Claim case sharing
“Admitted Policy” in cargo insurance
If your client is shipping goods outside of Hong Kong to a distant destination, it is important that he checks carefully whether he is permitted to buy a normal cargo insurance policy from a single Hong Kong-based insurer to cover his entire journey from end to end.
In many cases these days, the customer may need to take out insurance in both Hong Kong and the destination country to make absolutely certain that all parts of the entire journey are covered. This is because of the “Admitted Policy” regulation.
An increasing number of countries around the world have rules and regulations governing the practice of companies importing into their country taking out insurance in the country of origin or other countries. On the other hand, in Malaysia for example, the insured may be entitled to enjoy a tax incentive if they buy insurance from a Malaysian insurance company.
In some cases, if the customer buys their insurance in other countries, not only will they not be eligible for the tax incentive, but it could also affect their claim. An insurance policy of this type is called the “Admitted Policy”. In addition, as well as benefitting from a related incentive offer, buying insurance from an Admitted insurance company can often result in the insured enjoying the protection of the destination country’s insurance ministry.
Insurance authorities in some destination countries may also help the insured in cases where, for example, a natural disaster has depleted the funds of the insurer. Government help may also be on hand if the insured feels his insurer has mishandled its claims.
It is vital for the benefit of your clients that you are always up to date as the incentive offers and other regulations are constantly changing in some destination countries. By contrast, some distant countries (Libya for instance) may apply penalties rather than incentive offers. In Libya, all marine cargo imports must be insured through local insurers. Fines up to US$78,000 and/or up to 6 months imprisonment have been applied.
In some cases, clients may be advised to take out insurance both in Hong Kong and the destination country.