SOP Library
SOP NO:
FS-IM02
(List of Exhibits/Attachments)
Missi
on
:
Finance and Administration
Area:
Financial Services (FS)
Activity:
Insurance Management (FS-IM)
Title:
SOP on Marine Insurance System
Date Approved/Issued:
07/06/1999
Date Effective:
07/06/1999
Digest:
I. TERMS OF REFERENCE
A. Rationale
B. Objective
C. Scope
D. Basis
II. IMPLEMENTING GUIDELINES
A.
Insurance Coverage
1.
NFA stocks transfers/shipments shall be covered under an open
marine insurance
policy with a maximum automatic insurance liability limit to be determined separately for inter-island transfers and importations/exportations from time to time as the need arises. The maximum current liability limit are as follows :
Type of Shipment Liability Limit
Inter-Island transfers P 50 million
Importation/exportation 200 M for rice
250 M for corn
An open
marine insurance
policy refers to an automatic insurance coverage for all transfers/shipments of NFA commodities from the warehouse of origin to the final warehouse of destination (for importation) or from one port to another (for local shipments) through any form of conveyance whether by air or by sea with a value not exceeding the maximum insurance liability limit. Any amount in excess of the maximum insurance liability limit shall only be covered upon declaration made prior to actual shipment.
2.
The open
marine insurance
coverage for all NFA stock transfers/shipments shall be contracted with the Government Service and Insurance System (GSIS) by the Administrator in behalf of NFA. All terms, clauses and conditions stated in the insurance policy shall be strictly followed unless both parties, NFA and the GSIS, agree to amend or to alter such terms, clauses and conditions.
3.
The Insurance, Billing and Collection Division (IBCD) of the Special Project Office (SPO) shall be responsible for securing
marine insurance
coverage for all NFA commodity transfers/shipments whether by sea or air cargo based on a
Bi-monthly Summary Schedule of Shipments
(Exhibit I) prepared by the Department for Marketing Operations - Operating Coordination Division (DMO-OCD) (for local shipments) and based on the memo request of DMO-Foreign Operations Division (DMO-FOD) (for imported cereals).
4.
For local shipment, DMO-OCD shall prepare and submit a letter of request for marine insurance coverage together with the Bi-monthly Summary Schedule of Shipments to the SPO-IBCD which the latter shall submit to GSIS on the Monday of the week following the two-week shipment period. The individual value per shipment shall not exceed the automatic insurance liability limit.
For importation/exportation, DMO-FOD shall notify SPO of the shipment within five (5) working days upon acceptance of the vessel nomination, containing all the following pertinent information regarding the intended shipment:
For Local Shipments
a)
Bill of Lading Number
b)
Variety/quantity/value of commodity
c)
Origin and destination
d)
Name of carrying vessel/barge/tugboat
e)
Estimated time of departure and arrival
For Importation/Exportation
a)
Supplier
b)
Commodity/Quantity (bags and kilograms)
c)
Value of shipment
d)
Origin and destination
e)
Estimated time of departure and arrival
f)
Name of carrying vessel/flag
g)
Age of vessel/year built
h)
Registry classification of vessel
5.
For inter-island transfer of commodities, it shall be the responsibility of the field office (P.O./R.O.) Marketing Operations Group to assure that all pertinent information regarding the transfer of commodities are furnished to DMO, copy furnished SPO, thru the fastest available means at
least three (3) days before any shipment is effected
. However, all wires on commodity shipments whose value exceed the maximum insurance liability limit and whose ETD falls on Saturday/Sunday/Holiday, must reach DMO-OCD cc: SPO-IBCD not later than 12:00 o'clock noon on Friday or on the working day before the holiday. SPO shall then declare the said shipment to GSIS immediately and before actual departure and sailing of the vessel from the origin/loadport.
6.
For insurance purposes, the value of the local commodities to be shipped shall be declared based on its
book value
. For importation, the value to be declared shall always be based on the commercial invoice of the commodities. For this purpose, dollar value of imported/exported commodities shall be converted to its peso value using the prevailing BAP (Bankers Association of the Philippines) exchange rate on the day of coverage as verified by SPO-IBCD.
7.
Any material changes in the circumstances related to the shipment of commodities must be relayed to DMO-OCD/FOD and then to SPO-IBCD immediately for re-insurance purposes.
8.
