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
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.