The Insurance Act 2015, passed by the UK Parliament, introduced the most significant changes to British commercial insurance law in over 100 years. The Act came into force on 12 Aug 2016 and includes Marine Insurance coverage. Here we highlight four key changes that you should be aware of: 

1. New duties on ‘fair representation’
   The insured has a duty to disclose material facts, and the insurer has a duty to ask the right questions to determine the facts in assessing the risk. A representation may be withdrawn or corrected before the contract of insurance is issued.
2. Remedies for breach
   The insurer has different remedies depending on the situation. If a qualifying breach is deliberate or reckless, the insurer may void the contract and refuse all claims, and need not return any premiums paid. If a qualifying breach is neither deliberate nor reckless, the insurer has the right to void the contract as if they would not have entered into a contract; or the insurer may impose different terms; or may charge a higher premium. When losses are incurred, the insured may not be entitled to full compensation. The claims under the contract may be reduced by the same proportion as the actual premium charged bears to the premium that would have been charged.
3. Warranties and terms not relevant to loss
   Clauses which could tend to affect either the whole risk or a significant part of the risk remain unchanged. But insurers should pay the claim when the breach of a specific term is totally irrelevant to the loss that has taken place.
4. Remedies in the event of fraudulent claims
   If a claim is at all tainted by fraud, the policyholder will forfeit the whole claim. If the insurer has already paid a claim and later discovers fraud, the insurer may recover those monies paid to the assured. The insurer may terminate the contract from the date of the fraudulent act.

Naturally, it is very important that you understand these changes and how well you are protected. 

Please refer to the UK Insurance Act 2015 for details.

Learn more about our insurance plans:
Cargo
Pleasure Craft

When the container contains goods which will ultimately be distributed to several consignees, the insured may need to bear risks that he is unaware of. Several recent cases have highlighted the need for more careful consideration of such cargo insurance needs. So it is important to understand that cargo insurance will terminate “at the place of allocation or distribution”, which may be sooner than “warehouse to warehouse” coverage for a single consignee.

The proper way to arrange cargo insurance is dependent on the number of consignees or destinations. Where there is more than one consignee or destination under a Bill of Lading or Delivery Order, a separate cargo insurance is needed for each respective consignee or destination. If it is not arranged in this manner, the cargo insurance will automatically terminate once the cargo has arrived at any place of “allocation or distribution” in accordance with the Transit Clause of Institute Cargo Clauses no. 8.1.2.2.

If the shipment involves more than one consignee or destination, this is one of the important material facts that need to be disclosed to the Underwriter, so that the Underwriter can give advice on the policyholder’s risk exposure.

To advise your customers on the most appropriate cargo insurance arrangements for their needs, we offer the following tips:

For a single shipment cargo policy:

• Note that it will typically provide insurance for one consignee per destination in a single sale.
• Note that it will terminate in accordance with the Transit Clause of Institute Cargo Clauses.
• Please advise the Underwriter if any consolidation, allocation, distribution or storage will take place during the insured transit.
• Please provide details of the insured voyage to the Underwriter for consideration when applying for insurance.
• Please advise the Underwriter immediately of any change of plan that may occur during the insured voyage.

We hope the above tips can help your clients to enjoy full protection at the lowest cost, and avoid time-consuming claims disputes.

Learn more about our insurance plans:
Cargo
Pleasure Craft

The unexpected failure of a global container giant has been much in the news this quarter. When the shipping operator entered sudden bankruptcy, their ships were seized at sea. Many freight forwarders and shippers had already made advance payment for services, and have now suffered losses as a result. These same freight forwarders and shippers have also now incurred additional expenses for arranging re-delivery of the containers from the seized ships, and carriage by other operators.

To mitigate their losses in any other similar events in the future, customers may do a little more to protect themselves. Under the Institute Cargo Clauses (2009), the possibility of an extension of destination change as well as the reimbursement of incurred extra charges is allowed to the insured. In particular, it is important to remind your customers that time is of the essence in such circumstances, and that they should notify their insurer promptly. While the insurer may not be able to offer full reimbursement for any loss, they may be able to grant extended coverage.

