could prove to be more than handy, if he plays. My son again feels that Aussies would prefer Calum Ferguson (have you heard of him !)

Aussies most unusually have lost their last 3 one dayers whilst if has been LWLWL for India in the recent five. Nehra is back with confidence flowing and could prove to be the potential lead bowler in the build up to World Cup line up. If he succeeds, he will be bowling at the batting powerplay and in the slog – he is also a wicket taker, an aggressive bowler at that.
Cricinfo stats reveals that India is not all that good in chasing against Aussies having lost 34 and won only 17 while batting second. After the Test win, this is going to be different.

As usual we want another good Indian win, for which there are enough pointers

Regards – Sampathkumar.S