after discovery of the over-insurance and prior to the time when the overseas vessel reaches the destination port in safety, to the Underwriting Agent, then the Maritime Administrator will give consideration to an application for a return premium and if in his sole discretion the Maritime Administrator is satisfied that the Assured acted in good faith and that the instance is one in which in commercial practice a return premium would be made the Maritime Administrator will grant the appropriate return premium.

CLAUSE 22. Partial loss. In case of partial loss by perils insured against, the proportion of loss shall be determined by a separation of the damaged portion of the insured property from the sound and by an agreed estimate (by survey) of the percentage of damage of such portion: or if such agreement is not practicable, then by public sale of such damaged portion for the account of the owner of the property, and by comparison of the amount so realized with the applicable valuation limit provided in Clause 9.

CLAUSE 23. Labels clause. In case of damage affecting labels, capsules or wrappers, the Underwriter, if liable therefor under the terms of this policy, shall not be liable for more than an amount sufficient to pay the cost of new labels, capsules or wrappers, and the cost of reconditioning the goods, but in no event shall the Underwriter be liable for more than the insured value of the damaged merchandise.

CLAUSE 24. Carrier clause. Warranted that this insurance shall not inure, directly or indirectly, to the benefit of any carrier or bailee.

CLAUSE 25. Notice of loss. In the event of loss which may give rise to a claim under the policy, prompt notice must be given to the Underwriting Agent.

CLAUSE 26. Rules and regulations. This policy is subject to all rules and regulations pertaining hereto which may now or hereafter from time to time be published in the FEDERAL REGISTER.

CLAUSE 27. Cancellation. This policy may not be cancelled by the Assured unless the goods are not shipped within thirty (30) days following the effective date of binding and then only if the policy is returned to the Underwriting Agent for cancellation.

CLAUSE 28. Amendments. This policy may be amended by the binder or by endorsement attached hereto and executed on behalf of the United States of America, represented by the Maritime Administrator, acting for the Secretary of Commerce, by a duly authorized Underwriting Agent pursuant to prior written or telegraphic instructions from the Maritime Administrator.

In witness whereof, the Maritime Administrator, acting for the Secretary of Commerce, has signed this policy, but this policy

Original and duplicate issued-one of which being accomplished, the other to stand null and void.

§ 308.546 Standard optional endorsement No. 1-A, Form MA–316–A. Standard Optional Endorsement No. 1-A limits the amount payable for the loss of goods to the actual bona fide pecuniary loss to the Assured, exclusive of any allowance for anticipated or accrued profit arising out of the insured venture. (Similar provisions for Open Cargo Policies are contained in Standard Optional Endorsement No. 1, Form MA-300-A, prescribed in § 308.518.) Application for Standard Optional Endorsement No. 1-A must be made to the Underwriting Agent at the time application is made for the policy. The Underwriting Agent is authorized to issue the endorsement without prior approval of the Maritime Administrator. The following is the Standard Form of Optional Endorsement No. 1-A:

is hereby deleted and the following substituted therefor:

CLAUSE 9. Limits on amount payable for loss-(a) Actual pecuniary loss. In the event of loss, the Assured shall file a declaration (under the penalties of perjury) stating that the amount claimed does not exceed the actual bona fide pecuniary loss to the Assured, exclusive of any allowance for anticipated or accrued profit arising out of the insured venture. If claim is filed by the Assured named herein on behalf of any other person at interest, the declaration shall include a statement that the amount collectible does not exceed the amount which would have been collectible by the Assured named herein if at the time of the loss the Assured named herein had full interest in the insured goods. If this policy is issued to an agent for account of a principal named herein, both the agent and the named principal shall be required to sign the declaration.

(b) Sales price less discount. In the event of the loss of goods shipped by, to, or at the direction of the Assured and which were sold by the Assured prior to loading on board the overseas vessel (1) on ter ns requiring the Assured to provide war risk insurance to the port of discharge, or (2) with respect to which written or cabled instructions to provide war risk insurance to the port of discharge have been received by the Assured from the purchaser prior to loading of the goods on board the overseas vessel, and which were shipped for the account and at the risk of third persons other than a branch, subsidiary or affiliate of the Assured, the named Assured shall file a declaration (under the penalties of perjury), in lieu of the declaration, required by paragraph (a) of this Clause, stating that the amount claimed does not exceed the actual bona fide sales price less all discounts, plus the costs of marine insurance, transportation and expenses incidental thereto, and war risk insurance with respect to the lost goods if such items are not included in the sales price. The claim shall be filed by the named Assured unless otherwise permitted in writing by the Maritime Administrator for good cause shown.

