Associated Marine to launch new pollution cover product

The freight industry is clearly on a cost-cutting drive – and that applies no less to the insurance sector. According to chief operating officer of Associated Marine, Mike Brews, customers are looking for the lowest rates and the widest cover. And whereas in the past they would tend to absorb smaller claims – in the R20 000–R50 000 range – they’re now putting those claims through because it all makes a difference to their bottom lines. “So claims are becoming more frequent and demands on administrative staff are rising.” And according to Brews, rates have been on a gradual decline since 9/11 – and this year is no different. “We thought the Napoli incident would turn rates around but as a whole that year was generally profitable. “With a number of new people coming into the industry there’s effectively been an overcapitalisation of the marine insurance industry with everyone fighting for their piece of the pie. This inevitably leads to a rates battle so you end up fighting on rates to retain business.” Brews estimates that in the past there was generally a seven year cycle of ups and downs. “Now we’ve had eight years of constant downs, so the cycle is becoming a lot longer.” Associated Marine has a long history in the market, offering a range of cover for the perishable industry from fish to fruit by every transport mode. And it’s the perishable nature of the cargo that presents the greatest challenge. “As soon as there’s a delay of any sort you’re under risk for losses. In conjunction with that you have a range of restrictions in the countries to which the goods are being exported. If any of the temperature meters in the containers have a false reading, there’s a huge rejection risk and you end up having to find alternative markets that have less stringent restrictions. Whatever the solution, there are always costs involved.” In the case of a claim, an independent surveyor is appointed to undertake a full analysis based on information from temperature gauges, shipping schedules and the like to establish the reason for the damage or loss. “Because there are so many restrictions on perishable cargo there are not many corners that can be cut and there will always be the odd problem – like cargo stuck on an arrested vessel.” South Africa’s alarmingly high road accident rate is a concern, but the saving grace is that values on a truck are much lower than a vessel. “You can put one or two containers on a truck but you can put 50 from one client on a vessel. The frequency of accidents may be much higher but values comparatively low.” Innovation and differentiation are clearly important competitive factors in the marine insurance industry, which is why Associated Marine is currently looking into the introduction of pollution cover on the back of its haulage business. The product is being developed through an associated company to cover clean-up costs following tanker accidents. “It’s the advantage of being part of the Santam group – enabling us to draw on associate companies to offer this type of cover. “We’ve identified a gap in the market and hope to have it up and running in the next couple of months. We see it as a way of adding value to the products we offer.”