TOLANI COLLEGE OF COMMERCE

MARINE INSURANCE

INTRODUCTION
Marine insurance is basically a protection of ship, cargo or property due to loss or
damage while it is in transit from one place to other. A marine insurance agreement is a
contract in which the insurer covers the assured, in the event of losses incurred during
transit. The amount of insurance is decided by the insurer. The Marine Insurance is
particularly beneficial for those business owners who travel a lot or deal with high-value
items.
The origin of this policy cover dates back to 17th century when one of the
insurance company of London started it for its clients. They introduced the concept of
inland marine coverage to guarantee goods coverage even after it had been unloaded from
the ship.

MEANING
A contract of marine insurance is an agreement whereby the insurer undertakes to
indemnify the insured, in the manner and to the extent thereby agreed, against transit
losses, that is to say losses incidental to transit. A contract of marine insurance may by its
express terms or by usage of trade be extended so as to protect the insured against losses
on inland waters or any land risk which may be incidental to any sea voyage.

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HISTORY
The oldest form of insurance was that of marine insurance. This seems to have
originated in Rhodes, to have been adopted by the commercial cities of Italy and by the
towns of the Hanseatic League between the twelfth and fourteenth centuries, and to have
been introduced into England in the sixteenth century. The law of insurance was a branch
of the law merchant and very greatly out of harmony with the principles of the common
law. Early insurance cases were generally either submitted to the arbitration of a merchant
court or tried before a special court created for that purpose in the first year of the
seventeenth century. Only about fifty cases had come before the common law courts up to
the middle of the eighteenth century. The business of marine insurance was in its early
stages mainly conducted at Lloyd's Coffee House in London, and it was here that much of
the law and custom governing marine insurance was developed.
"It is known that Lloyd's Coffee House, an inn kept by one Edward Lloyd on
Tower Street in London, was, as early as 1688, a popular resort for seafaring men and
merchants engaged in foreign trade. It became the custom among those who gathered at
Lloyd's to make their gathering an occasion for arranging their mutual contracts of
insurance against the sea. In making such contracts it was the custom for the person
desiring the insurance to pass around among the company assembled a slip upon which
was written a description of the vessel and its cargo, with the name of the master and the
character of his crew, and the voyage contemplated. Those desiring to become insurers of
the ventures so described would write beneath the description on this slip their names or
initials, and opposite thereto the amount which each was willing to be liable for as an
insurer. When the total amount of insurance desired by the owner of the vessel was thus
underwritten, the contract was complete. From this practice, among those congregating at
Lloyd's, is derived the term 'underwriters; as now applied to insurers. The business of
insurance carried on in this informal way at Lloyd's seems to have increased rapidly, and
the commercial importance of the house required that it should be removed to a more
commodious and convenient site, which was found on Lombard Street, whither Lloyd
removed his house in 1692. Both the importance of this coffee house in commercial
circles, and the enterprise of its proprietor, were shown by the establishment in 1696 of a
newspaper, giving information of commercial transactions and of the movement of
shipping throughout the world. While this newspaper was shortly afterwards suppressed
by reason of some indiscretion on the part of its publisher, it was yet the progenitor of
'Lloyd's Lists,' the publication of which was begun in 1726, and which continues up to
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this day as the most important publication in the shipping and commercial world. After
various removals, Lloyd's finally found permanent quarters in the Royal Exchange, where
it is now located, and remains, probably the greatest and most important single
commercial factor in the mercantile world."6

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OBJECTIVES

Know the meaning of Marine insurance.

Know the Companies offering Marine insurance.

Know how to settle the claim under Marine Insurance.

Know the inland transit / overseas transit.

Know what is covered under Marine insurance.

Know what is not covered under Marine insurance.

Features Of Marine Insurance

1) OFFER & ACCEPTANCE:

It is a prerequisite to any contract. Similarly the goods under marine

(transit) insurance will be insured after the offer is accepted by As insurance
company Example: A Proposal submitted to the insurance company along with
premium on 1/4/2013 but the insurance company accepted the proposal on
15/42013. The Risk is covered from 15142013 and any loss prior to this date will
not be covered under marine insurance.

