Yes, your past claims impact the premium of your present marine insurance policy. In a situation where your claims have been high, the existing marine insurance company may increase your premium at the time of policy renewal. However, in case you are approaching a new insurer, your insurance premium might be somewhat lower, but it would depend on various factors like the nature of your claim.
If however, your claims have not been substantial, there would be no change in marine insurance premium rates. It is necessary to understand that the level of the claim that would be considered substantial or minor, would be decided by the marine insurance company. So, it is better to ask the insurer and get clarity on the level of your claims that would increase your marine insurance premium.
Along with the claim history, there are various other factors that would impact the premium of your marine insurance policy as well. Some of these factors are:
- The nature and value of the goods you are getting insured
- The route and the type of vessel being used
- The inherent risks that your products may have
- The destination to which your goods would travel
- Strikes, riots, or civil commotion that could affect the good’s delivery
Further, some of the other factors which can raise your marine insurance policy premium are as follows:
Natural Forces:
Though natural perils of the sea are beyond the control of human beings, it is still feasible to curtail their impact by taking certain measures. Some ports lack good anchorage and protection facilities against tides, and therefore, if you are travelling through these ports, your premium might be high.
Construction and Type of the Vessel:
The quality of the vessel plays a crucial role. While deciding the premium, the underwriter sometime takes an interest to know which vessel and material to use in constructing it. The underwriter would check the adaptability of vessels to carry various kinds of cargo.
Age of the Vessel:
It points to the experience and hence the skills of the crew members managing the vessel. Further, hull insurance premium rates would depend on the age of the vessel along with the risks covered.
Policy Coverage:
Various clauses are added to a marine insurance policy in order to limit the liability of the insurer. While some insurers cover total loss, and some are interested in covering only partial losses. Determining your premium on the basis of the policy coverage.
Additional Read: How to Decide the sum Assured in Specific Transit Insurance Policies?
Case Study: 1
Considering the nature of its business, K.S Shipping has purchased a comprehensive marine insurance policy. Last year, during the transit of one of its consignments, a fire erupted and damaged the vessel. As K.S Shipping had a marine insurance policy, it approached the insurer for the claim settlement. Here, the insurer appointed a surveyor who found the claim to be valid and thus, accordingly settled the claim.
When a few months ago, K.S Shipping approached the insurer for the renewal of its marine insurance policy, the insurer took into account the last year’s claim as well. As the claim amount was high, the insurer increased the insurance premium at the time of policy renewal.
Additional Read: How to Reduce Marine Cargo Insurance Premium Rates?
Case Study: 2
Incepted in 2006, K.G Engineering is a Delhi-based engineering company supplying and exporting high-quality engineering items in India and abroad. The company is involved in manufacturing various engineering items and situated a large base of clients in different parts of the world. Last year, the company got a major order for exporting engineering items to a buyer situated in the Maldives.
As the consignment was worth $500 million and scheduled to send it via sea. The engineering company decided to purchase a marine export insurance policy. The insurer considered various parameters like the value of goods, nature of goods, the type of vessel, the distance to cover, etc. while deciding the premium rates. As K.G Engineering was using two vessels for the consignment. The insurer also insisted upon checking the nationality and quality of the vessels. The insurer also checked the structural strength of the vessels in order to ascertain the total premium rates of the marine insurance policy.