The disbursement voucher for the premium payment of the insurance coverage shall be prepared by SPO-IBCD upon receipt of the endorsement/risk note from the GSIS as proof of
marine insurance
coverage for the shipments declared to GSIS and the insurance premium billings. The disbursement voucher shall be processed thru the usual voucher processing system. To facilitate processing and payment, the disbursement voucher must be supported by the following documents :
For Local Shipment/transhipment
a)
Letter of request for insurance coverage
b)
Summary schedule of local shipments containing
the following:
Vessel name
Origin
Destination
BL number
ETD/ETA
Variety
Quantity
Value
c)
Copy of wires re: advice of shipment
d)
Computation sheet re: insurance premium due
e)
Risk note
f)
Premium billings of GSIS
For Importation
a)
Commercial Invoice
b)
Bill of Lading
c)
Premium Billing from GSIS
d)
Risk Note
e)
Computation Sheet
B
.
Claims for Damages/Losses
1.
The disport/destination province shall be primarily responsible for informing IBCD-SPO cc: DMO-OCD/FOD and the source province of the losses/damages on the commodities/MTS
within 24 hours
upon discovery during unloading at the port. For losses/damages discovered upon arrival at the destination warehouse, it shall be determined whether the losses suffered occurred during hauling or the losses originated from the vessel (undetected at the port).
Likewise, the vessel agent (for foreign shipment) and vessel owner (for local shipment) and all parties concerned must be informed by the disport province of the loss/damage immediately upon discovery.
The notice of loss/damage shall include the following information:
a)
Estimated volume and value of lost/damaged commodities
b)
Estimated cause/nature of
damage/loss
(indicate whether by rain or sea water, oil, jettison, etc.)
c)
Date and place of occurrence
d)
Name of carrying vessel
e)
Type of commodity
2.
The destination province shall be responsible for filing the written provisionary claim with the vessel owner and/or shipping agent, Stevedoring Contractor, Trucking Contractor and the Customs Arrastre Contractor, as the case may be,
within 24 hours
upon identification of
damage/loss
. The provisionary claim executed by the NFA Field Office shall be acknowledged by the owner of the vessel or Manager or their authorized representative.
A Sea Protest shall be secured from the vessel captain in case of loss/damage due to extraordinary perils of the sea by the following:
For stocks that were For stocks that were
received by the not received by the
Destination Province Destination Province
For local shipments Destination Province
Province of Origin
For Importation Destination DMO/FOD
Province
The Sea Protest shall be executed by the vessel captain within 24 hours upon arrival at the port of distress.
Further, a weather report, casualty report from the coast guard may be secured to support the allegation of the captain.
3.
The SPO-IBCD upon receipt of notice of loss/damage from the concerned field office shall immediately file a provisional claim letter with GSIS. The provisional claim letter shall specifically state the following information necessary to facilitate investigation by the insurance adjusters:
a)
Estimated volume/value of loss/damage
b)
Estimated cause/nature of
damage/loss
c)
Date and place of occurrence
d)
Type of commodity
e)
Name of carrying vessel and date of arrival
f)
Policy/Risk/Endorsement Note number of insurance covering the lost/damaged commodity shipped, if available or if not yet available, date of marine cargo declaration (Date of receipt of letter request for insurance coverage).
4.
A formal claim (Annex D) letter shall be filed by the Contracting Province (for local shipments) or by DMO-FOD (for importation/ exportation) with the vessel master or Shipping agent immediately upon receipt of the following information :
a)
Actual volume/value of
damage/loss
b)
Cause/nature of
damage/loss
c)
Date and place of occurrence
d)
Type of commodity
e)
Name of carrying vessel
f)
Date of vessel arrival
In case the vessel owner or agent refuses to receive the formal claim a copy of the formal claim shall be tendered. The person who served the formal claim shall execute an affidavit regarding the circumstances surrounding the serving of the formal claim.
Freight claims by the Shipping Company (particularly for local shipments) equivalent to the estimated amount of loss shall be withheld until liability for the lost/damaged commodities is established in coordination with the GSIS adjuster. However, SPO may recommend the full or partial release of freight claims to the Shipping Company on a case to case basis depending on its initial findings as regard to the liability for the
damage/loss
suffered.
5.
In cases where other contractors (e.g. Customs Arrastre Contractor, Stevedoring Contractor, Trucking Company) may be held liable for the
damage/loss
suffered on commodity importation/exportation, the destination province shall send formal letter claims to concerned contractors specifically stating information as provided in paragraph B.4.
6.