2) PAYMENT OF PREMIUM:

Art owner must ensure that the premium is paid well in advance so that the
risk can be covered. If the payment is made through cheque & it is dishonored
then the coverage of risk will not exist. It is as per section 64VB of Insurance Act
1938- Payment of premium in advance.

3) CONTRACT OF INDEMNITY:

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Marine insurance is contract of indemnity and the insurance company is

1iable. only to the extent of actual loss suffered. If there is no loss there is no
liability even if there is operation of insured peril.

Example, If the property under marine (transit) Insurance is insured for Rs.
20 Lakhs and during transit it is damaged to the extent of Rs.10 lakhs then the
insurance company will not Pay more than Rs. 10 Lakhs

4) UTMOST GOOD FAITH:

The owner of goods to be transported must disclose all the relevant

information to the insurance company while insuring their goods. The marine
policy shall be voidable at the option of the insurer in the event of
misrepresentation, mis-description or non-disclosure of any material information.

Example, The nature of goods must he disclosed i.e. whether the goods
are hazardous in nature or not, as premium rate will be higher for hazardous
goods.

5) INSURABLE INTEREST:

The marine insurance will be vaild if the person is insurable interest At the
time of loss. The insurable interest will depend upon the nature of sales contract.

Example, Mr. A sends the goods to Mr. B on CIF (Cost Insurance &
Freight) basis which means the insurance is to be arranged by Mr. B. And if any as
arises during transit Men Mr. B is entitled to get the compensation from the
insurance company.

6) CONTRIBUTION:

If a person insures his goods with two insurance companies, then in case
of marine loss both the insurance companies will pay the loss to the owner
Proportionately.

Example, Goods worth Rs. 50 Lakhs were insured for marine insurance
with insurance company A and B. In case of loss, both the insurance companies
will contribute equally.

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7) PERIOD OF MARINE INSURANCE:

The period of insurance in the policy is for the normal time taken for a
particular transit. Generally the period of open marine insurance will rot exceed.
one year. It can also be issued for the single transit and or specific Period but not
for more than a year.

8) DELIBERATE ACT:

If goods are damaged or loss occurs during transit because of deliberate act
of an owner then that damage or loss will not be covered under the policy.

9) CLAIMS:

To get the compensation under marine insurance the owner must inform
the insurance company immediately so that the insurance company can take
necessary steps to determine the loss.

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PROCEDURE TO INSURE UNDER MARINE INSURANCE

A. Submission of form

B. Quotation from the Insurance Company.

C. Payment of Premium

D. Issue of cover note/Policy

I. SUBMISSION OF FORM:

The form will have the following information:

a) Name of the shipper or consignor (the insured).

b) Full description of goods to be insured: The nature of the commodity to be

insured is important for rating and underwriting. Different types of commodities
are susceptible for different types of damage during transit-sugar, cement, etc are
easily damaged by sea water, cotton is liable to catch fire; liquid cargoes are
susceptible to the risk of leakage and crockery, glassware m breakage, electronic
items are exposed to the risk of theft and so on.

c) Method and type of packing: The possibility of loss or damage depends on this
factor. Generally, goods are packed in bales or bags, cases or bundles, crates,
drums or barrels, loose packing, paper or cardboard cartons, or in bulk etc.

d) Voyage and Mode of Transit: Information will be required on the following

Paints:

i. The name of the place from where transit will commence and the name of the
place where it is to terminate.

ii. Mode of conveyance to be used in goods,( i.e.) whether by rail, lorry, air, etc ,
or a combination of two or more of these. The name of the vessel is to be
given when an overseas voyage is involved. In land transit by rad, lorry or air,
the number of the consignment note and the date there of should be furnished

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The postal receipt number and date there of is required in case Of goods sent
by Post.

iii. If a voyage is likly to involve a trans-shipment it enhances the risk This fact
should be informed while seeking insurance Trans-shipment means the
change of carrier during the voyage.

e) Risk Cover required: The risk against which insurance cover is required should
be stated.

