Choose your in­sur­ance wisely

Your in­sur­ance claim can be a cake walk or a night­mare, it all de­pends on the in­surer and the pol­icy you choose

Maritime Gateway - - Contents - This ar­ti­cle is writ­ten by In­sur­ance & Broking firm Ntrust in public in­ter­est

Your in­sur­ance claim can be a cake walk or a night­mare, it all de­pends on the in­surer and the pol­icy you choose.

The In­dian lo­gis­tics busi­ness is ex­pected to touch $190-200 bil­lion by 2020 with a CAGR of 8-9 per cent. As lo­gis­tics in­volves stuff­ing/ de-stuff­ing of goods and mul­ti­ple han­dling, the cargo is al­ways sus­cep­ti­ble to dam­age and needs to be in­sured. There is a unique in­sur­ance chal­lenge be­fore the lo­gis­tics In­dus­try to cir­cum­vent upon the tight de­liv­ery sched­ules, in­cur­ring high cost of re­place­ment of ma­chin­ery, goods and peo­ple in move­ment. The in­sur­ance in­dus­try has come up with an ar­ray of prod­ucts for the lo­gis­tics sec­tor. The type of in­sur­ances mostly used by im­porters and ex­porters in­clude those cov­er­ing car­ri­ers’ le­gal li­a­bil­ity, freight for­warder’s li­a­bil­ity, multi mo­dal trans­port in­sur­ance, ware­house prop­erty, public li­a­bil­ity (haz­ardous goods) Act 1991.

It is ob­served that many times in­sureds in or­der to save some pre­mium, do not chose “All Risks Poli­cies,” re­sult­ing in par­tial pro­tec­tion against dam­age dur­ing tran­sit. The question now arises as to how should an in­sured se­lect an in­surer and the in­sur­ance pol­icy? A ship­per while choos­ing in­sur­ance of cargo must se­lect an in­surer who is fi­nan­cially sound. Nor­mally the fi­nan­cial state­ments pro­vide the de­tails of the fi­nan­cial health of the in­sur­ance com­pa­nies. Over and above the rat­ing agen­cies like ICRA and CRISIL also do an­nual fi­nan­cial and claim pay­ing au­dits of the com­pa­nies and from these rat­ings, the fis­cal health of the com­pa­nies can be eval­u­ated.

A marine in­sur­ance prod­uct hav­ing full pro­tec­tion in­clud­ing in­ter­mit­tent stor­age and of­fer­ing cover for all types of as­so­ci­ated risks should be cho­sen. An ideal in­sur­ance plan will be the one that of­fers seam­less oper­a­tional cov­ers viz. prop­erty, li­a­bil­ity, cargo, duty and ter­ror­ism.

A ma­jor short­com­ing ob­served in the in­sur­ance poli­cies gen­er­ally avail­able in the mar­ket is that Di­rect Cargo In­sur­ance poli­cies are nor­mally not granted by In­dian In­sur­ers to lo­gis­tics com­pa­nies, the rea­son be­ing trans­port op­er­a­tors not hav­ing di­rect in­sur­able in­ter­est on the cargo. In this sce­nario, in­stead of opt­ing for a Marine Tran­sit Pol­icy, lo­gis­tics com­pa­nies and trans­porters do have re­course to take Car­ri­ers’ Le­gal Li­a­bil­ity pol­icy which can cover their le­gal li­a­bil­i­ties in case cargo own­ers sue them for ac­ci­dent or dam­age. Fur­ther, mar­itime in­sur­ance com­pa­nies need to im­prove their ser­vices by of­fer­ing tailor made in­sur­ance solutions and claim set­tle­ment.

Choos­ing wrong in­surer or in­sur­ance prod­uct

Ma­jor prob­lems that ship­pers face by choos­ing wrong in­surer or in­sur­ance pol­icy are in the form of de­ductibles (ex­cess de­duc­tion) from claims, too many doc­u­men­ta­tion and car­rier’s le­gal li­a­bil­ity set­tle­ment only af­ter le­gal ac­tion is so­licited and issues re­lated to sub­ro­ga­tion rights.

Claim set­tle­ment can be easy

A ship­per needs to take the fol­low­ing mea­sures in or­der to en­sure the claim­ing of in­sur­ance is smooth and easy: Chose the right prod­uct from the right in­surer, hir­ing a pro­fes­sional in­sur­ance bro­ker will help in out­lin­ing risk man­age­ment strate­gies which are suit­able for their pro­file. The bro­ker will also do com­par­i­son to find the best poli­cies from more than one in­sur­ance com­pany and ne­go­ti­ate for best deals. The in­sur­ance bro­ker should be an ex­pert in the ar­eas of port­fo­lio and claims man­age­ment too.

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