THE CHARTERED INSURANCE INSTITUTE. Read the instructions on page 3 carefully before answering any questions.

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1 THE CHARTERED INSURANCE INSTITUTE P90 Diploma in Insurance Unit P90 Cargo and goods in transit insurances October 2016 examination Instructions Three hours are allowed for this paper. Do not begin writing until the invigilator instructs you to. Read the instructions on page 3 carefully before answering any questions. Provide the information requested on the answer book and form B. You are allowed to write on the inside pages of this question paper, but you must NOT write your name, candidate number, PIN or any other identification anywhere on this question paper. The answer book and this question paper must both be handed in personally by you to the invigilator before you leave the examination room. Failure to comply with this regulation will result in your paper not being marked and you may be prevented from entering this examination in the future. 6162

2 The Chartered Insurance Institute

3 Unit P90 Cargo and goods in transit insurances Instructions to candidates Read the instructions below before answering any questions Three hours are allowed for this paper which carries a total of 200 marks, as follows: Part I 14 compulsory questions 140 marks Part II 2 questions selected from 3 60 marks You should answer all questions in Part I and two out of the three questions in Part II. You are advised to spend no more than two hours on Part I. Read carefully all questions and information provided before starting to answer. Your answer will be marked strictly in accordance with the question set. The number of marks allocated to each question part is given next to the question and you should spend your time in accordance with that allocation. You may find it helpful in some places to make rough notes in the answer booklet. If you do this, you should cross through these notes before you hand in the booklet. It is important to show each step in any calculation, even if you have used a calculator. If you bring a calculator into the examination room, it must be a silent, battery or solar powered non programmable calculator. The use of electronic equipment capable of being programmed to hold alphabetic or numerical data and/or formulae is prohibited. You may use a financial or scientific calculator, provided it meets these requirements. Answer each question on a new page. If a question has more than one part, leave six lines blank after each part PTO

4 PART I Answer ALL questions in Part I Note form is acceptable where this conveys all the necessary information 1. (a) List the main manufacturing countries of clothing outside Europe. (6) (b) List eight main producing countries of sugar cane. (8) 2. State the insurable interests which fall within a marine adventure as defined by Section 3.2 of the Marine Insurance Act (9) 3. Describe briefly the roles of the seller, freight forwarder, haulage contractor, stevedores and shipowner in the delivery of goods from a seller in the United Kingdom to a buyer overseas. (12) 4. (a) Outline the purpose of Incoterms. (2) (b) State the current edition of Incoterms and the date on which they came into force. (2) (c) Identify the two categories of Incoterms. (2) 5. A consignment of coffee beans, sold on Cost Insurance & Freight terms, is en route by sea when it is sold by the first buyer to another buyer together with the original insurance. However, the ship had sunk before the transaction could be completed and the cargo insurers are refusing the claim from the second buyer. The insurers argue that the loss had already taken place before the sale was completed meaning there was nothing for the second buyer to insure that the second buyer had no insurable interest, and that the insurers have no contractual relationship with the second buyer. Explain whether the cargo insurers must pay the claim or are correct in rejecting it. (10)

5 6. Identify three products that are made from sulphur. (6) 7. (a) Identify the parties responsible for paying freight under the following Incoterms: (i) Cost Insurance & Freight (CIF). (1) (ii) Free on board (FOB). (1) (iii) Cost & Freight (CFR). (1) (iv) Delivery Duty Paid (DDP). (1) (b) Identify six Incoterms that may be used for carriage of goods by land. (6) 8. (a) Identify the four International conventions covering the carriage of goods from the UK to other countries by: (i) (ii) (iii) (iv) road; rail; sea; air. (1) (1) (1) (1) (b) State for each of part (a) above, the Acts, including dates, which introduced these International conventions into UK law. (8) 9. List ten members of the International Association of Classification Societies (IACS). (10) QUESTIONS CONTINUE OVER THE PAGE PTO