Institute Cargo Clauses (2009):

Change of Voyage

10.1 Where, after attachment of this insurance, the destination is changed by the Assured, this must be notified promptly to Insurers for rates and terms to be agreed. Should a loss occur prior to such agreement being obtained, cover may be provided but only if cover would have been available at a reasonable commercial market rate on reasonable market terms.

10.2 Where the subject-matter insured commences the transit contemplated by this insurance (in accordance with Clause 8.1), but, without the knowledge of the Assured or their employees the ship sails for another destination, this insurance will nevertheless be deemed to have attached at commencement of such transit.

Forwarding Charges
12. Where, as a result of the operation of a risk covered by this insurance, the insured transit is terminated at a port or place other than that to which the subject-matter insured is covered under this insurance, the Insurers will reimburse the Assured for any extra charges properly and reasonably incurred in unloading storing and forwarding the subject-matter insured to the destination to which it is insured.

*If there is any inconsistency or ambiguity between the English version and the Chinese version of the above clauses, the English version shall prevail.

Learn more about our insurance plans:
Cargo
Pleasure Craft

Scenario:
Mr. Pao opened a dried seafood shop in Wing Lok Street in Sheung Wan 6 months ago. To celebrate his exceptionally good business turnover, he temporarily closed his shop for 5 days and went to Thailand with his workers. However, there was unforeseen heavy rain in Hong Kong during his 5-day trip, which resulted in some of his abalone becoming waterlogged.

Question:
Can Mr. Pao successfully claim under shop insurance?

Answer:
Although Mr. Pao did not take out any preventive measures against flooding, if he has taken out a shop insurance policy, he can probably claim the damage to his shop's fixtures and fittings, as well as the loss of stock, under the Contents and Stock section.

In addition, Mr. Pao can claim his loss of profit due to his Reduction in Takings and Increase in Cost of Workings, i.e. the additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in takings) under the Business Interruption section.

With the rainy season approaching, if your customers are the owners of a dried seafood shop in Sheung Wan, you can advise them to pay special attention to possible flooding or water damage, and to take preventive measures to minimise any loss.

Learn more about our insurance plans:
SME Protection Bundle
Office Insurance
Shop Insurance
Business Insurance

Scenario:
Mr. Pao opened a dried seafood shop in Wing Lok Street in Sheung Wan 6 months ago. To celebrate his exceptionally good business turnover, he temporarily closed his shop for 5 days and went to Thailand with his workers. However, there was unforeseen heavy rain in Hong Kong during his 5-day trip, which resulted in some of his abalone becoming waterlogged.

Question:
Can Mr. Pao successfully claim under shop insurance?

Answer:
Although Mr. Pao did not take out any preventive measures against flooding, if he has taken out a shop insurance policy, he can probably claim the damage to his shop's fixtures and fittings, as well as the loss of stock, under the Contents and Stock section.

In addition, Mr. Pao can claim his loss of profit due to his Reduction in Takings and Increase in Cost of Workings, i.e. the additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in takings) under the Business Interruption section.

With the rainy season approaching, if your customers are the owners of a dried seafood shop in Sheung Wan, you can advise them to pay special attention to possible flooding or water damage, and to take preventive measures to minimise any loss.

Learn more about our insurance plans:
SME Protection Bundle
Office Insurance
Shop Insurance
Business Insurance

Mrs. Lam took out shop insurance for her boutique a year ago. She opted for a sum insured of HK$100,000 with an excess of HK$5,000 to cover all contents including decorations and stock in her boutique.

As her business had been earning profits steadily, she decided to renovate the boutique to attract more customers. After renovation, the value of her property in the boutique increased from HK$100,000 to HK$200,000.

Unfortunately, a vehicle accidentally crashed into her boutique. The new fixtures and fittings as well as new stock arrivals were damaged. Mrs. Lam immediately filed a claim with a loss amount totaling HK$30,000 with her insurance company. After evaluation of the loss, her insurance company applied the average clause to the claims adjustment as the value of the boutique at the time of loss was greater than the sum insured in her insurance.

