‘Never cut costs on insurance’

In Africa, risk is part and parcel
of the challenge – but knowing
how to mitigate that risk is key to
success.
“Africa does pose a challenge
for insurers as we often find
ourselves having to work in difficult
conditions on a continent where
the lack of basic communication
networks and other infrastructure
remains a major challenge,” says
Susan Duvenage, marine marketing
manager for Prestmarine. “The
greatest challenge is to sort out
problematic claims. Documents
relating to claims often go astray or
repair facilities in Africa are not as
efficient as in other countries. Then
there are times when the consignee
does not co-operate with surveyors
when it comes to repair and salvage
dealings for example. There is a
range of problems that impact on the
finalisation of a claim.”
Mike Brews, COO of Associated
Marine, says infrastructure remains
a challenge in Africa as in many
countries it is either non-existent
or deteriorating. “The money is not
there to repair roads and ports – and
while the influx of Chinese money
is helping to some extent, it is still a
concern. A pot-holed road can end up
causing a major accident resulting in
damage to cargo. Also in container
depots there is not always enough
equipment and cargo takes so much
longer to move through the depot and
is then more susceptible to damage.”
Another challenge says Brews is
ensuring cargo is safe at all times.
“Because a lot of the cargoes in
Africa involve high value it is
important to ensure its safety at all
times. Copper from the DRC for
instance will travel through four or
five countries. To have an armed
escort following that shipment for an
entire journey is not easy and often
there are concerns that the escorts
are not in place.”
And when one is moving
R20 million worth of copper on the
back of a truck, an armed escort is
often the only way of mitigating
risk.
Duvenage says hijacking
syndicates also pose risk.
“Previously this was a major
concern when entering South
Africa, but now there are
syndicates operating in the North.
Consignments of valuable cargo
such as copper, cobalt and ores are
constantly being targeted.”
Fraud is another major challenge
for insurers. Underwriters must
constantly be on the look-out as
documents are easily and readily
falsified.
How do you mitigate risk?
In terms of infrastructure it is a
question of knowing that it is a
risk and charging the appropriate
premiums, says Brews. “There
is nothing we can do to fix the
roads but knowing the roads are
deteriorating is important and
therefore should be taken into
account.”
He says a lot depends on the
cargoes being moved. “As long as
clients and transporters know the
issues, one can mitigate the risk. In
Somalia for instance the best way of
travelling is in convoy.”
Additional security and packaging
of cargo are important for the safe
delivery of cargo, says Duvenage.
“The costs, however, do become
exorbitant and cargo owners are
reluctant to apply these in an
increasingly competitive market.
“The transportation of precious
metals and ores could cost cargo
owners and the transporter dearly if
not handled in the correct manner.
Truckloads of copper, cobalt and
ores are being hijacked en route
through South Africa and African
borders. In the past hijackings only
became a real threat on entering
South Africa, but this has changed
dramatically. Insurers are providing
guidance on security measures to
manage these risks and in some
instances are refusing to provide
insurance if these measures are not
applied,” she says.
Where is the risk?
Over the past few years an increase
in incidents has been experienced
from Central Africa with Eastern
Africa currently posing a major
piracy risk, says Duvenage.
Brews agrees, pointing out that
Somalia is a huge problem be it on
land or sea. “A lack of governance
adds to the problem. We had two
vessels hijacked last year. In terms of
land and sea cargo bound for Somalia
we avoid it completely now.”
Areas that have seen major
improvement, however, include the
Democratic Republic of the Congo
and Nigeria as well as Angola,
where there appears to be political
stability.
“Risk does seem to be on the
decrease rather than increase
because of stabilisation of
governments especially in the
southern African region,” says
Brews. But it’s important to
deal only with legitimate service
providers who are familiar with the
African continent, he adds.
Whatever the country to which you
are transporting, it is imperative not to
cut costs when it comes to the packing
and risk management of one’s cargo.
And always insure the cargo through
a professional marine insurance
provider that has the expertise and the
network of surveyors to deal with any
claim efficiently.