外　贸　英　语　函　电 Business English Correspondence

外　贸　英　语　函　电Business English Correspondence 主编　项伟峰

Content Structure Job Competency • Learning Goals Job task • Learning Task 1 Job task • Learning Task 2 Exercises • Module Assessment Summary • Module Conclusion

Module Eight Insurance 1 Learning Goals (Job competency) 2 Learning Task 1 3 Learning Task 2 4 Module Assessment 5 Module Conclusion

Learning Goals • Identify various risks, losses and expenses involved in international transport; • Identify coverage of ICC and CIC clauses; • Negotiate insurance terms in business letters.

Learning Task 1 Insurance Terms Section 1 Lead in Section 2 Business Compass Section 3 Simulation Workshop Section 4 Summary

Lead in Discussion: What are risks and what kind of risks will be involved in international business?

Keys • A risk can be defined as an unplanned event with financial consequences resulting in loss or reduced earnings. Companies doing business across international borders face many of the same risks as would normally be evident in strictly domestic transactions. For example, • Buyer insolvency (purchaser cannot pay); • Non-acceptance (buyer rejects goods as different from the agreed upon specifications); • Credit risk (allowing the buyer to take possession of goods prior to payment); • Regulatory risk (e.g., a change in rules that prevents the transaction); • Intervention (governmental action to prevent a transaction being completed); • Political risk (change in leadership interfering with transactions or prices); and • War, piracy and civil unrest or turmoil; • Natural catastrophes, freak weather and other uncontrollable and unpredictable events, • unfavorable exchange rate movements (and, the potential benefit of favorable movements)

1. Basic Concepts and Insurance Principles Basic Concepts: • Insurance: practice of sharing among many persons, risks of life or property that would otherwise be suffered by only a few. • The insurer: the party that provides the insurance service and makes compensation in case of loss. It can be the insurance company or underwriter. • The insured: the party who buys insurance. It can be either the exporter or importer depending on the incoterms adopted in transaction • The insurance policy: contract made between the insurer and the insured. • The insured amount: the amount of money the insurer agrees to cover the insured goods against loss. • The premium: the money paid to the insurer for the insurance service.

1. Basic Concepts and Insurance Principles Insurance Principles: • The insurable interest principle • The utmost good faith principle • The indemnity principle • The proximate principle • The subrogation principle • The share principle

2. Marine Risks, Losses and Expenses

3. ICC and CIC Clauses ICC Clauses: • Institute Cargo Clauses (A) – ICC (A) 协会货物条款(A) • Institute Cargo Clauses (B) – ICC (B) 协会货物条款(B) • Institute Cargo Clauses (C) – ICC (C) 协会货物条款(C) • Institute War Clauses – Cargo 协会战争险条款(货物) • Institute Strike Clauses – Cargo协会罢工险条款(货物) • Malicious Damage Clauses 恶意损害险条款勘误：请将P174第五行中的ICC C改为ICC Clauses:

3. ICC and CIC Clauses General additional Risks: • TPND (Theft, Pilferage and Non-delivery) 偷窃提货不着险 • Fresh Water Rain Damage 淡水雨淋险 • Risk of Shortage 短量险 • Risk of Intermixture and Contamination 混杂玷污险 • Risk of Leakage 渗漏险 • Risk of Clash and Breakage 碰损破碎险 • Risk of Odor 串味险 • Damage caused by Heating and Sweating 受热受潮险 • Hook Damage 勾损险 • Risk of Rust 生锈险 • Loss for Damage Caused by Breakage of Packing 包装破裂险

3. ICC and CIC Clauses Special Additional Risks: • War Risk 争险 • Strikes, Riots &Civil Commotions (S.R.C.C.)罢工暴动民变险 • Failure to Delivery Risk 交货不到险 • Import Duty Risk 进口关税险 • On Deck Risk 舱面风险 • Rejection Risk 拒收险 • Aflatoxin Risk 黄曲霉素险 • Fire risk extension clause for storage of cargo at destination Hong Kong, including Kowloon or Macao 出口货物到香港（包括九龙在内）或澳门在存仓火险责任扩张险

3. ICC and CIC Clauses Exclusions of CIC coverage: • Loss or damage caused by the intentional act or fault of the insured; • Loss or damage falling under the liability of the consignor; • Loss or damage arising from the inferior quality or shortage of the insured goods prior to the attachment of this insurance; • Loss or damage arising from normal loss, inherent vice or nature of the insured goods, loss of market and/or delay in transit and any expenses arising therefrom; • Loss or damage arising from risks and liabilities excluded by the ocean marine cargo war risks clauses and strike, riot and civil commotion clauses of C.I.C.