The concerned provincial office shall furnish DMO-OCD/FOD and IBCD-SPO with copies of the provisional and formal claims sent to the Shipping Company, Customs Arrastre Contractor, Stevedoring Contractor, or Trucking Company, as the case may be, including their replies thereto, if any.
7.
The Provincial Office concerned shall furnish SPO-IBCD with the pertinent data/documents on the
damage/loss
suffered within three (3) months from the time of occurrence or discovery to facilitate the filing of a
formal insurance claim
(Annex D) with the GSIS. The required data/documents shall be as follows :
a)
Bill of Lading
b)
Marine Protest filed by the Vessel Master
(for losses arising from heavy weather or "force majeure")
c)
Pictures of damaged commodities
d)
Laboratory Analysis Report/Damaged Stock Report
e)
Proof of Loss
f)
Delivery Way Bill/WSR/WSI/ESR/ESI
g)
Copies of the provisional and formal letter claims filed against the Shipping Company, Customs Arrastre Contractors, Stevedoring Contractors or Trucking Contractors and their replies thereto, if any. The claims filed must be acknowledged received by the addressee.
h)
Bad order certificate from arrastre services
i)
AI issued to GSIS assigned adjuster
j)
Proof of Disposal/Sale of Salvage (OR issued to GSIS assigned adjuster)
If Issued for burning/dumping
a)
Pictures of burnt stocks
b)
AI/WSI
c)
Disposition report
The PM shall be liable for negligence for failure to submit the complete documents within the prescribed period and sanctions shall be imposed accordingly.
8.
For damaged/lost commodities on importation/exportation, DMO-FOD shall furnish SPO-IBCD with certified true/xerox copies of the Bill of Lading and the supplier's invoice of whole shipment insured and formal claim filed against supplier/vessel owner/agent. Said documents shall be included as supporting documents for the filing of formal claims with the GSIS.
9.
All required documents as provided in paragraph B.7 and B.8 must be submitted to SPO-IBCD in three (3) copies. All must be certified true copies.
10.
SPO shall prepare the formal claim with final computation and shall consolidate the required data/documents for submission to GSIS. For this purpose, SPO-IBCD shall accomplish the GSIS insurance claim bill form and same shall be filled with the GSIS together with the NFA billing, certified true/xerox copy of the Marine Cargo Policy Cover Note/Risk Note/Endorsement Note and all the required supporting documents as provided in paragraph B.7 and B.8. Filing of the formal insurance claim shall be made immediately upon receipt/consolidation of all the required data/documents.
IBCD-SPO shall furnish DAS-CIAD a copy of the insurance claim bills and supporting documents for record purposes.
11.
The total insurance claims on marine damaged commodities shall be computed by SPO based on the declared value of the commodities upon shipment as covered by the
marine insurance
less salvage proceeds, if any. In computing for the amount of insurance claim, the following formula may be used :
Value of damaged commodities = (damaged quantity x
unit cost)
To derive the unit cost:
Unit Cost = (insured value/insured quantity)
In case of total loss, total insurance claims against GSIS shall include total insured value of the commodities plus all other incidental expenses incurred in the unloading and warehousing of the damaged commodities, if any. All marine damaged commodities shall be turned-over to GSIS after segregation from the good stocks.
12.
SPO-IBCD shall have the sole responsibility of transacting with GSIS concerning all insurance claims filed to facilitate early settlement of the same.
13.
For Local Shipment - If the Vessel Owner/Stevedoring Contractor/Trucking Company acknowledges the
damage/loss
as their liability, notice or certification shall be sent to SPO-IBCD by the concerned provincial office. The freight payable to the shipping company shall be applied to the loss/damage. Should the loss/damage be greater than the freight due, the difference shall be charged against the insurance. Should the loss/damage be equal or less than the freight due, the claim shall be waived. In either case, the concerned province shall advise SPO of such offsetting for its appropriate action.
For Importation - If the vessel owner/agent acknowledges the
damage/loss
as his liability, notice or certification shall be sent to DMO/FOD by the disport province. DMO/FOD then recommends to SPO the waiver of claim with GSIS or the billing of the net amount due as the case maybe. SPO in turn informs GSIS of such waiver or prepares the bill for the net loss sustained.
14.
Denied insurance claims involving legal matters shall be endorsed to the Department for Legal Affairs (DLA) by SPO-IBCD for appropriate legal actions. If denial on such insurance claims is found to have legal grounds, a write-off of the insurance claims shall be effected. Copies of the documents shall be endorsed by DLA to DAS-CIAD to take-up the write-off in the books, copy furnished SPO and DMO.