II. QUOTATION BY INSURANCE COMPANY:

Based on the Information provided as above the insurance company will

quote the premium rate In nutshell, the rates of premium depends upon:

a. Nature of commodity.

b. Method of packing.

c. The Vessel.

d. Type of insurance policy.

III. PAYMENT OF PREMIUM:

On accepting the premium rates, the concerned person will make the
payment to the insurance company. The payment can be made on the consignment
basis.

IV. ISSUE OF COVER NOTE /POLICY DOCUMENT:

i. COVER NOTE:

A cover note is a document granting cover provisionally pending the issue of a

regular policy. It happens frequently that all the details required for the Purpose of
issuing a policy are not available. For instance, the name of the steamer, the
number and date of the railway receipt, the no. of packages involved in transit.
etc., may not be known.

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ii. MARINE POLICY:

This is a document which is an evidence of the contract of marine insurance. It

contains the individual details such as name of the insured, details of goods etc.
These have been identified earlier. The policy makes specific reference to the risks
covered. A Policy covering a single shipment or consignment is known as specific
policy.

iii. OPEN POLICY:

An open policy is also known as 'floating policy'. It is worded in general terms

and is issued to take care of all shipment coming within its Scope.it is issued for
a substantial amount to cover shipments or sending during a particular Period of
time. Declarations are made under the open policy these go to reduce the sum
insured. open policies are normally issued for a year. If they are fully declared
before that time, a fresh policy may be issued, or an endorsement placed on the
original policy, for the additional amount. On the other hand, if the policy has run
its normal period and is cancelled, a proportionate premium on the unutilized
balance is refunded to the insured if full premium had been earlier collected.

iv. OPEN COVER:

An open cover is particularly useful for large export and import firms-making
numerous regular shipments who would otherwise find it very inconvenient to
obtain insurance cover separately for each and every, Shipment. It is also possible
that through an oversight on the part of the insured a particular shipment may
remain uncovered and should a loss arises M respect of such shipment, it would
fall on the insured them selves to be born by them. In order to overcome such a
disadvantage, a permanent form of insurance protection by means of an open
cover is taken by big firms having regular shipments. An Open cover describes the
cargo, voyage and cover in general terms and takes care automatically of all
shipments which fall within its scope. It is usually issued for a period of 12
months and is renewable annually. It is subject to cancellation on either side, i.e.,
the insurer or the insured, by giving due notice.

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TYPES OF MARINAS INSURANCE

CARGO INSURANCE:

Cargo insurance caters specifically to the cargo of the ship and also
pertains to the belongings of a ship's voyagers.

HULL INSURANCE:

Hull insurance mainly caters to the torso and hull of the vessel along with
all the articles and pieces of furniture in the ship. This type of marine insurance is
mainly taken out by the owner of the ship in order to avoid any loss to the ship in
case of any mishaps occurring.

LIABILITY INSURANCE:

Liability insurance is that type of marine insurance where compensation is

sought to be provided to any liability occurring on account of a ship crashing or
colliding and on account of any other induced attacks.

FREIGHT INSURANCE:

Freight insurance offers and provides protection to merchant vessels'

corporations which stand a chance of losing money in the form of freight in case
the cargo is lost due to the ship meeting with an accident. This type of marine
insurance solves the problem of companies losing money because of a few
unprecedented events and accidents occurring.

VOYAGE POLICY:

A voyage policy is that kind of marine insurance policy which is valid for
a particular voyage.

TIME POLICY:

A marine insurance policy which is valid for a specified time period -

generally valid for a year - is classified as a time policy.

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MIXED POLICY:

A marine insurance policy which offers a client the benefit of both time
and voyage policy is recognized as a mixed policy.