6 10. AXZ, a haulage contractor, has agreed to carry goods from a UK city to the Republic of Ireland, but did not specify any conditions of carriage. These goods are destroyed in an accident which was not the fault of its driver. AXZ claims it carried the goods under either the CMR Convention, or under the Road Haulage Association (RHA) conditions of carriage, if CMR could not be applied. State whether AXZ are correct in their claim that either CMR Convention or RHA conditions of carriage would apply and explain their legal liability for the goods. (14) 11. (a) Describe briefly how a freight forwarder must exercise its duties under British International Freight Association s (BIFA) standard terms of business. (4) (b) State the standard levels of compensation a freight forwarder must pay under BIFA terms if liable for loss or damage involving goods. (2) (c) State the legal regime that will apply if a BIFA freight forwarder acts as non vessel owning carrier for goods by sea and the level of compensation that may be payable. (4) 12. Explain briefly the activities of a freight forwarder when acting as a through transport operator (TTO). (6) 13. Describe the Removal of Debris Clause and how it operates. (7) 14. A shipowner declares general average, following the jettisoning of some of its cargo at sea. The value of the vessel was 75 million, whilst the total value of the cargo was 150 million. The value of the jettisoned cargo was 30 million. Calculate, showing all your workings, the general average contributions to be made by the following cargo owners: Cargo A value: 2 million Cargo B value: 4 million Cargo C value: 5 million (14)

7 Part II questions can be found on pages 8 and PTO

8 PART II Answer TWO of the following THREE questions Each question is worth 30 marks 15. You are an insurance broker for Potatoes and Fries Ltd, a company which imports potatoes from a Mediterranean island to the UK, peels and cuts them into uncooked fries, packages them and sends them out to customers in the UK and Europe. The company prefers to cover these activities under a stockthroughput policy. Describe to Potatoes and Fries Ltd: (a) the way in which stockthroughput cover operates; (8) (b) the risks that stockthroughput will cover; (5) (c) how the risks are incorporated into this type of policy; (9) (d) how the premium for all the risks is constructed. (8) 16. Goods sent to a buyer in the Far East were lost when the ship sank. The ship was deemed unseaworthy when she sailed. Prior to the goods being loaded aboard the vessel the seller had learnt that the ship s owners were in severe financial difficulties, as a consequence of which essential maintenance had not been carried out on the ship s propulsion machinery. Nevertheless the seller still allowed the goods to be loaded. During the sea voyage the ship s machinery failed in heavy seas. Unable to propel herself, the ship was overwhelmed by the sea and sank. In the light of the circumstances of this loss, insurers refuse to pay the claim for the lost cargo. (a) (b) Explain the parts, of the Institute Cargo Clauses (A) 1/1/09 on which the insurer will seek to rely in rejecting the claim. (26) Identify the party who will make the claim and state, with reasons, whether you agree or disagree with the cargo insurer s rejection of the claim. (4)

9 17. Place2Place Carriers Ltd (P2P) has contracts to carry goods from the UK to Cologne, Germany and Budapest, Hungary. Part of the load includes a printing press which, it is agreed, can be carried unsheeted, as it is the middle of summer and rain is not expected. The rest of the load consists of machinery bound for Budapest. During the course of the journey to Germany, P2P agree to an additional carriage of goods from Cologne to Stuttgart, Germany under CMR terms. Two incidents occur en route, giving rise to claims for loss or damage to the goods. Shortly after crossing into Germany an unexpected storm, accompanied by heavy rain, causes damage to the printing press. Then, in the journey from Cologne to Stuttgart, P2P s vehicle is involved in a head on collision with another vehicle which had veered across the centre of a dual carriageway, without warning, destroying the vehicle and the goods on board. (a) Explain the legal regime that will apply to the carriage of all the goods on the vehicle and why that particular regime applies. (12) (b) State the period during which P2P is liable for the goods. (2) (c) Explain, with reasons, any defences that P2P may have should any of the owners of the goods seek compensation for loss or damage of their goods. (16)

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