Original Insurance Policy
Blank Endorsed


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Dear J.H.,

Thank you for the photo.  You look quite handsome.  My response is in blue fonts appearing hereunder.

T. O.


Dear Mr. Lee,

Much thanks for your kind clarification about the problem of "negotiation". With your guide, I understand it in a much more depth than ever, especially the meaning of "undertaking payment obligation" which has been a hard nut to crack in front of many Chinese DC experts who I know.

Yesterday I encounter a query from my fellow about "blank indorsed" insurance documents. Although I answer the query, I discovered some points doubtful. As I know that you are the learned expert on insurance, I have to trouble you again by presenting you my query.

The query from my fellow is:

L/C requires "ORIGINAL INSURANCE POLICY OR CERT BLANK ENDORSED...", the insurance policy presented is made out "TO ORDER" and blank endorsed by beneficiary. Is this insurance policy acceptable?

My answer is:

The legal case Kredietbank v. Midland Bank PLC (Court of Appeal (Civil Division) The Independent 7 May 1999 [England]) encountered and solved the same problem. The judge rejected applicant's objection that unless the beneficiary was named in the policy there was no assurance that the endorsement is valid, because he considered that the objection just sought to introduce a requirement that was not stated in the credit, namely, that the assured should be named in the policy and there was no authority in law and no support in practice for any suggestion that its failure to name the assured rendered the policy invalid or unenforceable against the insurers.

From the a/m legal case, it can be seen that when L/C stipulated "BLANK ENDORSED" (as learned expert TOLEE said in his article, as there is no endorsee, it is hence "endorsed in blank") without indicating the assured, the box followed after "ASSURED" or " at the request of" may be filled in by "To order" or "beneficiary's name, for the account of whom it may concern" or " beneficiary's name" and blank endorsed by beneficiary.

Also refer to ICC R322: L/C stipulates" Full set of insurance policies or certificates endorsed in blank..."The policy presented is made out "TO BEARER".

ICC hold the opinion that "By requesting an insurance document to be endorsed in blank, the issuing bank is seeking to receive a document which is capable of transfer by means of completion of the endorsement, i.e. the assured party (holder) would become the issuing bank or the applicant. A document issued to "bearer" has the same effect as transfer of title by endorsement as the holder (presenter of the document to the claims settling agent would be classified as the assured party). There is no discrepancy."

It, thus, can be seen that "blank endorsed" insurance document/bill of lading equals to "bearer" insurance document/bill of lading because they have the same effect.

So far what you said is correct. For my further comments on these endorsement issues, please click below and read my article written at the request of Lloyd's of London about endorsement issues that apply to most negotiable instruments.

Title: What "To Order" and "Blank Endorsed" Actually Means

published by Lloyd's of London Press "Maritime Asia / Intermodal Asia" Magazine December 1993


My doubts are:

  1. English Marine Insurance Act 1906 ART 23 stipulates: "A marine policy must specify The name of the assured, or of some person who effects the insurance on his behalf". If the insurance policy shows assured as "bearer" or "to order", is it consistent with E.M.I.A 1906 ART 23?

    The MIA Articles, like UCP Articles, should not be read and interpreted in isolation. An insurance policy is a contract made between the insured/assured and the insurer. Hence without the insured/assured, there is no point to create a policy. Therefore the policy must show the name of the insured (in cargo insurance) and assured (in life or medical insurance). This is only common sense. In a policy there must be a box for the insured and it should not be left blank. Having said that, what if the insurance company is the insured and issue a policy to a third party to cover the insurance company itself? for example to buy a mainframe computer system through opening a FOB DC with a bank that insists that the shipment must be covered with a policy?

    If you read my article quoted above, you will know that "To Order of insured and blank endorsed", "bearer" or "blank" (if the assured is the insurance company itself like a two party credit where the applicant is the issuing bank itself) are the same in terms of negotiability. Only those who don't understand insurance policy would consider that they are different. All roads lead to Rome.

