Uncategorized INSURANCE DOCUMENT ISSUED TO ORDER OF ISSUING BANK By Mr Old Man Posted on June 19, 2012 7 min read 5 0 4,587 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Dear Mr Old Man, I have an issue that needs your comment. LC requires insurance policy/policy schedule to order of Bank I (issuing bank). Is it acceptable if beneficary presents policy schedule as follows: – The insured: name of beneficiary– The interested party: to order of Bank I. I don’t accept this document. According to me, the insured in policy schedule must be to order of bank I. Your prompt reply will be highly appreciated. Thanks and best regards,Phương Anh—————– ANSWER Dear Phuong Anh, You are correct. The insurance document must be issued to order of Bank I to comply with the L/C requirement. The adddition of “The interested party: To order of Bank I” does not changed the fact that the assured party is stated to be the beneficiary. My opinion is based on ICC Opinion TA688rev (see attachment). Best regards,Mr. Old Man Attachment: Whether insurance documents should or should not indicate or be required to indicate the assured as "To Order" or "To Bearer". Official Opinion TA688rev – Unpublished UCP 600From UCP600 – ISBP 681 paragraph 179QUERY We have recently come up with cases related to insurance documents where some banks required endorsements but the others did not. We would therefore appreciate an ICC official opinion..Case 1 where the L/C required insurance document blank endorsedThe presented insurance policy without endorsement showed:Assured: To bearerOur opinion: This is acceptable according to ISBP Paragraph 179..Case 2 where the L/C required insurance document blank endorsedThe presented insurance policy without endorsement showed:Assured: ABC Exporting Co LtdTo bearerOur opinion: This is acceptable according to ISBP Paragraph 179..Case 3 where the L/C required insurance document blank endorsedThe presented insurance policy without endorsement showed:Assured: To orderOur opinion: This is acceptable because "to order" is, in effect, the same as "to bearer"..Case 4 where the L/C required insurance document blank endorsedThe presented insurance policy without endorsement showed:Assured: ABC Exporting Co LtdTo orderOur opinion: This is acceptable because "to order" is, in effect, the same as "to bearer"..Case 5 where the L/C required insurance document to be issued to order of XYZ Bank LtdThe presented insurance policy without endorsement showed:Assured: To order of XYZ Bank LtdOur opinion: This is acceptable because the insurance policy was issued as required by the L/C..Case 6 where the L/C required the insurance document to be issued to order of XYZ Bank LtdThe presented insurance policy without endorsement showed:Assured: ABC Exporting Co LtdTo order of XYZ Bank LtdOur opinion: This is also acceptable because the insurance policy was issued as required by the L/C.Please confirm whether our opinions are correct or incorrect..Analysis and conclusion Case 1: We agree with your opinion.Case 2: We disagree with your opinion. The insurance document requires endorsement by ABC Exporting Co. Ltd, which would remove the contradiction between ABC Exporting Co. Ltd and "To Bearer". The addition of "[T]o bearer" does not change the fact that the assured is stated to be ABC Exporting Co. Ltd.Case 3: In the context of an insurance document, we agree with your opinion.Case 4: We disagree with your opinion. The insurance document requires endorsement by ABC Exporting Co. Ltd. The addition of "[T]o order" does not change the fact that the assured is stated to be ABC Exporting Co. Ltd.Case 5: We agree with your opinion.Case 6: We disagree with your opinion. The insurance document requires endorsement by ABC Exporting Co. Ltd. The addition of "[T]o order of XYZ Bank Ltd" does not change the fact that the assured is stated to be ABC Exporting Co. Ltd.To avoid some of the issues identified in this query, insurance documents should not indicate or be required to indicate the assured as "To Order" or "To Bearer".
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?