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How to assess whether a marine insurance premium is fair and reasonable?

Apart from an insurance company's operation costs and profit, its premiums depend on the underwriting risK which, in turn, depends on probability. Below are the major criteria to determine marine insurance premiums:

Insured interest
The risk of the insured interests being damaged will be in direct proportion to the marine insurance. For example, the risk of damage to fragile items such as glass products is higher than that of metal. Therefore, other things being equal, the marine insurance premium for transporting glass products is higher than that of metal products.

Sum insured
Jewellery is much smaller than an ordinary chair in terms of size, however, its value and, consequently, its sum insured, is much higher. So, other things being equal, the marine insurance premium for transporting jewellery is higher than that for an ordinary chair.

Risk of voyage
Transportation arrangements of different countries vary. An insurance company will use international intelligence and the past history of the carrier to determine the marine insurance premium. Generally speaking, the higher the number of transshipments or temporary storage requirements for consolidation during the voyage, the longer the voyage will take and therefore, the higher the risk of cargo being damaged.

Cargo clauses
The most common marine cargo insurance coverage includes Institute Cargo Clauses A, Institute Cargo Clauses B and Institute Cargo Clauses C. Clauses A provides the most comprehensive coverage while Clauses C covers the least. Therefore, the premium for marine cargo insurance with Clauses A is higher relative to that with Clauses C.

If these calculations seem complicated, simply call your insurance representative at MSIG and we'll be pleased to provide professional advice and a marine insurance quote for your cargo.

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