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BROKER OF RECORD LETTER Insurance news Powered By Docstoc
					                                                                                                   Part 1 of 2

Translation from Norwegian


                                              Standard Form
                                                 May 2000

This Agreement has been entered into on the basis of and under reference to Norwegian
Regulations No. 23 of November 24 th, 1995 relating to Insurance Broking (the Broker Regulations)
and Circular 3/99 of January 8 , 1999 from The Banking, Insurance and Securities Commission of
Norway to insurance brokers giving amplification of and general comments on the Broker
Regulations – which stipulates requirements as to the duty of an insurance broker to disclose
information to his principal ("transparency") and as to the position of the broker being an
independent intermediary in accordance with generally accepted broker standards etc.

The Principal (the Client): _______________________________________
The Insurance Broker (the Broker): ________________________________

The Scope of the Authority:
It is hereby agreed between the Client and the Broker that the Broker shall:
a)      obtain quotation(s) on;
b)      place, service and renew;
the insurances listed below in respect of the percentage share stated and market(s)
and/or insurer(s) specified.

The Authority according to b) above shall only apply when the Client has confirmed in writing that
placing or renewal may take place, stating the insurance(s), percentage share and market(s) /
insurer(s), and any other preconditions.

Insurance(s)                              Share in %                    Market(s)/insurer(s)

*)   According to § 23, 3rd paragraph of the Broker Regulations the Broker must exercise due care in the
     choice of insurer(s) and advise the Client against using insurers whose ability to discharge their duties
     under insurances may be doubted or unknown.

To be completed as required
(applicable only when             The Client stipulates the following explicit requirements as to
completed)                        the "security rating" of insurers:__________________________________

                                                                                Part 1 of 2

By signing this agreement the Broker undertakes to keep within the scope of the
Authority as outlined above.

Any changes in the scope of the Authority must be executed in writing and carry the
signatures of both parties in order to be valid.

This Agreement may be terminated in accordance with the Norwegian STANDARD
below – unless this Agreement is defined as being specifically limited in time without a
right to give notice of termination ( see below under Special Conditions). Notice of
termination should occur at the expiry date of the insurance(s), alternatively at the
anniversary date for an insurance of a duration of at least 24 months.

Special Conditions:
a)  Time limitation (no right to give notice of termination):
b)  Payment of premium and claims to take place directly between the Client and the
    insurer(s) without intervention by the Broker, for the following insurance(s):
     (applicable only when completed):
c)   Other details:

Otherwise the following shall apply:

                              as issued by:
                    Norwegian Shipowners' Association
                 The Central Union of Marine Underwriters
                     The Mutual Hull Clubs Committee
              The Norwegian Association of Insurance Brokers
                                May 2000

This Agreement is executed in two originals, one to each of the parties.


           The Principal                                    The Insurance Broker

                                                                                   Part 2 of 2

Translation from Norwegian


                                    as issued by:
                          Norwegian Shipowners' Association
                       The Central Union of Marine Underwriters
                           The Mutual Hull Clubs Committee
                    The Norwegian Association of Insurance Brokers
                                      May 2000

1.      These Standard Rules and Conditions apply to the contractual relationship
        established between a Principal and an Insurance Broker when employing a
                                    Standard Form
                                       May 2000

2.      Duration of the Broker's Authority (Agreement) – Notice of termination:
     a) The Authority for the Broker (the Agreement) is effective from and including the
        date of the Agreement until terminated, which may take place at any time with at
        least 1 month's notice in writing, unless the Agreement is for a limited period of
        time without a right to give notice of termination by explicit stipulation.

 b) In the event that the Client gives notice of termination, the Broker is entitled to, and
    the Client undertakes to pay to the Broker, the agreed commission/
    remuneration/consideration (fee) until the due date (dates of expiry).