OPEN (OR) UN-VALUED POLICY:

In this type of marine insurance policy, the value of the cargo and
consignment is not put down in the policy beforehand. Therefore reimbursement
is done only after the loss to the cargo and consignment is inspected and valued.

VALUED POLICY:

A valued marine insurance policy is the opposite of an open marine

insurance policy. In this type of policy, the value of the cargo and consignment is
ascertained and is mentioned in the policy document beforehand thus making
clear about the value of the reimbursements in case of any loss to the cargo and
consignment.

PORT RISK POLICY:

This kind of marine insurance policy is taken out in order to ensure the
safety of the ship while it is stationed in a port.

WAGER POLICY:

A wager policy is one where there are no fixed terms of reimbursements

mentioned. If the insurance company finds the damages worth the claim then the
reimbursements are provided, else there is no compensation offered. Also, it has to
be noted that a wager policy is not a written insurance policy and as such is not
valid in a court of law.

FLOATING POLICY:

A marine insurance policy where only the amount of claim is specified and all
other details are omitted till the time the ship embarks on its journey, is known as floating
policy. For clients who undertake frequent trips of cargo transportation through waters,
this is the most ideal and feasible marine insurance policy.

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IMPORTANCE OF MARINE INSURANCE

Importance Of Marine Insurance In the commercial age of today marine insurance

has become most important insurance in the field of insurance. The importance of marine
insurance is describe below in detail.

1. IMPORTANCE OF MARINE INSURANCE FOR THE INDIVIDUAL:

A person has to import goods from another country which is located on the
other side of sea for his business. While carrying goods from other side of sea
businessman may have to face dacoits or goods may be damaged because of
sinking of ship into the water. So businessman has to experience economic loss.
By the result of loss person may be discouraged to engage in business. But when
one insures his/her property in marine insurance does not have to face with
economic problem because marine insurance provides compensation to the
insured against the loss of property.

2. IMPORTANCE OF MARINE INSURANCE FOR SHIPOWNER:

Expensive ship may be destroyed due to different types of risks on the

marine venture. Shipowner may have to experience with larger amounts of loss
due to the destruction of the ship. Marine insurance provides compensation of loss
to the shipowner . So, marine insurance is important insurance for shipowner.

3. IMPORTANCE OF MARINE INSURANCE FOR FREIGHT:

Freight insurance is also included under the marine insurance. Freight

refers to the revenue that a cargo ship earns or the money which is paid to the
shipowner for transportation of goods from one part to another. If businessman
does not pay freight of his goods to the shipowner, may have to experience
economic loss. If such types of loss occurs insurance company indemnifies the
shipowner to marine insurance. So marine insurance is very important for the
freight.

4. IMPORTANCE OF MARINE INSURANCE FOR CARGO OWNER:

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A businessman wants to be secured for his goods. Especially countries which are
located on the other side of sea , businessman may have to use marine venture. Marine
insurance keeps them away from worry and fear or all responsibility of cargo owner is
transferred to the hand of insurance company that provides compensation to the cargo
owner if loss occurs.

5. IMPORTANCE OF MARINE INSURANCE FOR THE GOVERNMENT:

International trade has been increased due to the marine insurance. As

international trade increases government also can receive economic profit. Government
increases revenue by including extra income tax. So marine insurance is important for the
government also.

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THE MARINE INSURANCE ACT, 1963:

The Marine Insurance Act, 1963 was enforced on 18th April, 1963. The Act
codifies laws relating to marine insurance. Apart from a few exceptions, the Act is based
on UK Marine Insurance Act, 1906. According to section 3 of The Marine Insurance Act,
1963 marine insurance is an arrangement whereby the insurer agrees according to
contract terms, to indemnify the assured for losses incurred in connection with marine
adventure. Marine adventure includes any adventure where any insurable property is
exposed to maritime perils i.e. perils consequent to navigation of the sea. It also includes
the earnings or acquisition of any freight, passage money, commission, profit or other
pecuniary benefit, or the security for any advances, loans, or disbursements is endangered
by the exposure of insurable property to maritime perils as defined under section 2 sub
clause (e) of the Act.

