STOP , the abbreviated form of Sales TurnOver Policy seems to be the only way in India, a marine cargo policy can be structured. Further, STOP is supposedly easily and well understood by the masses, the youngsters who come into the industry and the veterans too. It is such a simple product — every transit of the client is automatically covered while he pays premium only on his sales. What is more,STOP is much cheaper than if one was to buy separate marine open policies for each type of transit. Wow! What an incredible product! A boon for every marine client, but about the insurer? Insurers too were/are happy expanding coverage under STOP, diluting rating parameters and bringing down rates by the day, if not the hour. Ground realities are different.
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How I wish all of us insurers were to do the STOP rating in the way it was conceived. The way it has been corrupted over time, I wish to start a movement to STOP STOP… unless this monster is reigned, almost 60% of all polices we issue are faulty and losing money on them is all be assured.
Thanks a lot sir for such detailed explanation. Sir i have one doubt if the insured has stop policy with icc a clause then during intermediate storage of raw material will the cover be all risk or sfsp perils only?
What exactly you mean by intermediate storage is the question. If it is a stoppage in the ordinary course of transit that is not at the direction of the insured, cover will be on All Risk basis
Wow, was doing a research on STOP and the Google search I did was “STOP Bala Broadcast” and bang, I got more than I could have imagined by going through other sites. Bala Sir, though u have touched upon all the myths prevailing in the market including the opening and closing stock related points, I have a specific query here. Since premium is charged on Sales, how do we cover the transit, I e. By the Invoice date or the LR/AWB/BL date. My understanding is that it should always be on the freight document date and not on Invoice date, as you have already mentioned that ultimately, it’s a “marine transit insurance”. May I request for your elaborated comment on this please.
Paresh, this is a common issue with STOP, especially in cases where the policy on renewal is shifted to another insurer. As far as marine insurance goes, it should be the date of commencement of transit which should be crucial, not the date of invoice, which could be earlier, on the same day or later. In case of STOP, however premium is charged on the sales i.e. sum total of all invoices. So, if an invoice is raised on ,say the last day of the policy but the actual transit commences two days later under the renewed policy (maybe with another insurer) & if there be a loss, which insurer would pay? Premium would accrue to the earlier insurer while the transit would have commenced under the policy of the new insurer. To avoid these issues, it must be clearly agreed with the insurers that under every policy period, there may be some invoices for which risk may not be run. Hence the second insurer should agree to pay such borderline claims, since at the end of his policy period, he too would get a ‘free-ride’ i.e. some invoice sfor which he would collect the premium but not run the risks.
Thank you Sir for your response. Yes as rightly pointed out by you this becomes a circle when the Insurer changes at the time of renewal. Better to word it or bring clarity in the policy itself. Let me tell you with my limited experience in this industry, all the “myths” that you have highlighted have been so strongly accepted as true, by the agents, brokers, clients and even some of the underwriters that at times it becomes very difficult to explain. However, your article has given enough points to rethink on how to better put it across such people so that they get the actual essence of the STOP product. Many thanks Sir….