        Subsequent to a termination the Broker shall also follow up and complete his
        remaining tasks and duties of work under this Agreement, unless the Client
        decides to transfer these to a new broker. In the latter event the Broker shall
        nevertheless be fully entitled to receive in full any commission etc. as stated

        In the event that the insurance(s) to which the termination relates have been
        placed for 24 months, the Broker's right to any remaining commission shall be
        reduced by 10% when notice of termination is given not later than 1 month before
        expiry of the first 12 months of the period of insurance. If the insurance period
        placed is 36 months or longer, the commission is reduced by 20% if notice of
        termination is given not later than 1 month before expiry of the first 12 months
        period of insurance, and by 10% if notice of termination is given not later than
        1 month before expiry of 24 months of the period of insurance.

                                                                               Part 2 of 2

3.   The Client is under obligation:

     3.1 To obtain the information needed by the Broker in order that the insurer may
         be provided with a proper and objective description of the objects and risks to
         be insured.

     3.2 To provide details of previous insurance arrangements (and brokers) and
         claims reported, and arrange for new claims to be reported.

     3.3 To assist the Broker in drawing up a renewal strategy for the insurances in
         good time before renewal.

     3.4 To pay the premium within its due date.

     3.5 To report details of any changes in the insurance situation which have
         occurred as regards the risk scenario and the objects insured, or which may
         be requested as regards the extent of cover and the terms and conditions of
         cover, both in connection with renewals and during the period of insurance.

4.   The Broker is under obligation:

A.   In respect of the placing/renewal of insurances:

     4.1 To start working on the placing/renewal in good time before the inception /
         renewal date.

     4.2 To obtain relevant insurance quotations from the markets and/or the insurers
         comprised by the Agreement, by arranging for a full or a limited round of
         tenders, or a unilateral placing/renewal, depending on what is advisable or
         desirable as agreed with the Client.

     4.3 To give necessary advice and information in order to define the need for

     4.4 To provide advice and guidance based on the information received from the
         Client, with a view to covering the Client's insurance requirements.

     4.5 To provide advice on the choice of insurance options and insurers,
         depending on the Client's insurance requirements.

     4.6 To ensure that proper procedures are adhered to in order that the insurance
         contract(s) may take effect at the time agreed for placing or renewal.

     4.7 a) To disclose the commission/remuneration to the Broker from
            themarkets/insurers involved.

             The said information should be disclosed as early as possible in
             connection with the insurance quotations presented ahead of the Client's
             choice of market/insurer, and not later than in connection with advising as
             to the choice of market/insurer.

                                                                                  Part 2 of 2

             The Broker shall disclose details of all commissions/remunerations which
             are received from the insurer and which are related to the Client's
             insurances. This to include both direct commissions / remuneration and
             also those of an indirect nature where for example the Broker places
             reinsurance for the insurer related to the cover concerned, or indeed the
             Broker has agreements which involve an overriding commission, portfolio
             commission or any such like.

             As far as direct commissions are concerned, the Broker shall disclose the
             gross premium, any Client discount rate, the Broker's rate of commission,
             and the rate of commission of any sub-brokers – all rates stated as a
             percentage of the gross premium. The sum total of the said rates shall
             represent the overall deduction from the gross premium accepted by the

          b) To agree any consideration (fee) which the customer should pay to the
             Broker in addition to or instead of commission/remuneration from the

     4.8 To arrange for the requisite documentation in order that the insurance
         contract(s) has become effective with the insurer(s), and, prior to inception of
         the period of cover, confirm to the Client that the placing of the insurance(s)
         has been completed - alternatively advise of outstanding shares yet to be

          As far as is practically possible, to comply with the rules of regulations in
          accordance with § 1-3 of the Norwegian Marine Insurance Plan of 1996
          "Contracts entered into through a broker".

          To forward to the Client a summary in writing of the contents and details of
          the insurance contracts concluded (the Broker's "Cover Note") within a
          reasonable time following inception of the insurance.

B.   During the period of cover:

     4.9 To provide advice and assessments in respect of the interpretation of actual
         questions related to the insurance contract(s) placed.

     4.10 To give the Client any necessary assistance in the event that an insurance
          event occurs.

     4.11 To monitor, in joint consultation with the Client, any changes in the need for
          cover during the period of cover and assist in arranging for them to be
          implemented in the insurance contract(s) with the insurer(s).