An insurer underwrites to a risk in return of premium by assured, premium here is

compensation in lieu of risk to an insured property. The amount of premium depends on
degree of risk to property of insured. The business of insurance is usually carried out by
spreading of potential liabilities in smaller amount over a number of persons. The risk
here shall include not only the actual property but also the financial losses those incurred
to third party. The marine insurance covers only certain type of risks which includes risks
pertaining to casualties of the sea, fire, war perils, pirates, seizures and jettison. The types
of marine insurance are Hull Insurance, Cargo insurance, Freight Insurance and Liability
Insurance.

The marine insurance is a standard forrn, of contract because it embodies terms

and conditions which shall be standard for all the insured. Section 25 of the Act provides
certain minimal requirements of the Act which shall include the name of the Act which
shall include the name of assured, subject matter, risk insured, voyage- its time or period,
sum insured, names of the insured.

Section 28 of the marine Insurance act deals with the subject matter and the same
shall be considered with utmost care and caution. As per section 28 sub clause (2) the
nature and extent of subject matter not be specified in policy, where policy specifies
subject matter in general terms it shall apply to the interest intended by the assured. Under
the Act there shall be three types of policy valued policy, unvalued policy and floating

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ship policy under sections 29, 30 and 31 apart from this there shall be time policy, voyage
policy and mixed policy.

Marine Insurance is based on few principles which are also its essentials these are
principle of utmost good faith; principle of insurable interest; principal indemnity and
principle of subrogation Here utmost good faith shall mean t at the insured relies
absolutely on the insurer, a contract of marine insurance is nothing different from any
other form of contract as laid down in General Assurance Society as laid down in General
Assurance Society v. Chandumull Jain, AIR 1966 SC 1644. Incase either insured or
insurer commits fraud the other party can avoid such contract. It shall be prima facie duty
of both the parties to act in utmost good faith and disclose every material circumstance
known as per section 20 and 21. Insurable interest here would mean, at the time of
insurance the insurer should have interest in subject matter. The insurer is liable to
indemnify the insured in case of loss also given under section 75 of the Act. Subrogation
means substitution of the insurer in place of the insured for the purpose of claiming
indemnity from a third person for loss covered by insurance. The insurer is entitled to
recover from a negligent t party for any loss payment made to insured as also under
section 79 of e Act.

Thus we can conclude that the Marine Insurance Act, 1963 is an essential piece of
legislation which bring into its ambit maritime losses. Prior to the legislation losses
incurred by the owner of goods and by the owner of vessel were unaccounted. The law
provides for insurance in all such cases relating to maritime losses and the contract of
marine insurance is similar in nature to that of any other insurance and contract.

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WARRANTIES AND CONDITIONS

A peculiarity of marine insurance, and insurance law generally, is the use of the
terms condition and warranty. In English law, a condition typically describes a part of the
contract that is fundamental to the performance of that contract, and, if breached, the non-
breaching party is entitled not only to claim damages but to terminate the contract on the
basis that it has been repudiated by the party in breach.

By contrast, a warranty is not fundamental to the performance of the contract and

breach of a warranty, while giving rise to a claim for damages, does not entitle the non-
breaching party to terminate the contract. The meaning of these terms is reversed in
insurance law. Indeed, a warranty if not strictly complied with will automatically
discharge the insurer from further liability under the contract of insurance. The assured
has no defense to his breach, unless he can prove that the insurer, by his conduct, has
waived his right to invoke the breach, possibility provided in section 34(3) of the Marine
Insurance Act 1906 (MIA). Furthermore, in the absence of express warranties the MIA
will imply them, notably a warranty to provide a seaworthy vessel at the commencement
of the voyage in a voyage policy (section 39(1)) and a warranty of legality of the insured
voyage.