4. Insurance Terms Who, how much, what risk and which clauses Example 1 • Who: Insurance is to be covered by the sellers • How much: for 110% of invoice value • What risk: against Risk … and Risk…, etc. • Clause: as per Ocean Marine Cargo Clauses of the People’s Insurance Company of China dated 1998.1.1

4. Insurance Terms Who, how much, what risk and which clauses Example 2 • Who: insurance to be covered by the seller on behalf of the buyers • How much: for 110% of invoice value • What risk: against marine risks… • Clause: as per Institute Cargo Clause (A) dated Jan. 1, 1982 • Who pay: premium to be for buyer’s account

Simulation Workshop Study the insurance letter below carefully, and answer the following questions: Dear Sirs, We will cover insurance ourselves on 500 pieces of bicycles under Contract No. 1234. We usually effect insurance with the People’s Insurance Company of China against All Risks, as per Ocean Marine Cargo Clauses of the People’s Insurance Company of China, dated the 1st January, 1981. The additional insurance premium is for the buyer’s account. Yours faithfully, (Signature)

Simulation Workshop Questions: Who will arrange insurance according to this letter? What are the insured goods? What type of coverage will be covered? Who is the insurer? What insurance clauses is this insurance letter based on? By whom shall the extra premium be borne if there is need to cover additional insurance?

Keys 1. Who will arrange insurance according to this letter? The seller will arrange insurance according to this letter. 2. What are the insured goods? The insured goods are 500 pieces of bicycles under Contract No. 1234. 3. What type of coverage will be covered? All Risks 4. Who is the insurer? The people’s Insurance Company of China. 5.What insurance clauses is this insurance letter based on? This insurance letter is based on Ocean Marine Cargo Clauses of the People’s Insurance Company of China. 6. By whom shall the extra premium be borne if there is need to cover additional insurance? The additional insurance will be for the buyer’s account.

Summary This task mainly discusses various risks, losses and expenses involved in insurance, two mostly adopted insurance clauses—ICC and CIC, and insurance terms in a contract.

Learning Task 2 Insurance Arrangement and Effectuation Section 1 Lead in Section 2 Business Compass Section 3 Work Samples and Analysis Section 4 Core Phrases and Sentence Patterns Section 5 Simulation Workshop Section 6 Summary

Lead in Discussion: What insurance coverage of C.I.C. would you choose for the following products?

Keys Probably, you will give the following answers: • (1) (2), (3), (4) and (6) would probably be insured All Risks because they are prone to be damaged in transit. Most manufactured goods fall into this category. • (2) would be insured against All Risks or F.P.A.+T.P.N.D+Clash & Breakage, for it could be lost or prone to be damaged. • (4) would be insured against All Risks or W.A. +Intermixture & Contamination. • (5) would be insured against W.A.+Sweat & Heating+F.W.R.D, but it is less prone to damage than the finished products mentioned.

1. Insurance in trade terms • CIF or CIP contract: the exporter will effect insurance immediately after he has received the letter of credit from the buyer and before shipment is made or before the consignment is delivered to the carrier. • In the contracts under FOB, CFR, FCA and CPT trade terms, the buyer is to arrange insurance and pay premium.

2. Attention points in effecting insurance: • Whether the insurance coverage is under C.I.C. or I.C.C.? • What type of coverage is required, for example, F. P.A. or W. P. A.? • Whether the insured amount is 110% of the invoice amount or more than that? • Whether insurance is in effect before the date of shipment? • The currency of the insurance shall be the same as the invoice currency to avoid foreign exchange exposure.

3. Procedures of cargo insurance: • Step one: to calculate the insurance amount: Insurance amount = CIF (CIP) × (1+ markup rate) (Markup rate is normally 110%) • Step two: to determine the insurance coverage, under CIF or CIP, min. FPA • Step three: to obtain the insurance premium rate. (normally 0.5%-2.5%)

4. Insurance letters writing guide Insurance letters are usually about: • Asking for insurance arrangement. • Inquiring about insurance. • Replying to an insurance application. • Asking for extra insurance. • Clarification of insurance terms. • Confirmation of insurance

4. Insurance letters writing guide Key points in letters of insurance: • the contract number; • a brief description of the goods; • the insurer and the insured; • the insurance rate; • insurance coverage and clauses.

