LOSS OF COMMISSION INSURANCE
The Club offers cover to ship brokers and ship managers against loss of their commission or management fee as a result of a marine peril.
Most companies, whether marine or non-marine, have some form of business interruption insurance and in many ways loss of commission is a similar type of insurance. If a broker is negotiating a period charterparty the loss of commission arising out of the total loss of a ship in the early days of such a charter can be very substantial. Unless you have purchased loss of commission insurance, that is money wasted. ITIC offers insurance in one of two forms:
(a) Loss of commission solely as a result of total or constructive total loss of a ship and;
(b) Loss of commission due to any marine peril (including total loss), engine breakdown, strike, or war risk affecting ship or cargo.
Loss of commission insurance is hardly new. It has been offered by the hull insurance market for a long time. However, the wording was often difficult to understand and interpret. ITIC can insure both a one-off S&P deal or all commissions earned by that broker in a year. You can therefore pay a premium from US$ 100 upwards depending on what costs you want covered.
The advantages of this cover compared to similar products are as follows:
- Individual fixtures need not be declared.
- Comprehensive and flexible cover.
- Competitive premium.
- Uncomplicated policy wordings.
We have had a number of substantial loss of commission claims recently. One was as the result of an earthquake while another arose from the constructive total loss of a ship waiting outside a port and the third concerned a fire on a container ship that meant that one year’s commission out of a five year time charter was lost whilst the ship was being repaired. All claims were paid in full.
If you would like more information please contact the Managers.