Insurance Claims Systems (ICS)
We understand the importance of Insurance and Claims for the marine shipping industry with vessels transporting cargo for different charterers to different parts of the world.
ICS is a web-based platform that enables better claims reporting, and a simpler and faster closing process by integrating the claim information between insurance and accounting. It is capable of handling all possible kinds of insurance namely P&I (Protection & Indemnity) and H&M (Hull and Machinery).
Role and Need of Insurance in Marine Shipping
In simple terms the word Insurance means “Protection against future loss”. Insurance is very important in marine shipping industry because through marine insurance, ship owners and transporters can be sure of claiming damages especially considering the mode of transportation used. Of the four modes of transport – Road, Rail, Air and Water – it is the latter most which causes a lot of worry to the transporters not only because there are natural occurrences which have the potential to harm the cargo and the vessel but also other incidents and attributes which could cause a huge loss in the financial casket of the transporter and the shipping corporation.
Incidents like piracy and possibilities like cross-border shoot-outs also pose a major threat when it comes to water transportation and therefore in order to avoid any loss because of such events and happenings, in the interest of the corporation and the transporter, it is always beneficial to have a back-up like a marine insurance.
What is ICS (Insurance Claims System)
For a marine shipping company with vessels transporting cargo for different charterers to different parts of the world it’s very important to record and effectively manage the insurance claims. Traditionally the claims are maintained in spreadsheets in some stand-alone systems by the insurance department and the claim balances are maintained in a similar manner by the accounting guys of a marine shipping company. Such arrangement makes the process of reconciliation of outstanding claim amounts between insurance and accounting department completely manual, which delays the accruals and closing process and it is impossible to generate any accurate reports.
ICS is a web-based platform that integrates the claim information between insurance and accounting which provides better claims reporting and makes the closing process faster. This system generates a unique claim number for each claim recorded, which is used organization wide to refer to the claim. This system also interfaces with the Accounting System to pass the accounting entries related to the claim directly and it keeps the accruals/provisions up-to-date.
How ICS helps the Vessel Owners (Features of ICS)
Class I - Protection & Indemnity (P&I)
This is general liability insurance, which would cover ship owners' liability for main exposures they may face in today's shipping, including, but not limited to
- Passenger (and other persons carried on board) liability
- Stowaways and refugees
- Collision and contact with fixed or floating objects
- Wreck removal
- General Average not recoverable under Hull policy
Class II - Freight, Demurrage & Defence (FD&D)
This insurance is covering ship owners' reasonable costs for necessary legal assistance in relation to disputes, which are directly connected with the operation of the insured vessel. It goes without saying that you do not need to be liable to be held liable, so FD&D cover is becoming more and more popular within shipping community these days.
Hull & Machinery (H&M)
This is very basic of marine hull. Skeleton, if we may say so. This policy will cover your vessel, including hull, machinery, gear and equipment against loss or damage.
As the name suggests this group of insurance covers all other liabilities that fall outside the ambit of the above categories. This might include Disbursements, Freight, Increased Value (IV), Loss of Hire (LOH), Mortgagees' Interest Insurance (MII), and Builders’ Risks.
- When a claim is created ICS calculates the outstanding amount, liability, recoverable amount and other details about depending on the type and sub-type of the claim.
- ICS is capable of interfacing with the financial system being used by the accounting department. So whenever any claims are created or updated it automatically sends the details to the financial system. Hence the insurance and accounting departments are always in sync regarding the claim’s status.
- ICS has the provision for generating different reports