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LIST OF MARINE INSURANCE COMPANIES IN INDIA:

1. Bajaj Allianz General Insurance Co. Ltd.

2. ICICI Lombard General Insurance Co. Ltd.

3. IFFC0 Tokio General Insurance Co. Ltd.

4. National Insurance Co. Ltd.

5. The New India Assurance Co. Ltd.

6. The Oriental Insurance Co. Ltd.

7. United India Insurance Co. Ltd.

8. Reliance General Insurance Co. Ltd.

9. Royal Sundaram Alliance Insurance Co. Ltd.

10. Tata AIG General Insurance Co. Ltd.

11. Cholamandalam MS General Insurance Co. Ltd.

12. HDFC ERGO General Insurance Co. Ltd.

13. Export Credit Guarantee Corporation of India Ltd.

14. Agriculture Insurance Co. of India Ltd.

15. Star Health and Allied Insurance Company Limited

16. Apollo Munich Health Insurance Company Limited

17. Future Generali India Insurance Company Limited

18. Universal Sompo General Insurance Co. Ltd.

19. Shriram General Insurance Company Limited

20. Bharti AXA General Insurance Company Limited

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21. Raheja QBE General Insurance Company Limited

22. SBI General Insurance Company Limited

23. Max Bupa Health Insurance Company Ltd.

24. L&T General Insurance Company Limited

25. Religare Health Insurance Company Limited

26. Magma HDI General Insurance Company Limited

27. Liberty Videocon General Insurance Company Limited

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RATIONAL

SWOT ANALYSIS

STRENGTHS:

1. Strong credit ratings indicated by financial stability.

2. Comprehensive product portfolio decreases the business risk.
3. One of the leading player in insurance industry in terms of revenue .
4. Global presence reaches out to about 35+ countries.
5. Nearly 25,000 people form the workforce for the company.

WEAKNESS:

1. The concentrated Japanese operations increasing the business risk.

2. Japan being a earth-quake prone geography often causes lesser profits for
insurance companies.

OPPORTUNITIES:

1. New business likely to increase revenue impact the revenues growth.

2. Market share likely to increase by expansion in Asian countries.
3. Deregulation of OTC sales likely to increase revenues.
4. Market expansion of Japan's life insurance

THREATS:

1. Increase of claims by natural disasters

2. Japan's slowing population growth would impact the revenues
3. Market share affected by intense competition in Japanese insurance industry

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HYPOTHESIS

The formulation of hypothesis is an important step in the formulation of research

problem. The hypothesis is a tentative proposition formulation to determine its validity.
The hypothesis may prove to be correct or incorrect. In any event, it is leads to an
empirical test. Whatever the outcome, the hypothesis is a question put in such a way that
an answer of some kind can be forthcoming. In the given problem hypothesis is "There is
high degree of risk in marine transportation, therefore marine insurance plays
important role to cover the risk."

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RESEARCH METHODOLOGY

1) APPLIED RESEARCH:
Research undertaken to find a solution for a problem faced by a marine
insurance companies.

2) CASE STUDIES:
Within the set-up of the research project from which this
research will result, it is also considered important to provide good case studies of
typical marine insurance cases. In addition, a clear look at various.
case studies can provide important indications of the instruments used in the
performance of utmost good faith in practice.

RESEARCH DESIGN:
In view of the objects of the study listed above an exploratory research design
has been adopted. Exploratory research is one which is largely interprets and already
available information and it lays particular emphasis on analysis and interpretation of
the existing and available information.

EXPLORATORY RESEARCH DESIGN:

The primary object of the exploratory research design is to provide insight
into an understanding of the problem.
So far, I have studied more than seven books, including the The Law
Relating to Marine Insurance; The Law of Marine Insurance in India, Maritime
Law, Marine Insurance Its Principles and Practice (Classic Reprint), Marine
Insurance: Law and Practice (Lloyd's Shipping Law Library) etc., and a couple of
classic law reports and journal articles.
Additionally, I have already surveyed more than ten websites. Several of
these sites have a large number of links to other sites with information about the
`Marine Insurance', so I plan to look at many of these other sites. The majority of
the sites that I evaluated had the text of complete articles, law reports and
precedents about marine insurance. Obviously, since the study of marine insurance

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is a part of the research project, the survey of complete articles, law reports and
textbooks is necessary as well.