(c) Criminal code. The declarations required to be filled pursuant to this Clause shall be subject to the United States Criminal Code which makes it a criminal offense for any person knowingly to make a false statement or representation to, or to conceal a material fact from, any department or agency of the United States as to any matter within its jurisdiction (18 U. S. C. 1001), or to file a false, fictitious of fraudulent claim against the United States (18 U. S. C. 287).

§ 308.547 Application for return premium, Form MA-317.

An application for the return of premium must be filed in duplicate with the

86-102-68-28

familiar with all matters pertaining thereto; and that the information set forth in said application is in all respects true and correct and is made to induce the Maritime Administrator to return part or all of the premiums heretofore paid by said Assured to said Maritime Administrator for Facultative Cargo War Risk Insurance. The application is made with full knowledge that the Maritime Administrator will rely on the information set forth therein.

NOTE: The United States Criminal Code makes it a criminal offense for any person knowingly to make a false statement or representation to, or to conceal a material fact from, any department or agency of the United States as to any matter within its jurisdiction (18 U. S. C. 1001), or to file a false, fictitious or fraudulent claim against the United States (18 U. S. C. 287).

Policy hereby endorsed in accordance with foregoing and voucher cleared by Maritime Administration.

Date:

§ 308.548

Standard form of underwriting agency agreement for cargo; Form MA-318.

The following is the standard form of underwriting agency agreement applicable with respect to agreements made after June 7, 1961, which will be executed by the Maritime Administrator and domestic insurance companies authorized to do a marine insurance business in any State of the United States, appointing such companies as Underwriting Agents to issue war risk cargo policies in accordance with the provision of the agreement and this subpart:

Form MA-318 (Revised 5-61)

UNITED STATES OF AMERICA
DEPARTMENT OF COMMERCE
MARITIME ADMINISTRATION

UNDERWRITING AGENCY AGREEMENT FOR CARGO
This Agreement, made and entered into
this
day of
19--, by and
between the United States of America (here-
in called the "United States"), acting by the
Secretary of Commerce (herein called the
"Secretary"), represented by the Maritime
Administrator (herein called the "Adminis-
trator"), and
a corporation
organized and existing under the laws of
and duly authorized to do a
marine insurance business in a State of the

United States, having an office for the transaction of business at (herein called the "Underwriting Agent"). Witnesseth:

Whereas, pursuant to title XII of the Merchant Marine Act, 1936, as amended (herein called the "Act"), the Secretary is authorized under certain circumstances to provide marine insurance and reinsurance against loss or damage by the risks of war, and to employ domestic companies or groups of domestic companies authorized to do a marine insurance business in any State of the United States to act as his Underwriting Agent; and

Whereas, the Secretary has delegated authority to the Administrator to perform the functions vested in the Secretary by title XII of the Act (Section 8.01, subsection 3, of Department Order No. 117 (Revised), published in the FEDERAL REGISTER July 21, 1960, 25 F.R. 6934); and

Whereas, the Administrator has determined to employ the Underwriting Agent as an underwriting agent in providing war risk cargo insurance as set forth in section 1203 (b) of the Act upon the terms and conditions herein set forth:

Now, therefore, in consideration of the premises and of the mutual covenants and agreements, and upon the terms and conditions herein set forth, the parties hereto agree as follows:

1. Appointment of agent. The Administrator hereby authorizes the Underwriting Agent, as an agent acting on behalf of the Administrator and not as an independent contractor, to utilize its offices and facilities to make available the insurance which the Secretary is authorized to provide pursuant to Section 1203 (b) of the Act and to perform the functions hereinafter provided for, upon the terms and conditions hereinafter set forth and in accordance with the rules, regulations and instructions which will be issued from time to time to the Underwriting Agent by the Administrator directly or through any clearing agency appointed by the Administrator. The Underwriting Agent hereby agrees to utilize its offices and facilities to make such insurance available, as agent for the Administrator, and to perform the functions hereinafter provided for to the best of its ability. The Underwriting Agent may act through its home office, branch offices or agencies which are authorized to write insurance on its behalf.