C.   Other aspects:

     4.12 To provide assistance to the Client in questions of a technical, legal or
          insurance nature – in connection with the placing/renewal of insurances and
          in the course of the period of cover – to the extent that this may be deemed
          necessary and natural within the scope of the assignment.

                                                                                 Part 2 of 2

          In the event that the Client requests an examination of the said questions to a
          greater extent than what is reasonable in view of the nature and size of the
          assignment, then this shall be subject to a separate agreement and payment
          of fee.

     4.13 To appoint a Client contact at the Broker's office.

     4.14 To arrange for a proper handling and evaluation of the Client’s insurance
          requirements, and thereby enabling the Client to assess his insurance
          alternatives and insurers in a professional and commercial manner.

     4.15 To ensure that any and all information from the Client, of a significant nature
          relating to the extent of cover and the evaluation of risk, is passed on without
          delay to the insurer(s).

     4.16 To arrange for any and all relevant information received from the insurer(s)
          concerning the insurance cover to be passed on without delay to the Client.

5.   Payment of Premiums and Claims via the Broker:

     Unless specifically agreed in the Broker's Letter of Authority that payment of
     premium and claims shall be made directly between the Client and the insurer(s),
     the following shall apply:

     As soon as possible following completion of the placing, the Broker shall issue and
     send to the Client a premium debit note showing the net premium payable (i.e. the
     gross premium after deduction of any Client discount).

     The Client shall pay the premium to the Broker who will arrange for distribution
     and payment of the net amount of the premium to the individual insurer(s) and/or
     to the individual market(s) via a sub-broker, having first deducted the Broker's own

     Any return premiums and / or compensation from the insurer(s) in respect of claim
     settlements shall be collected by the Broker (directly or via a sub-broker) for
     payment to be passed on to the Client.

     The Broker is under duty to pass on payment of premiums, return premiums, and
     claims as soon as practically possible, or in accordance with market practice on a
     monthly basis.

     Premiums, return premiums and compensation amounts for claims shall be
     deposited by the Broker without delay in a separate Clients' account with a bank,
     away from the Broker's own funds. In accordance with industry practice, Clients'
     funds are handled without interest being earned for the Client or the insurer and
     without a transaction fee being charged for the transfer of money.

     Where desirable, and after stating this expressly in writing to the Broker, the Client
     may request permission to pay premiums and /or receive claim payments on a
     direct basis with insurers.

                                                                                 Part 2 of 2

6.   Duty of Confidentiality:

     The parties shall be under complete duty of confidentiality as to any and all work
     carried out under this Agreement. An exception is made for any information which
     the Broker may be required to give to other brokers in the event that the Client
     changes broker and this information relates to actual circumstances concerning
     the object insured or matters relating to the risk and the assessment thereof, and
     where such information is not subject to confidentiality.

7.   Arbitration Clause:

     In the event of a dispute as to the understanding of the Agreement and the
     Brokers' Letter of Authority, the parties have agreed that an attempt shall first be
     made to resolve the dispute amicably through negotiations within the first 6
     months after one of the parties has requested that the dispute be resolved through
     negotiations. Should the negotiations fail to succeed within the period stated,
     either party may request that the dispute be resolved by arbitration.

     The arbitration panel shall be made up of 3 members. Each party shall appoint an
     arbitrator, and the two arbitrators thus appointed shall then jointly appoint the
     Chairman of the arbitration panel who must be a trained legal professional. After
     one party has requested arbitration and made his appointment of an arbitrator, the
     other party shall make his appointment of an arbitrator in the course of 14 days.

     Should the two arbitrators appointed fail to agree on a Chairman f or the arbitration
     panel within 14 days or any other period agreed by the parties, either party may
     request that the Chairman of the panel be appointed by the Head of the
     Scandinavian Institute of Maritime Law at the University of Oslo.

     The provisions of § 32 of the Norwegian Civil Procedure Act shall otherwise apply,
     unless the parties have agreed on a different mode of procedure.