In this situation, Mrs. Lam had to bear a ratable proportion of her loss according to the extent of under insurance.

As a result, including the HK$5,000 excess, Mrs. Lam had to bear a HK$20,000 (HK$5,000 + HK$15,000) reduction of her claim because her insurance company would only pay HK$10,000 for the loss.

In the case above, Mrs. Lam should have instructed her insurance company to increase the sum insured of her shop insurance immediately after the renovation. Average clause is commonly applied to commercial property insurance such as office insurance, shop insurance etc. This also applies to insurance on buildings. Average clause is applicable when the property and contents insured at the time of loss or damage is collectively of greater value than the sum insured. The insured person will be deemed to be the insurer to the extent of under insurance, bearing a ratable proportion of the loss.

Learn more about our insurance plans:
SME Protection Bundle
Office Insurance
Shop Insurance
Business Insurance

Mrs. Lam took out shop insurance for her boutique a year ago. She opted for a sum insured of HK$100,000 with an excess of HK$5,000 to cover all contents including decorations and stock in her boutique.

As her business had been earning profits steadily, she decided to renovate the boutique to attract more customers. After renovation, the value of her property in the boutique increased from HK$100,000 to HK$200,000.

Unfortunately, a vehicle accidentally crashed into her boutique. The new fixtures and fittings as well as new stock arrivals were damaged. Mrs. Lam immediately filed a claim with a loss amount totaling HK$30,000 with her insurance company. After evaluation of the loss, her insurance company applied the average clause to the claims adjustment as the value of the boutique at the time of loss was greater than the sum insured in her insurance.

In this situation, Mrs. Lam had to bear a ratable proportion of her loss according to the extent of under insurance.

As a result, including the HK$5,000 excess, Mrs. Lam had to bear a HK$20,000 (HK$5,000 + HK$15,000) reduction of her claim because her insurance company would only pay HK$10,000 for the loss.

In the case above, Mrs. Lam should have instructed her insurance company to increase the sum insured of her shop insurance immediately after the renovation. Average clause is commonly applied to commercial property insurance such as office insurance, shop insurance etc. This also applies to insurance on buildings. Average clause is applicable when the property and contents insured at the time of loss or damage is collectively of greater value than the sum insured. The insured person will be deemed to be the insurer to the extent of under insurance, bearing a ratable proportion of the loss.

Learn more about our insurance plans:
SME Protection Bundle
Office Insurance
Shop Insurance
Business Insurance

The main purpose for enrolling in medical insurance is to enjoy comprehensive medical protection and coverage, especially when you need to stay in hospital for further treatment. Medical insurance can help share the burden of hospitalisation expenses. Some people may misunderstand that as many hospitalisation expenses claims are covered in full, up to the maximum aggregate amount as stated in their policy, their own share of the surplus expenditure shall be limited even if they choose to stay in a hospital ward with daily room and board rates exceeding their cover limit. However, this may not be correct.

Ms. Kwok was admitted to hospital for minor surgery and stayed for one day. As Ms. Kwok had enrolled in a medical insurance plan, she decided to stay in a semi-private room at HK$2,500 per day instead of a ward at HK$1,800 per day to ensure a more comfortable environment for recuperation. Ms. Kwok then submitted a claim form for hospitalisation expenses to her insurer after being discharged from hospital. She expected that she could get back most of her hospitalisation expenses of HK$12,100. However, her insurance company only reimbursed HK$9,216 of her claim. Why couldn't Ms. Kwok get the full reimbursement she expected?

With regard to Ms. Kwok’s case, please refer to the chart below:

As Ms. Kwok upgraded from a ward to a semi-private room, the actual expenses of room and board exceeded the maximum limit stated in Ms. Kwok’s policy. At the same time, other related expenses went up according to the class of room she chose. According to the provision of Ms. Kwok’s medical insurance policy: “If an Insured Person is confined to hospital accommodation exceeding the Room & Board entitlement stated in the table of Benefits, the amount payable for Hospital Treatment & Services will be adjusted according to the following factor: (Daily rate of Room & Board entitlement) divided by (actual daily rate of Hospital accommodation incurred) times 100%.” i.e. (HK$1800/HK$2,500) x 100% = 72%, which means that apart from the expenses of Room & Board which can be covered to its original maximum limit, all other expenses will be compensated in the same proportion.