2. Duties of agent. The duties of the Underwriting Agent shall be as follows:

(a) Receive applications and issue binders and policies. The Underwriting Agent shall receive applications for insurance, covering the class or classes of property and subject to the rates and conditions specified by the Administrator upon forms prescribed by the Administrator. After determining that the applications have been submitted in complete and proper form and are accompanied by remittances in the amount of the premiums required for the insurance applied

for, the Underwriting Agent shall countersign binders or policies of insurance, or both binders and policies of insurance, subject to the rules, rates, terms and conditions specified by the Administrator on forms prescribed by the Administrator. The insurer under such policies shall be the United States.

(b) Keep records. The Underwriting Agent shall keep a full and complete record of all applications, binders, and policies, and shall also record all premiums, charges, collateral deposit funds and surety bonds required by the terms of the binders and policies, so that a record may be available at all times to the Administrator, both as to all applications received and all binders and policies isued, and as to all collateral deposit funds or surety bonds provided by the assured in connection with such binders and policies.

(c) Receive money and reports. The Underwriting Agent shall accept monthly Closing Reports from each open cargo policyholder for transmission to the Administrator or to a clearing agency if one is designated by the Administrator. The Underwriting Agent shall also receive checks drawn to the order of "Maritime Adm.-Commerce" for the premiums and charges involved, which checks shall be deposited by the Underwriting Agent in the Federal Reserve Bank nearest to its office, or in such other bank as may be authorized by the Administrator to receive such deposits. The Underwriting Agent shall receive from the bank in which the deposits are made receipts therefor in such number as may be prescribed in instructions to the Underwriting Agent and handle the receipts so received in accordance with such instructions.

(d) Report monthly. The Underwriting Agent shall prepare a monthly report, in summary form, of all Closing Reports and binders and policies issued on standard forms to be approved by the Administrator and transmit them, together with supporting Closing Reports received from Open Cargo policyholders and receipts for deposits made as above provided, to the Administrator or to a clearing agency if one is designated by the Administrator.

(e) Other reports. The Underwriting Agent shall prepare and transmit such other reports as may be required by the Administrator.

(1) Process claims for return premiums. The Underwriting Agent shall receive from holders of policies issued by such Underwriting Agent any claims for return premiums on a standard form prescribed by the Administrator and shall certify thereon, if such is the fact, that the amounts with respect to which such return is claimed were previously paid and were included in closing reports submitted to the Administrator and that based upon the statements included in such application by the assured the return premium applied for is payable in accordance with the regulations of the Administrator. Such applications and certifi

cations shall be transmitted promptly to the Administrator or to a clearing agency if one is designated by the Administrator.

(g) Process claims for losses. The Underwriting Agent shall receive reports of losses, prepare adjustments and vouchers, and other data, required by the Administrator, and submit the same with its recommendation as to whether claims are in order for settlement to the Administrater or to a clearing agency if one is designated by the Administrator. (h) Help establish advisory committee. The Underwriting Agent shall, if requested by the Administrator, cooperate with the Administrator and other Underwriting Agents acting in a similar capacity to establish and maintain an advisory underwriting committee to consult with and advise the Administrator in connection with specific underwriting problems, subject to the rules, regulations and instructions of the Administrator, and to establish and maintain such other advisory committees as may be deemed necessary from time to time to safeguard the interests of the Administrator including a loss committee to act as a recipient for information concerning losses and to pass upon any recommendations made by the Underwriting Agent as to losses and payments of claims arising therefrom.

The

(1) Cooperate with clearing agency. Underwriting Agent shall if requested by the Administrator cooperate with any clearing agency designated by the Administrator to act on behalf of the Administrator in coordinating and facilitating the issuance of insurance pursuant to Section 1203 (b) of the Act in accordance with terms and conditions agreed upon between the clearing agency and the Administrator and in accordance with the rules, regulations and instructions issued by the Administrator to the clearing agency.

3. Compensation. Subject to paragraph 9 of this Agreement:

(a) Fair and reasonable. The Underwriting Agent shall receive for its services such amount as the Administrator and the Underwriting Agent may, from time to time, agree to be fair and reasonable compensation. In addition to such fair and reasonable compensation, the Underwriting Agent shall receive reimbursement for out-of-pocket expenditures reasonably incurred, meaning payments to persons not regularly employed by the Underwriting Agent but excluding payments to attorneys unless such employment has been authorized by the Administrator, provided, however, that all such expenditures shall be subject to the review of the Administrator, and further provided that, except as authorized by Section 1209 (d) of the Act, such expenditures shall not include any fee or other consideration paid to an insurance broker or any person acting in a similar intermediary capacity for services by virtue of his participation in arranging any of such insurance nor include any payment on account of solicitation for or stimulation of such insurance.

