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Dear Experts ,

How can the applicant claim the insurance amount when the insurance document states assured as ''Issuing bank/to the order of issuing bank''. Practically,we often see that the bill of lading states consignee as ''issuing bank'' intention was that issuing bank wants to take control over goods.Issuing bank will arrange applicant to take goods once the payment is settled /necessary indemnity is taken. If it is ''to the order of the issuing bank'' simply issuing bank will endorse it further on the name of the applicant

when there is no such terms negotiable on the insurance document, what is the reason being the LC calls for insurance document issued in favour of issuing bank/to the order of issuing bank

Regards,
Dinesh

Hi Dinesh,

There is a wrong practice prevailing in the trade finance industry related to insurance document. Banks are considering or treating the insurance documents on par with the negotiable instrument which is not supposed to do so. Please note it is assignable documents. Here the claims are assigned to the end user through the endorsement where the policy is not issued in the name of the person who should be listed as insured party. Please be noted here the goods are not transferred as in bill of lading. Hence the word : To order or To order of (name of the entity should not appear on the insurance documents. I beg all the issuing banks and applicants should refrain from requiring the insurance document To order or To order of issuing bank in LC which calls for insurance document. They should call for the insurance document as "Issued in favor" of or "issued to" and in assignable form instead of endorsement to the order or like words.

Regards
Mani

Dear Mani,

Excellent. So if the insurance document states ''in favour of issuing bank'', then the issuing bank may endorse/assign the right to claim the value to the applicant by stating ''ENDORSED IN FAVOUR OF APPLICANT NAME(XXXX) or just blank endorsement.

I am little bit confused about how the issuing bank will in turn assign the rights to applicant. Since applicant is ultimate person responsible for the claim, he should have the assignable insurance document with him incase of claim.

Please correct me if am wrong.

Regards
Dinesh

Dear All
I have a question regarding Insurance policy that it has alteration and even a correction stamp is used by the Insurance Company but there is a clause in policy that any alteration in policy will make it invalid will issuing bank take it as a discrepancy or not