To avoid any disputes and ensure that hospitalisation expenses will not exceed their expectations, customers are advised to choose a suitable medical insurance plan that meets their desired level of accommodation and select an appropriate room that is fully covered under the “Room & Board” Benefits they are entitled to.

Learn more about our insurance plans:
CriticalCare 1.0
MediSure Plus
HospitalCare

Hospitalisation is never pleasant. But, a Hospitalisation Payment Guarantee can help to relieve much of your financial stress, even for a short-term stay.

A Hospitalisation Payment Guarantee is available to you with the MediSure Plus insurance policy, and is specially designed to help you relax during your stay. It couldn't be easier. Simply contact MSIG at least 3 days prior to your hospital admission, making sure all admission details provided by your doctor(s) are submitted to MSIG to avoid any delay of your payment guarantee.

If there is an emergency, please make sure you notify MSIG of your intention to apply for a Hospitalisation Payment Guarantee once you are admitted to the hospital – this allows MSIG and the hospital as much time as they need to process your application. By doing this, you avoid the burden of a cash or credit card settlement and then having to seek reimbursement, which can take up to 7 days.

Please make sure you or your client informs MSIG of any upcoming claims as soon as possible, especially with urgent or emergency cases, to allow your claim to be processed promptly.

Learn more about our insurance plans:
CriticalCare 1.0
MediSure Plus
HospitalCare

Nine people were injured after a tour boat crashed into London's Tower Bridge a few years ago. On the same day, New York subway riders were trapped in a smoke-filled train. A fire in a bus terminal and shopping complex in South Korea caused death and injuries. All these disasters occurred at popular travel destinations, which shows that there is always a certain amount of risk involved in travelling abroad and you never know when you may require emergency assistance due to an unexpected incident.

An unfortunate case concerns Mr and Mrs Hui, who went to the Philippines on a diving holiday. After diving, Mr Hui rose to the surface and started to feel sick. Eventually he became so ill that he died in the Philippines. Mr and Mrs Hui did not have any travel insurance but Mrs Hui remembered that Mr Hui’s medical insurance did provide emergency assistance service, so she phoned her insurance agent but discovered that, while her husband’s medical insurance did provide an emergency assistance hotline, it did not cover evacuation and repatriation. Mrs Hui ended up having to pay for this herself.

We understand that some people do not buy travel insurance for their overseas trips as they do not care about the trivial coverage such as “Travel Delay and Trip Cancellation”. Their major concerns, such as personal accident and medical cover are already covered by their personal insurance and medical insurance which provide worldwide cover.

However, most people may not be aware of their own insurance coverage. Some emergency assistance services under medical insurance only provide a 24-hour emergency assistance hotline service but not the evacuation or repatriation service. It is vital to have the evacuation or repatriation protection because, in the event of urgent medical needs, the emergency evacuation service could transfer the insured person to the nearest centre of medical excellence if the treatment the beneficiary needs is not available locally. Also, if the insured person unfortunately passes away while abroad, the repatriation of remains benefit will cover the costs associated with returning the insured body to the home country. It could safeguard your family’s financial stability even if the worst happens.

It is true that not all kinds of assistance services would provide the emergency evacuation and repatriation service. As evacuation and repatriation services involve high costs, for some basic plans, this service might be excluded from the policy. Therefore, customers should examine the details of their insurance policy and ensure it provides sufficient protection. If you require all-round protection for your trip, we highly recommend that you take out travel insurance after confirming your itinerary as travel insurance is specifically designed to provide protection for overseas trips.

At MSIG, we offer a wide range of products that fully cater to our clients’ needs. Customers can choose the right product for themselves, based on their needs. For example, in the tragic case of Mr Hui, if he had purchased our MediSure Plus – super plan or executive plan – Mrs Hui would not have been left in such a predicament.

Learn more about our insurance plans:
CriticalCare 1.0
MediSure Plus
HospitalCare