R765 (TA673rev) - This Opinion focussed on whether it would be acceptable for insurance documents to be signed by a broker. The initiator advised that issuance and/or signing by a broker was a common occurrence and that some banks were accepting such documents whilst others were refusing them. It was also pointed out that some insurance company personnel hold the position of 'broker' within the company. An example of one such document was provided for review.
Article 28 does not refer to insurance documents being issued or signed by brokers. The conclusion that was offered was that an insurance document may be issued and/or signed by a broker provided that the broker indicates it is acting in the capacity of agent or proxy for an insurance company or underwriter. If the broker is an employee of the insurance company and has a title of 'broker' then they must sign for or on behalf of the insurance company.
R767 (TA732) - This request for an Opinion asked whether a date stated as part of the countersignature data could be deemed to be the date of issuance of the insurance document or evidence of an effective date of insurance.
The insurance document showed "Countersigned at ..... (blank) Date: 13/10/2009" and was properly signed. However, there was no issuance date or evidence of an effective date for the insurance coverage. The shipment date was the same as the date appearing in the countersignature area.
Sub-article 28 (e) states that the date of the insurance document must be no later than the date of shipment, unless it appears from the insurance document that the cover is effective from a date not later than the date of shipment.
The analysis stated that the date of the countersignature is the date that the insurance becomes valid (or effective) and can be taken into consideration by banks when determining compliance with the terms and conditions of the credit and UCP 600 article 28.
Absent any other date appearing in the document, that could cast doubt as to the date of issuance or effective date of the insurance, the document would be acceptable.
TA784 - This query related to insurance documents and the need to identify whether all originals have been presented given certain circumstances.
Credit is silent as to the number of originals / copies to be presented: if the insurance policy does not indicate that it is issued in more than one original, then only one original is to be presented; if the insurance policy does not indicate that it is issued in more than one original and more than one original is presented, then the number presented will be considered as the number of originals required.
Credit requires original and duplicate: there is no requirement for the insurance policy to indicate the number of originals that have been issued so presentation can consist of two originals or one original and one copy.
Credit requires insurance policy in duplicate: there is no requirement for the insurance policy to indicate the number of originals that have been issued so the number presented will be considered to be the number of originals that have been issued.
Credit requires insurance policy in two originals: there is no requirement for the insurance policy to indicate the number of originals that have been issued but at least two originals must be presented.
Credit required full set insurance policy: there is no requirement for the insurance policy to indicate the number of originals. If it does so, that number must be presented. If no indication is given, the number of originals presented will be considered as the full set.
R768 (TA687rev) - An issuing bank refused documents due to the fact that the insurance coverage had not been calculated to three decimal places to accommodate the requirement for 110% of the invoice value. The conclusion made it clear that the international standard banking practice for the establishment of insurance coverage is two decimal places.
R634 (TA638rev) - A credit was issued deleting UCP 600 sub-articles 28 (h) and (i). The conclusion highlighted that if sub-article 28 (i) is excluded or does not apply, then the insurance document must not bear any exclusion clauses - which is extremely rare. To exclude this rule may, in a vast number of transactions, create an unworkable letter of credit or necessitate the beneficiary obtaining an amendment in order to allow specific exclusion clauses or the removal of the restriction completely. With respect to sub-article 28 (h), this rule was included in UCP 600 in order to discourage banks from merely indicating that the insurance document is to cover "all risks" rather than expressly stating the risks that are required to be covered. By excluding the rule, the issuing bank is further compounding the lack of detail in its credit by prohibiting any exclusions to a risk that most insurance companies do not cover, i.e., all risks.
R778 (TA688rev) - This Opinion focussed on the requirements
for insurance documents to be endorsed. Six examples of how an insurance
document could be issued were provided for comment:
1. "To Bearer", where the LC required a blank endorsed insurance
document.
2. "ABC Exporting Co. Ltd, To Bearer", where the LC required a blank
endorsed insurance document.
3. "To Order", where the LC required a blank endorsed insurance
document.