Letter 1 Dear Sirs, Re: Our order No.123 covering 500 cases of porcelains Reference is made to your letter of June 12th with regard to our order No.123500 cases of porcelains asking for the insurance to cover the export goods. It is understood that it is we who should take out insurance since the business is concluded on the basis of CFR. But as we are not familiar with the insurance business, and in addition, we think it is more convenient to cover the insurance on thesubject goods at your end. Therefore, we are

Letter 1 grateful to you if you cover insurance for the goods at your end on our behalf against all risks and breakage for 110% of the invoice value up to the port destination of London only. We shall of course refund to you the premium upon receipt of your debit note or, if you like, you may draw on us at sight for the amount required. We sincerely hope that our requirement will be meet with your approval. Since the matter is urgent, we would appreciate your early reply. Yours truly, (Signature)

Comments & Analysis Comments: In this letter the importer asks the exporter effect insurance on his behalf because of certain reasons. The proposal is quite reasonable and might be accepted by the exporter. Analysis: • Para.1 Identify the reference. • Para.2 Request the exporter to effect insurance and explain reasons. • Para.3 Suggest payment method of premiums. • Para.4 Expectation: ask for approval of the proposal.

Letter 2 Dear Sirs, Re: Order No. 452 We refer you to Order No. 452. Since the shipping date is approaching rapidly, we would like to deal with the insurance. Now we would like to advise you that we are preparing your order for shipment. And it is our usual practice to have the goods covered against All Risks and War Risk for 110% of the invoice amount. We are writing to you just in order to know whether youneed to cover more

Letter 2 risks for this cargo or not. We can meet the customer’s requirements on the condition that the extra premium should be borne by his side. It should be pointed out that the insurance shall be limited to sixty days upon discharge of the insured goods from the seagoing vessel at the final point of discharge. Your early confirmation of the above will be much appreciated. Yours faithfully, (Signature)

Comments & Analysis Comments: In this letter the exporter wants to know more about insurance and get confirmation. Analysis: • Para 1. Identify the reference and state the purpose. • Para 2 Inform the other side of the risks covered and extent of liability. • Para 3 State validity period of insurance. • Para.4 Expectation: ask for confirmation.

Letter 3 Dear Sirs, We will be sending a consignment of 2,000 TV sets to ABC Co. Ltd, London, UK. The goods are to be loaded on the carrying vessel “West Wind” which is scheduled to sail from Shenzhen on July 12th and due to arrive at the port of destination on July 28th. All the documents and details with regard to packing and values are attached. We would like to have your most favorable premium rate for this shipment. And we also wish to know

Letter 3 whether you can issue a special rate in return for the promise of regular monthly shipments. It would be appreciated that if you would quote us the premium rate covering risks from port to port. We are very grateful to you if you can reply to us ASAP since the shipping date is approaching fast. Yours truly, (Signature)

Comments & Analysis Comments: In this letter the exporter writes to the insurance company to inquire about the premium rate. Analysis: • Para.1 State the shipment details. • Para.2 Enquire about insurance rate. • Para.3 Expect an early reply.

Letter 4 Dear Sirs, Thank you for your letter of July 28th inquiring about risks and coverage and the insurance rate for your shipment. In your letter your insured amount is USD 10,000 and payment by letter of credit. Therefore we would suggest having your goods covered

Letter 4 against WPA and TPND for which we can quote 0. 015%. We will issue you a cover note as soon as you complete and return the enclosed declaration form. Yours sincerely, (Signature)

Comments & Analysis Comments: In this letter the insurance underwriter replies to the applicant and provides details about this insurance. Analysis: • Para.1 Reply to an insurance inquiry and identify the reference. • Para.2 Suggest the insurance coverage and quote the insurance rate. • Para.3 State the time to issue a cover note.

Section 4 Core Phrases and Sentence Patterns 1. arrange/cover/take out/effect insurance 办理保险 Arrange/cover/take out/effect cover insurance on the goods为货物办理保险　 2. insure/cover…(risk) 投保…(险)； insure/cover…(commodity) 为…..投保; insure/cover…(commodity) against…(risk) with…(insurance company) for…(amount/value) at….(premium rate) 向……保险公司投保…...险别, 金额为……保险费率为……。

Section 4 Core Phrases and Sentence Patterns Insurance/insure后接介词的用法： • 表示所保的货物，后接on，如 insurance on the 100 tons of wool • 表示投保的险别，后接against，如 insurance against All Risks • 表示保额，后接for，如 insurance for 110% of the invoice value • 表示保险费或保险费率，后接at，如 insurance at the rate of 5% • 表示向哪家保险公司投保，后接with，如 insurance with the PICC

外　贸　英　语　函　电 Business English Correspondence