PGI Marine Insurance 3 — Questions and Answers
Question 1: When a marine cargo insurer pays a claim and wishes to recover the loss from a negligent carrier, which legal principle allows it to do so?
- Contribution
- Subrogation (Correct answer)
- Indemnity
- Proximate cause
Correct answer: Subrogation
Subrogation allows the insurer, after paying the insured's claim, to step into the insured's legal shoes and pursue recovery from the third party responsible for the loss.
Question 2: What is a 'notice of abandonment' in marine insurance, and when must it be given?
- A notice the insurer sends to decline a claim on grounds of unseaworthiness
- A notice the insured gives to the insurer when electing to treat a constructive total loss as an actual total loss, transferring title to the insurer (Correct answer)
- A notice required when a vessel changes its registration from Singapore to a foreign flag
- A notice the MPA issues when a vessel is detained at port
Correct answer: A notice the insured gives to the insurer when electing to treat a constructive total loss as an actual total loss, transferring title to the insurer
Notice of abandonment must be given by the insured to the insurer when claiming a constructive total loss; by accepting abandonment, the insurer acquires whatever remains of the subject matter.
Question 3: In a marine cargo claim, what is the significance of the 'survey report' obtained from a marine surveyor?
- It determines the premium refund due to the insured after a partial loss
- It establishes the cause, nature, and extent of loss or damage to support the claim assessment (Correct answer)
- It provides the insurer's formal acceptance or rejection of the claim
- It records the vessel's seaworthiness before departure
Correct answer: It establishes the cause, nature, and extent of loss or damage to support the claim assessment
A marine surveyor's report documents the cause, extent, and nature of the loss or damage, providing the evidence base for the insurer to assess and settle the cargo claim.
Question 4: Under Singapore's Insurance Act, who is authorised to carry on marine insurance business in Singapore?
- Any company registered under the Companies Act with a minimum paid-up capital of S$1 million
- Only insurers licensed by the Monetary Authority of Singapore (MAS) (Correct answer)
- Any individual holding a General Insurance agent's licence
- Only Lloyd's of London syndicates operating through a local coverholder
Correct answer: Only insurers licensed by the Monetary Authority of Singapore (MAS)
Only insurers licensed by MAS under the Insurance Act are authorised to carry on insurance business, including marine insurance, in Singapore.
Question 5: What is 'average' in the context of marine insurance (as distinct from general average)?
- The mean premium charged across a class of marine risks
- A partial loss of the subject matter insured (Correct answer)
- The average age of a vessel used to determine premium rates
- The proportional share of a claim paid by each co-insurer
Correct answer: A partial loss of the subject matter insured
In marine insurance, 'average' (or 'particular average') refers to a partial loss of the subject matter, as opposed to a total loss or a general average sacrifice.
Question 6: Which of the following is a key document typically required when making a marine cargo claim in Singapore?
- A certified copy of the insured's personal income tax statement
- The original Bill of Lading, commercial invoice, packing list, and survey report (Correct answer)
- A letter of credit from the importing bank confirming payment
- A MAS Form MIS-1 completed by a licensed loss adjuster
Correct answer: The original Bill of Lading, commercial invoice, packing list, and survey report
A marine cargo claim typically requires the original Bill of Lading, commercial invoice, packing list, and a survey report to establish ownership, value, and the extent of loss.
Question 7: Why is Singapore considered a major hub for marine insurance in Asia?
- Singapore imposes no premium tax on marine insurance policies, making it cheaper than all other Asian markets
- Singapore is one of the world's busiest ports and a regional financial centre with a well-developed legal framework for marine disputes (Correct answer)
- All ASEAN member states are legally required to insure cargo through Singapore-licensed insurers
- Singapore's MAS mandates that all cargo passing through PSA terminals must be insured locally
Correct answer: Singapore is one of the world's busiest ports and a regional financial centre with a well-developed legal framework for marine disputes
Singapore's status as one of the world's busiest ports, combined with its English common law legal system, skilled workforce, and MAS regulatory framework, makes it a leading Asian marine insurance hub.
PGI Marine Insurance 3
When a marine cargo insurer pays a claim and wishes to recover the loss from a negligent carrier, which legal principle allows it to do so?