4. "ABC Exporting Co. Ltd To Order", where the LC required a blank
endorsed insurance document.
5. "To Order of XYZ Bank Ltd", where the LC required an insurance
document to be issued to order of XYZ Bank Ltd.
6. "ABC Exporting Co. Ltd
To Order of XYZ Bank Ltd", where the LC required an insurance document
issued to order of XYZ Bank Ltd
In conclusion, the opinion states:
1. Structure is acceptable without endorsement
2. The insurance document requires endorsement by ABC Exporting Co. Ltd
3. Structure is acceptable without endorsement
4. The insurance document requires endorsement by ABC Exporting Co. Ltd
5. Structure is acceptable without endorsement
6. The insurance document requires endorsement by ABC Exporting Co. Ltd
Clearly, to avoid issues relating to the determination of compliance, an
insurance document should not show the assured party as "Bearer" or
"To Order" and neither should a credit require that an insurance
document be issued in a similar manner or in a manner similar to the
requirements for a bill of lading i.e., to order and blank endorsed.
R724 (TA731rev) - This Opinion covered clauses that had been seen on insurance documents and the question was whether the text would be acceptable or not.
Clause 1 which is pre-printed on the insurance document as part of the signature area:
"This insurance does not cover any loss or damage to the property which at the time of happening of such loss or damage is insured by or would, but for the existence of this Policy, be insured by any fire or other insurance policy or policies, except in respect of any excess beyond the amount which would have been payable under the fire or other insurance policy or policies had this insurance not been effected."
Clause 2 which is also pre-printed on the insurance document:
"This policy is prepared according to the material facts disclosed by the proposer as is shown in the proposal form and is subject to the general and special conditions and clauses enclosed or attached herewith and the Company hereby agrees to indemnify the Assured, against payment of the premium due, in case of a marine peril as described above."
The document contains a heading "Clauses" and shows thereunder "[Country T] General Conditions" and a list of applicable clauses including ICC (A), War, Strikes Clauses, Institute Classification Clauses, etc.
Clause 3 appears as part of the text inserted onto the insurance document:
"The cover will be valid, if and only if, the transporting vessel(s) have a valid ISM Certificate and Classification Certificate (according to Institute Classification Clause 01.01.2001) during the transport."
There is no data on any required document meeting the above-mentioned condition.
Clause 4 appears as part of the text inserted onto the insurance document:
"CAUTION:
This policy is subject to the following mentioned conditions and warranties:
1. The vessel should be fully classed and class maintained with class society member of IACS (including Turk Lloyd) as per Institute Classification Clause 01.01.2001 as per attached wording. Therefore, the vessel being nominated should be complied with the stipulation stated thereof.
2. Vessel should also be a member of a respected P & I (Protection & Indemnity) club member of International Group.
3. Vessel should also be complied with the ISM requirements.
4. A vessel which does not have above mentioned qualifications and are aged over 35 and tankers aged over 15 will not be covered."
There is no data on any required document meeting the above-mentioned conditions.
In responding to the effect of these clauses, the content of sub-article 14 (a) should be remembered:
"123 Someroad Street
Somewhere Town
Someplace nominated bank acting on its nomination, a confirming
bank, if any, and the issuing bank must examine a presentation to determine, on
the basis of the documents alone, whether or not the documents appear on their
face to constitute a complying presentation."
The Banking Commission decided as follows:
In respect of Clause 1, unless another insurance document issued in the same context as the quoted clause was presented, there would be no grounds to refuse.
In respect of Clause 2, by use of "enclosed" or "attached herewith" the document draws a distinction between the terms by the separate reference to "attached herewith". In interpreting "enclosed" this can only mean the clauses that are stated on the document itself.
The insurance document refers to "[Country T] General Conditions" and states other applicable clauses. It therefore follows that the "general and specific conditions and clauses" are stated (enclosed) on the document. The document will be acceptable.
In respect of Clauses 3 and 4, absent any data on another stipulated document that conflicts with the wording in the clauses, the document will be acceptable.