CASE STUDY

RISK PRESENTATION
FOR
GOOD FOOD ENTERPRISES LTD.

Contents:
1. Information needed for a risk
presentation
2. Identify risks & recommend appropriate
covers
3. Risk presentation to underwriters
(Broking slip)

Prepared by:
Noushad Muttippalathingal
Dubai, UAE

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 INFORMATION TO BE COLLECTED

a. GENEAL INFORMATION:
• Nature of Business
o Here Foodstuff manufacturing, perishable goods, finished goods cannot be
kept in stock for long, seasonal fluctuations in production and turnover.
• Location
o Exact locations and addresses (Industrial area, Residential area etc)
• How long they have been in business
o This will influence continuity plans in place, business relations such as
customer/supplier relationship, and experience in business operations &
risks involved etc.
• Management
o Reputation, Moral Hazard, Financial stability, brand-image etc.
• Loss experience (all classes)
o Type, frequency and severity of losses
 This indicates the risk exposure, safety measures in place, possible
hazards
• Previous insurance
o Name, Any insurers declined to cover/refused any claim/increased rate/
imposed any Special Condition/refused to renew
 Refers to breach of warranties, hazards or special risks involved
• Periods of insurance required

b. FACTORY PREMISES
Buildings (Factory premises, Offices):
• Age, Type and class of Construction
o Storeys, Walls/Roofing & the materials used for construction (concrete-
blocks/steel/bricks/timber)

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  helps to determine fire and wet perils risks involved and the
reinstatement value of property)
• Adjacent properties (any hazardous activities/properties)
• Safety/Risk improvement measures
o In-house safety officers/policies
o Sprinkler/Extinguisher system and maintenance details, fire protection
certificate by authorities.
o Security systems/Fencing/boundary walls/Burglar alarms
o Whether unoccupied or unattended during off-days
• Processes and methods :
o Hazardous materials used in production process
 if so where & how stored
o Ratio of automated/manual operations,
 Refers to different risks
• Occupancy
o Shifts of workers, staff accommodation within premises
o Nature of Off-days operations
o 24-hours security
• Other Utilities located in premises
o Fuel/gas/water storages, covered parking areas, signboards – these
influence the risks and to be included under the scope of cover
• Value of property
o Book value, Re-instatement value expected (depends on Market and time
for re-building) – for deciding sum insured on Buildings

Plant and Machinery :

For Fire or Property all risks insurance, no specific details of machinery are required
except the following:
- Value of machinery and general information
- Any boilers are used (boiler causing explosion is excluded in fire policies)
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But, considering requirement of ‘Machinery breakdown policy’, the following
information needed.
• Detailed list of machinery units/equipments
• Specifications – Make/Model, Year of manufacture, Name-plate details/Serial
number, Manufacturer’s guarantee, Size/Power/Capacity.
• Nature of usage, Operating hours, Maintenance/Supervision information, Whether
used by skilled/experienced staff, In-house Technicians.
• Location details – Static/mobile/portable.
• New replacement values of machinery
• Availability of service and repairing facilities – locally/abroad

Stock:
• Nature of stock
• Break-up of values of Stock
o Raw materials
o Finished Goods
o Stock-in-process
• Method of storage
o Stacking
o Use of pallets
o Refrigerating/Cooling chambers (The stock kept under refrigerated/chilled
condition can be covered under Deterioration of Stock policy, so get
their value separately)
• How long the finished goods will be kept in premises & Reserve of raw materials
o These will influence the Business interruption risks following any accident
• Fluctuation in stock levels

Furniture, fixture and fittings:

• Brief list with values (representing fair market value)
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 • Other general information as stated in previous sections

c. RETAIL OUTLETS
• Information about Premises, Refrigerating Machineries, Furniture Fixture
Fittings, Stock of products (as narrated in previous sections)
• The Stock value in each location
• The Stock value of 4 prime locations (represent the highest possible stock value
among the retail locations – This will help to decide the sum insured and
indemnity limits of a floater policy)

d. BUSINESS INTERRUPTION RISKS

• Last year’s Turnover & Gross Profit
• Projected Turnover & Gross profit for coming year
• Indemnity period (considering factors such as likelihood of complete destruction
and time required to re-build, possibility of running business with overtime or
alternative location etc.)
• Information about the major supplier of raw materials – for Specified Supplier
extension.
• MLOP (Machinery loss of profit as under Machinery breakdown policy), if
required, the following additional information required.
o List of Machinery with its Relative importance, turnover, gross profit &
indemnity period

e. PECUNIARY INSURANCES
Fidelity guarantee:
• Number of persons handling monies/accounts (category-wise)
• Limits of indemnity (Any one occurrence and aggregate)
Money Insurance:
• Estimated annual carryings
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 • Limits of indemnity (Cash in Safe, cash in transit per sending)
• Details of escort facilities while carrying higher amounts
• Details of the Safe
Geographical area and Jurisdiction for both above classes