DATA COLLECTION SOURCE:

Information is collected through both primary and secondary sources. i)
Primary Data: It refers to first hand information which is collected to solve a
specific problem. In some cases the researchers may realize the need for collecting
the first hand information. As in the case of everyday life, if we want to have first
hand information or any happening or event, we either ask someone who knows
about it or we observe it ourselves, we do the both. Thus, the primary data is
collected through questionnaire. The type of questionnaire is structured.

SECONDARY DATA:
Any data, which have been gathered earlier for some other purpose, are
secondary data in the hands of researcher. Those data collected first hand, either
by the researcher or by someone else, especially for the purpose of the study is
known as primary data. The data collected for this project has been taken from the
both primary and secondary source.

SOURCES OF PRIMARY DATA ARE:-

Questionnaire

SOURCES OF SECONDARY DATA ARE:-

Internet
Magazines
Publications
Newspapers
Brouchers

SAMPLE SIZE:
Keeping in the view objective of the study the sample size of 30 respondents is
consider good.

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1) Importers - 10 Respondents
2) Exporters - 10 Respondents
3) Others - 10 Respondents

SAMPLE DESIGN:
Sampling design is a plan designed to select the appropriate sample in
order to collect the right data so as to achieve the research objective. A sample is a
part of the universe that can be used as respondents to a survey or for the purpose
of experimentation, in order to collect relevant information to solve a particular
problem.
The primary data has been collected from the internal report of Indian
Banks Association. Sources of secondary data include newsletters of IBA,
websites of nationalized banks, Reserve Bank of India publications and Reserve
Bank of India circulars and newspapers.

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EXPECTED CONTRIBUTION

Principle of contribution is implemented when multiple insurance policies are

covering the same property or loss, the total payment for actual loss is proportionally
divided among all insurance companies. In insurance, the principle of contribution in born
from principle of indemnity. It is used to will maintain continued existence to preserve the
principle of indemnity.
Therefore, principle of contribution only applies to those insurance contracts
which are contracts of indemnity. In fact, however, there would have been possibilities of
getting more than the actual loss had the principle of contribution not been established
with legal force. Just to give a probability, the insured would have received a claim in
full, numbers of times, by affecting numbers of policies with different insurers thereby
defeating entirely the principle of indemnity. Like subrogation, therefore, has come up the
principle of contribution with the sole intent to preserve the principle of indemnity.
Contribution is a right that an insurer has, who has paid under a policy, of calling
other interested insurers in the loss to pay or contribute rate-able to the payment. This
means that if at the time of loss it is found that there is more than one policy covering the
same loss then all policies should pay the loss proportionately to the extent of their
respective liabilities so that the insured does not get more than one whole loss from all
these sources. If a particular insurer pays the full loss then that insurer shall have the right
to call all the interested insurers to pay him back to the extent of their individual
liabilities, whether equally or otherwise.
The insured, under no circumstances, shall be allowed to take the advantage of all
the policies individually so as to get the full claim number of times. Even if the insured
recovers from all the policies, he shall have to refund all such payments in excess of the
actual loss sustained. As this principle virtually comes to the rescue of the principle of
indemnity, therefore, like subrogation, the assertion "it is a corollary to the principle of
indemnity" equally holds well with regard to the principle of contribution. As life and
personal accident contracts are not contracts of indemnity, this principle does not apply
thereto.

