International Logistics Ch10

Front 1

actuarial tables

Back 1

Tables used by insurance companies that illustrate the exact probability, based upon historical data, of a particular peril

Front 2

average

Back 2

A loss incurred on an ocean voyage by a cargo owner. It can be further qualified as a particular average or a general average.

Front 3

barratry

Back 3

An act of disobedience or willful misconduct by the captain or the crew of a ship that causes damage to the ship or the cargo.

Front 4

bespoke names

Back 4

In the Lloyd's of London vernacular, the individuals who take on the risks insured by syndicates and who have unlimited liability for those risks on their personal assets.

Front 5

classification society

Back 5

A company that is responsible for determining the seaworthiness of a particular vessel. It places a ship in a specific “class” as a function of its age, maintenance records, and the availability of on-board equipment

Front 6

franchise

Back 6

The portion of a loss, expressed as a percentage, below which a “With Average” insurance policy will not cover a partial loss. If the amount of the partial loss exceeds the franchise, then the entire costs of the partial loss are covered

Front 7

general average

Back 7

A loss incurred on an ocean voyage that involves all of the cargo owners on board, such as in the case where the captain of the ship tosses overboard some of the cargo (see jettison) to save the ship and the remainder of the cargo, or when the captain decides to ground the ship to prevent a total loss. The owners of the cargo saved by this action are indebted to the owners of the cargo sacrificed and to the owners of the ship.

Front 8

hazard

Back 8

A situation that increases the probability of a peril and therefore of a loss. For example, a hazard would be a storm, which increases the probability of the peril of water damage; or a poorly trained crew, which increases the probability of the peril of grounding.

Front 9

jettison

Back 9

The act of throwing overboard part of the cargo of a ship (or of the fuel of an airplane) in an attempt to lighten the ship. The purpose of such an action is to save the ship, the remainder of the cargo, and the crew.

Front 10

objective risk

Back 10

The chance of a loss that can be accurately calculated, because ample empirical data are available (e.g. the probability of a fire causing a total loss of a residence) or because a good mathematical model has been developed

Front 11

organized theft

Back 11

Theft of a cargo shipment (or part of a cargo shipment) that is due to organized criminal activity, in which one or more individuals plan and eventually commit the theft.

Front 12

particular average

Back 12

A partial loss incurred on an ocean voyage; the cargo may have become wet from seawater or may have been damaged from rough seas

Front 13

peril

Back 13

The event that brings about a loss; for example, a fire, a collision, and a flood are all perils

Front 14

pilferage

Back 14

Theft of part of a cargo shipment due to opportunity. The thief did not plan the crime; the circumstances were such that it was possible to commit it.

Front 15

protection and indemnity club

Back 15

A group of ship owners who agree to mutually share the costs of a member's liabilities to other parties; for example, the club members would be individually responsible for the costs of a single member's liability in the event of an oil spill.

Front 16

pure risk

Back 16

The chance or the probability of a loss only. Pure risks can be insured against (i.e., transferred to an insurance company).

Front 17

risk

Back 17

The chance or the probability of a loss

Front 18

speculative risk

Back 18

The chance or probability of a loss or a gain (e.g., an investment in the stock market).

Front 19

subjective risk

Back 19

The perceived risk of a loss by an individual or company. Whether this perception is correct can be settled only by calculating the objective risk

Front 20

surveyor

Back 20

An individual or company whose responsibility it is to determine the extent and the circumstances of a marine cargo loss.

Front 21

Syndicate

Back 21

Under the Lloyd's concept of an insurance market, a group of Names who agree to insure a certain type of loss. The risks are shared by all the members of the syndicate

Front 22

system's theft

Back 22

Theft that is perpetrated by someone who also gains access to a computer in the information system of the supply chain and deletes the files related to that shipment to make the theft undetectable.

Front 23

underwriter

Back 23

The company, syndicate, or Name that assumes the risk of a loss for another party, in exchange for a premium

Front 24

A typical container will be handled ___ times in each of the ports of departure and destination.

Back 24

four to six

Front 25

Most ships that sink each year ___.

Back 25

a) are older ships
b) are bulk ships
c) are ships flying third world countries' flags

Front 26

The part of a trip during which cargo is at most risk for theft is ___.

Back 26

the inland leg.
On the ocean voyage, the cargo is relatively safe, except for piracy which is not as frequent as theft on inland trips. On the quay, the cargo is readily observed and is safer than on the inland trip.

Front 27

An exporter in a developing country sells under CIF terms to an importer in a developed country. The exporter provides the minimum required insurance coverage. If there is a loss, the importer would ___.

Back 27

have to file a claim with an insurer in the developing country.
Responsibility for the shipment transfers once the merchandise crosses the ship's rail, but the exporter provides minimum cover insurance and if there is a loss, the importer has to file a claim with the insurer of the developing country or an insurer not chosen by the importer.

Front 28

A letter of credit usually requires ___.

Back 28

a Certificate of Insurance

Front 29

Coverage A of the Institute Marine Cargo Clauses requires a special endorsement to cover ___.

Back 29

strikes and other civil disturbances.
Unseaworthy vessels and improper packing are never insurable. Coverage against strikes and other civil disturbances can be in this case with a special endorsement.

Front 30

Goods shipped "under deck" ___.

Back 30

Goods shipped "under deck" are stowed inside the ship, and face fewer perils than goods shipped "on deck" and can be insured by a United States All Risk policy.

Front 31

At Lloyd's, individuals assuming (insuring) risks are on their personal fortunes called ___.

Back 31

Bespoke Names
Bespoke Names are Lloyd's of London vernacular for individuals who have unlimited liability for insurance risks on their personal assets

Front 32

More companies are selling insurance on an "open-account" basis because ___.

Back 32

Competitive pressures are pushing firms to sell on an open-account basis, as customers try to acquire the best possible payment alternatives. Countries are providing fewer export subsidies, while the nationalization of Compagnie Francaise d'Assurance pour le Commerce Exterieur" is not relevant, and the World Trade Organization has no interest in methods of payment.

Front 33

"Warehouse-to-Warehouse" coverage is an extension to the traditional ___.

Back 33

a) All Risks policy
b) With Average policy
c) Free of Particular Average policy
The "Warehouse-to-Warehouse" coverage is an extension to the traditional All Risks, With Average, and Free of Particular Average Policies.

Front 34

types of maritime insurance

Back 34

open policy
special cargo policy
hull insurance
protection and indemnity

Front 35

types of risks

Back 35

transportation risk
political risks
business risks
financial risks

Front 36

the risk process

Back 36

risk identification
risk assessment
risk mitigation
risk control

Front 37

describe some risk an ocean shipment faces

Back 37

fire, pilferage, water damage, jettison, sinking

Front 38

describe some of the risk an airshipment faces

Back 38

fire, crash, pilferage

Front 39

what is general average

Back 39

when cargo is lost due to many reason. all parties involved share the cost of the lost carge (ship owner, cargo companies etc.)

Front 40

explain insurable interest

Back 40

an agree upon incoterm states; the DDP. The exporter is responsible for the ffreight until it reaches the importers dock. The exporter is interested in the loss/damage of freight becuase title has not changed hands. the importer is also "interested" in the freight becuase it purchased the material and might be needing it.

Front 41

what are some rick management strategies

Back 41

risk retention
risk transfer
mixed approach

Front 42

describe three maritime insurance clauses

Back 42

open policy
special cargo policy
hull insurance
protection and indemnity

Front 43

describe protection and indemnity

Back 43

form of insurance for ship owners. it si a mututal insurance policy to whic ship owners contribute and which absorbs the cost of one the owner's mishaps