RISKS INVOLVED AND COVERS SUGGESTED

Accidental loss/damages to Property All Risks Policy

Property • All properties other than stock with
1. Factory Premises reinstatement memoranda (The insured will
not lose in case the property has to be
reinstated after a loss, otherwise customer has
to bear extra expenses having indemnified only
upto the market value. The building values
given by the insured will be inflated to reflect
the reinstatement value for fixing the sum
insured)
• Stock on declaration basis (Due to the
seasonal fluctuations of stock; to save
premium; 75% deposit)
• Machinery breakdown policy for plant &
machinery in Factory
- Other extensions to enhance the cover
2. Retail outlets Property All Risks Policy
• for Several number of shops with sum insured
on Floater Basis (Any One location limit and
aggregate limits based on value at the Top-
most location)
- saving premium
3. Plant/Machinery Machinery breakdown policy

4. Boiler Boiler Insurance (if any boilers used)

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Damage to the refrigerated or Deterioration of Goods policy or extension
chilled stock • Covering deterioration of stock due to
damage/breakdown of listed machinery.
• The insured deals with
refrigerated/chilled/perishable products.
Loss of profit • Business Interruption cover with extension for
(loss of profit due to stoppage Increased Cost of Working, Auditors fees.
of business following any - Declaration linked (due to fluctuation of
loss/damage to the building or monthly profit figures)
machinery) - Specified supplier extension is required
since the stoppage of sole supplier’s
business due any loss will cause drop to
insured’s business.
• Machinery loss of profit (MLOP) is also
suggested.
Financial losses due to Fidelity Guarantee policy
Infidelity of employee • Covering employees handling moneys/accounts,
storekeepers etc.
Loss of money during transit Money Insurance policy
or from premises

Damage of Plate Glass and Covers under PAR (if included in Sum insured)
Signboards in shops

Accidental damages to goods Goods in transit extension to PAR policy can be an

while transits to/from shops option

Other risks liabilities Marine Cargo policy for transits within GCC countries,
Workmen Compensation with Employers liability
extension, Public liability policy etc.

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 RISK PRESENTATION TO UNDERWRITER
FOR
GOODFOOD ENTERPRISES

BROKING SLIP
General Information

Insured & : Good Food Enterprises Ltd. and/or its subsidiaries

Address

Period of insurance : 01/01/2009 to 31/12/2009

Insured’s business : Manufacturer/Retailer of Foodstuff such as soft

beverages/ice cream/cakes/pastry/canned food/sauces

Current insurance : ABC-Insurance

Brief Note on:

-Insured’s activities

-Survey details attached

-Claim-History attached

MATERIAL DAMAGE

1)-PROPERTY ALL RISKS (LM7)

Locations : 1) Factory Building Premises located in Sharjah,

Abudhabi and Bahrain(details attached)
- Stock of items pertaining to the insured’ business -
Foodstuff such as soft beverages/ice
cream/cakes/pastry/canned food/sauces etc. and raw
materials
2) 100 retail outlets at various locations in GCC
countries(details attached)
- Stock as above except raw materials

Clauses and Extensions

 For Location1
• Reinstatement Memorandum

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 • Stock declaration clause

 For Location2
• Floater cover with limits (as per
schedule attached)
 Deterioration of Goods extension for the stock kept in
refrigerating/chilling chambers/freezers
• Value and list of machinery listed

General-Extensions
 72-Hours Clause
 All Other contents Clause
 Architects/Surveyors fees
 Automatic Reinstatement Clause
 Capital Addition
 Debris Removal
 Errors and Omission
 Expediting Expenses
 Fire Brigade & Extinguishing expenses
 Payment on Account Clause
 Public authorities clause
 Temporary Removal
 Workmen’s maintenance
 Impact damage by insured’s own vehicles

2)-MACHINERY BREAKDOWN

Items covered : Machinery (with itemized with

value/age/specifications) as List attached

BUSINESS INTERRUPTION

Cover & Premises As per Material Damage above

Sum Insured:
- Gross Profit(estimated) AED11,000,000/-
- Increased cost of working AED1,000,000/-
- Auditors fees AED200,000/-

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Indemnity period 12months

Conditions
o Declaration-linked basis
o Auditors/Accountants Fees clause
o Specified Supplier extension
 XYZ Trading, Dubai Port

PECUNIARY INSURANCES

Territorial limits &

Jurisdiction : The respective GCC Countries domestically where the
insured operates

1)-MONEY

Cover ‘All risks’

Est.Annual Carryings AED10,000,000/-

Limits Per Transit AED100,000/-

Safe Details/Location/
Limits (in safe/drawer etc) Attached

Extensions
o Loss or damage to Safe/Strong-rooms,
drawers/registers/cabinets
o Loss of Personal effects/money belonging to
Directors/employees

b)-FIDELITY GUARANTEE

Cover ‘All direct financial losses resulting from insured

employee(s) who acts dishonest or fraudulent against
the insured’

No. of insured persons 150 (categories and locations as listed)

Limit of indemnity AED500,000/- any one occurrence/employee

AED3,000,000/- in aggregate

Conditions
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 o Floater basis
o Automatic reinstatement of sum insured
o Automatic additions/deletions. Premium adjustment
at expiry
o Auditors/Accountants Fees clause
o Insured to provide details of all employees covered
at the time of any claim.

Foot Notes :

- The so-called attached lists of Location, item-wise Contents, their Values, Liability
limits, indemnity limits for extensions etc. as marked in green in Broking Slip are for
narration purpose only and are not actually attached herewith.

- Target rates and Deductibles are also not mentioned

Reference : CII study course book 745, various broking slips, proposal forms, GII study
materials & online information etc.

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