C
.
Disposition of Marine Damaged Stocks/MTS
For the disposition of marine damaged stocks/MTS, please refer to the SOP on the Disposition of Marine Damaged Stocks Covered by GSIS
Marine Insurance
Policy per SOP No. GM-DS04 issued and made effective January 7, 1997 and its Amendment/addenda issued thereto.
D.
Monitoring and Internal Control
1.
Two
Insurance Registry Books
(Exhibit 2), one for domestic shipments and one for importation/exportation, shall be maintained by SPO-IBCD where all
marine insurance
covers as well as adjustments or cancellations on issued insurance policies are recorded. Insurance claims filed with GSIS shall also be recorded in the registry book.
2.
SPO-IBCD shall reconcile every month all
marine insurance
coverage taken vis-a-vis the shipments made by provincial offices per
Schedule of Shipment Sent-Out
(Exhibit 3). Likewise, SPO-IBCD shall also reconcile every month all insurance claims filed on marine damaged/lost stocks/MTS with the shipments received by provincial offices per the
Schedule of Shipments Received
(Exhibit 4). For this purpose the DMO-OCD shall submit to SPO-IBCD a list of all actual dispersal by sea every first week of the succeeding month indicating therein the status of the shipment.
3.
SPO-IBCD shall see to it that all shipments, whether for domestic transfers or for importation/exportation, are covered by insurance and that all marine
damage/loss
sustained are indemnified. In this regard, IBCD-SPO shall be responsible for monitoring and coordinating with DMO-OCD/FOD and provincial office for the timely submission of required data, documents and reports for the purpose of securing insurance coverage and/or filing of insurance claims.
E.
Accounting Treatment
1.
Marine Insurance
(imported stocks) shall be accrued at the disport office at 0.34% of contract price. A separate HOA advice shall be prepared for this purpose.
Marine Insurance
for local shipment shall be based on the declared value of merchandise (e.g. Cereal = .528%, MTS = .264% General Merchandise = .6925% and sugar = .382%).
2.
Any variance incurred from the accrual of
Marine Insurance
against payment shall be absorbed by the Central Office and the variance shall be charged to Transfer Cost Variance Account II - (TCV - II).
3.
Marine damaged commodities shall be physically reclassified from the good ones for the purpose of identification only. The value of marine damaged commodities shall remain the same as far as the books are concerned.
4.
In reporting collection of claims receivable from insurance company, the DTBFM-Cash Division should indicate in the NFA Official Receipt (O.R.) the NFA bill Number and all the details of the particular insurance claims collected together with supporting documents, if possible, for proper matching against claims receivable previously set-up in the books.
5.
Journal Entries to take up insurance transactions in the books :
a)
To set up accruals on
Marine Insurance
:
F.O. Books (Disport Province)
DR : Inventory Items for Sale xxx
DR/CR : Inventory Cost-Marine
Insurance (Contract
Price x 0.34%) xxx xxx
CR: HOA xxx
Central Office Books
Responding entry to set-up the accruals on
marine insurance
CR: FOA (xxx)
CR: Accrued Expense Payable xxx
To record payment of
Marine Insurance
DR: Operating Expense-TCV II/
Retained Earnings xxx
DR: Accrued Expense Payable xxx
DR/CR: Vouchers Payable xxx xxx
CR: Cash in Bank xxx
b)
To record the receipt of damaged stocks/MTS based on WSR:
Field Office Books:
DR: Misc. Invty - Damaged Stocks xxx
CR: Inventory in Transit xxx
To record the withdrawal of stocks by GSIS per WSI:
CR: HOA (xxx)
CR: Misc. Invty - Damaged Stocks xxx
Central Office Books
Upon Billing
DR: Miscellaneous Receivable - GSIS xxx
CR: FOA xxx
c)
To record collection of insurance claims filed for damages/losses sustained based on O.R.:
DR: Cash with Collecting Officer xxx
CR: FOA (adj. between amt. of
or (CR) receivable previously set-up
& actual amount of collection) xxx or
(xxx)
CR: Misc. Receivable- GSIS xxx
All rulings and/or issuances inconsistent herewith are hereby superseded.
III. RESPONSIBILITIES
IV. FLOW CHART
Top Page
EXHIBITS
Schedule of Shipment Sent-Out
Bi-Monthly Summary Schedule
of Inter-Island Shipments
Insurance Registry Book
Schedule of Shipments Received
Formal Insurance Claim - Marine Insurance