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LITERATURE REVIEW

1. Douglas-Westwood Limited. 2005. World Marine Markets. Douglas-

Westwood Limited, Canterbury. The study aims to compute for a world market
value for each marine sector and its regional segmentation. It classifies the marine
sector into shipping, marine tourism, offshore oil and gas, seafood processing,
marine equipment, fishing, shipbuilding, naval shipbuilding, ports, marine
aquaculture, yacht and boatbuilding, cruise, research and development, marine
services, marine renewable energy security and control, ocean survey, education
and training, underwater technology and underwater vehicles operations.

2. Mandate, Maurice at al. 1998. Estimating the Economic Value of Coastal and
Ocean Resources: The Case of Nova Scotia. Oceans Institute of Canada and
Atlantic Coastal Zone Information, Canada. The study focuses on estimating
the total economic contributions of coastal- and oceans-related industries to the
over-all performance of Nova Scotia's economy. It measures the economic value
of Nova Scotia's coastal and ocean activities using four indicators which am:
direct and indirect contributions of these activities to Gross Domestic Product
(GDP); number of people employed by the industries; amount of wages and
salaries received by the industries' employees; and export values of outputs
produced by these industries. Coastal industries, as defined by this study, refer to
two groups: those using the coastal zones as a resource and those that use coastal
zone as a "medium of movement, operation or innovation".

3. The Allen Consulting Group. 2004. The Economic Contribution of Australia's

Marine Industries The purpose of the study is to measure economic contribution
of marine-based industries to Australia's economy. The study, in particular. covers
six marine-based industries which are marine tourism, offshore oil and gas.
fisheries and seafood, shipping, shipbuilding and port-bawd industries. It uses the
concept of "value-added" in estimating the economic value of a specific activity.
Value added is defined as the financial net income before deduction of profit and
wages. To put it differently, it measures the net impact of an industry by deducting

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production costs from the total income. It should be noted. though, that this
includes payments to labor (wages) and, capital and entrepreneurship.

4. Mondale, Mourice.2000. The Economic Value of Marine-Related Resources

in New Brunswick. New Brunswick of Fisheries and Aquaculture and
Department of Fisheries and Oceans, New Brunswick. This study is similar
with the assessment conducted in measuring economic importance of the marine
sector in Nova Scotia which aims to provide support to policy formulation on
economic development and marine management. Specifically, this is an estimation
of the economic contributions of the marine sector to the over-all economy of
New Brunswick in term of its total direct and indirect contribution to Gross
Domestic Product (GDP), total number of people employed by the industry and
total amount of salaries and wages people earned from the said industry.

5. Kildow, Judith and Colgan, Charles. 2005. California's Ocean Economy.

Report to the Resources Agency. State of California. National Economics
Program, California. This study measures the contribution of the economy
coastal and ocean economy to California's total economy across time and regions
including the nations, state and counties. Economic contributions are calculated in
leans of output (Gross Domestic Product or its related measures), employment and
wages. It distinguishes the coastal economy from the ocean economy by defining
the former as "all economic activities in the coastal region, and is thus the sum of
employment, wages and output in the region". The latter, on the other hand, is
referral as "all economic activity deriving all or part of its inputs from the ocean or
Great Lakes.

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CONCLUSION

Insurance is an integral part of any personal financial plan. The type of insurance
and the amount of coverage you obtain all depends on your unique financial and family
circumstances, and must be evaluated carefully. When considering purchasing coverage,
you should review all the potential risks and the financial impact of these risks on your
financial health. This will help you determine what options to look for and what questions
to ask. What you need to keep in mind is that you do not want to be underinsured or
overinsured, which means you have to do your homework before you buy. And as with
any type of financial product, you must read the fine print and consult with a competent
advisor.

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BIBLIOGRAPHY

A] TEXT BOOK
1) Money & Central Banking - VASANT DESAI ( Himalaya Publications)
2) Environment & Management of Financial Services - P.K. Bandgar ( Banking &
Insurance I Semester )

B] SECONDARY DATA
www.google.com
www.rbi.com
www.rbi.org.in
www.moneycontrol.com
www.centralbanking.com
http://cpolicy.rbi.org.in
www.apex.com
http://bulletin.rbi.org.in

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