(b) Paid monthly. A statement of the compensation due to the Underwriting Agent (including reimbursement for out-ofpocket expenses as herein provided) shall be submitted by the Underwriting Agent to the Administrator monthly or at such other intervals as the Administrator may direct, with an appropriate voucher, and the amount of such compensation, if approved, shall be promptly paid to the Underwriting Agent.

4. Standard of performance. In the discharge of its duties and obligations pursuant to this Agreement, the Underwriting Agent shall conform to a standard of performance and accuracy reasonably to be expected of an insurance company in the administration of its own business and consistent with the highest degree of good faith. It is agreed, however, that the Underwriting Agent shall not be responsible for errors or omissions of agents or employees in whose selection and supervision it has exercised reasonable care, provided, however, that the Underwriting Agent, in any such case, shall have conformed to the standards of performance required hereunder, and provided further, that the Underwriting Agent assumes full and complete responsibility for the disposition of any funds received by it or its agents or employees under and pursuant to this Agreement. The exercise of reasonable care in the selection of agents and employees by the Underwriting Agent shall be deemed to include a determination by the Underwriting Agent that the agents or employees so selected are experienced in the transaction of such phases of the marine insurance business as may be delegated to such agents or employees by the Underwriting Agent.

5. Writing insurance for own account. It is understood that the Underwriting Agent is or may be engaged in writing for its own account war risk insurance, as well as other types of insurance, for the benefit of holders of policies issued by it hereunder and of other parties; and it is agreed that such insurance may be written notwithstanding the activities of the Underwriting Agent hereunder on behalf of the Administrator, pursuant to this Agreement.

6. Books and records.

The

(a) Maintained subject to audit. Underwriting Agent shall keep books, records and accounts covering the operations and activities under this Agreement which shall be the property of the United States represented by the Administrator and shall be kept separate from those relating to other business of the Underwriting Agent, in accordance with regulations made from time to time by the Administrator, and shall at all times be subject to audit and inspection by the Administrator.

(b) Comptroller General may examine. The Comptroller General of the United States or any of his duly authorized representatives shall have access to and the right to examine any pertinent books, documents, papers and records of the Underwriting Agent in the

performance of and involving transactions related to this Agreement.

7. Acts only as agent. The Underwriting Agent shall act only in the capacity of agent for the Administrator as principal, in the performance of the functions provided for hereunder. The Underwriting Agent shall have no authority other than as provided in this Agreement and in the rules, regulations and instructions issued to it by the Administrator under and pursuant to this Agreement, directly or through any clearing agency appointed by the Administrator. The Underwriting Agent may accompany its signature in all policies countersigned by it hereunder with a statement that, in countersigning such policies, it acts solely under the powers conveyed to it by the Administrator and that it does not thereby warrant its authority to accept applications for insurance or its authority to countersign, nor the authority of the Administrator to issue such policies.

8. Special circumstances.

(a) Reimbursement of taxes and fees. In the event that the Underwriting Agent, after giving notice to the Administrator, shall be compelled to pay to the United States, its territories or possessions, or to any state of the United States or political subdivision thereof, or to any foreign country or political subdivision thereof, any tax (excepting incomes taxes of every nature) or fee or interest or penalty relating thereto claimed to be due by reason of the business transacted pursuant to this Agreement and which would not have been payable except for the activities of the Underwriting Agent hereunder, the Administrator shall reimburse the Underwriting Agent therefor and for any special expenses necessarily incurred in connection therewith.

(b) Indemnification. If any legal suit or proceeding (whether or not based on negligence) is brought against the Underwriting Agent on account of anything done or not done, by the Underwriting Agent, the Administrator or any clearing agency appointed by him, in connection with the issuance or non-issuance of insurance on behalf of the Administrator or the payment or non-payment of claims arising thereunder (including, without in any way limiting the foregoing, anything done or not done pursuant to any rules, regulations, or instructions of the Administrator or anything done or not done in conflict with or because of any limitation on the powers of the Administrator), the Administrator shall, upon due notice and at the expense of the United States, defend any such proceeding. If, in or as a result of any such legal suit or proceeding, the Underwriting Agent be compelled or required to make any payment or incur any expense, the Administrator shall reimburse the Underwriting Agent for the amount thereof; provided always that the Administrator shall not be obligated to make any such reimbursement unless, in connection with the action complained of, the