  2. From the a/m legal case and ICC R322, R127, it is felt when determining whether the insurance document is inconsistent with the L/C requirement, banks should be concerned about the insurance document's practical effect/result, REGARDLESS "the strict interpretation of the rules" (ICC R127). If so, when L/C stipulates "FULL SET OF INSURANCE POLICY MADE OUT TO BENEFICIARY BLANK ENDORSED...", the insurance policy presented made out to "BEARER" or "to order " and blank endorsed can be acceptable, can't it? Further, "FULL SET OF INSURANCE POLICY MADE OUT TO ORDER OF ISSUING BANK AND BLANK ENDORSED...", the insurance policy made out to "bearer" can be acceptable?

    In practice, "Made out to order of issuing bank" is OK by making a restricted endorsement by the insured/beneficiary endorsed "to the order of the issuing bank".

    "Made out to the order of issuing bank and blank endorsed" is contradictory and misleading. You can either endorse in blank or endorse to the order of the issuing bank and you cannot endorse in blank and also to the order of the issuing bank. The banker that gives such contradictory instruction does not understand endorsement due to lack of professional training.

    The endorser, the beneficiary, can endorse in whatever way s/he likes but s/he has no right to control the endorsee, the issuing bank, as how further endorsement is to be made by the issuing bank, the endorsee.

    Like a will, the father can say in his will how to dispose of his property amongst his sons but the father cannot control his son's will, how his son would dispose of his son's own property to be distributed amongst his grandsons, unless his will also covers the grandsons. But this is difficult to make perfect as it may be that at the time of his death, some grandsons are not yet born. In the same way, can a master DC govern the name of the beneficiary in a baby DC? Can a transferable DC govern the name of the transferee, the second beneficiary?

Your expert's clarification shall be highly appreciated.

B.T.W, attached is my photo taken in my grandma's yard.

Best rgds,

J. H.

It is very fortunate for you to have a mentor to guide you in case of doubts. This is due to the results of the good deeds that you have done in your past life, according to Buddhism theories. But for me, I have no mentor and have to find out the answers to all my doubts the hard way.

An intelligent scholar, I think it should be Albert Einstein, but I am not 100% sure, once said:

"The most supreme knowledge cannot be learnt in the universities, or from any guru. It is not yet discovered. It must be learnt the hard way, that is all by yourself alone".

Last year I made a pilgrimage trip to Nepal and whilst sitting alone in the Summiter's (those who have reached the summit of Mount Everest are named "summiters") club named Rum Doodle, in Thamel, Kathmandu, I suddenly realised that studying is like mountaineering. Before Sir Edmund Hillary and his sherpa (Nepalese mountaineering guide) Tenzing Norgay reached the "Top of the World", nobody could teach you how to reach the summit of Mount Everest.

Sherpa Tenzing Norgay told his son, Jamling Tenzing Norgay (who is also a summiter) :

"You can't see the entire world from the top of Everest. The view from there only reminds you how much more of the world there is to see and learn from".

My version of the same message is: "The more you know, the more you don't know" which often appears at the end of my comments in DC Pro Discussions.

My hero, Reinhold Messner, who has successfully climbed all the highest summits in this world, but without oxygen, did an advertisement for Rolex watches about 15 years ago that I happened to see in Hong Kong. The message used in this advertisement was

"Problems in the mountain cannot be resolved in the mountain".

When a climber is only twenty steps to the summit and then s/he finds out that his/er oxygen is gone, the only thing s/he could do is to pray as no helicopter could reach this height. By the time the rescue comes, s/he should be already frozen dead.

This message inspired me that it applies equally to letter of credit operations.

If you find out that the letter of credit is not workable when you try to present the documents after shipment, it would be too late. Hence the process actually starts from the moment the seller drafts his/er quotation and for the buyer, his purchase order.

"Problems in letter of credit cannot be resolved in the presentation".

T. O.

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