New Spoornet scheme will offer a menu of freight protection options

THE GRAND launch of Spoornet's Freight Protection Policy is due for April 1.
And freight industry complaints that all has not yet been made clear on this insurance scheme - devised and operated by insurance consultants Price Forbes - will be overcome in a full-scale, pre-launch, communication programme, according to Dr Gerhard Booysen, assistant g.m. for risk management at Spoornet.
At a special meeting organised at FTW offices to discuss the industry complaints about the new scheme (See FTW, February 13 issue), Booysen stressed that the scheme against which complaints had been laid was a specific solution that was developed for a particular group of customers in container traffic.
It was launched on January 1 with the rail contract users. They had been approached individually, and the scheme negotiated with them. But, Booysen told FTW, the introduction of the Freight Protection Facility to the general public is a sensitive issue, and a full media and public information release was timed to follow the introduction of the new arrangements to customers on a personalised basis.
The motivation for the railways to move away from limited liabilty (traditionally R28 per kilogram) to an insurance-related system, according to Booysen, is part of Spoornet's transformation into a market-driven organisation. This, he said, has been given further impetus by the introduction of a wide range of customer-focused protection options in the freight industry.
On the R28/kg liability concept, only 30% of amounts claimed were settled on average, according to Booysen - talking about the overriding facts established by a detailed statistical analysis of Spoornet's loss history of the last three years. On an as if basis, he added, the proposed levels of indemnity (per cover afforded by Institute Cargo Clauses) would have resulted in the settlement of 95% of all claims made.
The new facility will, from April 1, enable customers to choose from a menu of freight protection alternatives, according to Booysen.
The transport freight protection system has been streamlined and placed on an insurance rather than a liability basis following the creation of a dedicated cargo protection solution, he said. The newly-introduced optional and cost-effective risk financing solution will substitute the legal liability inadequacies and inconsistencies of the past.
Customers previously faced a list of standard trading conditions that made it difficult to obtain redress in the case of loss or damage to cargo. Stipulations were limited in scope - requiring that customers obtained conventional insurance through brokers, and effectively doubling their costs.
Spoornet's new options make it possible to avoid duplication of insurance cover - that is, a concept of one-risk, one-premium.
The meeting at FTW was also intended to clarify the limits of indemnity, which - from the detail that had filtered out to the freight industry so far - seemed to have only R60 000 cover for a stolen container. And this theft menace was considered the high-risk item by the freight industry sources that FTW had already talked to in researching the February 13 article. But Spoornet and Price Forbes put a summary of the insurance-related products on the table, and it read:
Conditions: Primarily the internationally acceptable Institute Cargo Clauses.
Limits of Indemnity
a) R500 000 for losses resulting from fire, collision, overturning, derailment and non-delivery of an entire container.
(The critical word theft was added to the above at the meeting because the FTW interpretation of the phrase non-delivery of an entire container did not automatically include theft, as Spoornet had intended it should - Editor)
b) R60 000 for other losses.
c) Options to increase cover can be arranged on request.
(The above include the value of the container).
In-depth investigations over the past four years, said Booysen, have identified that the R500 000 limit of indemnity represents more than twice the average value of goods per container.
And he stresses distinct customer benefits flowing from the new scheme, which he highlighted as:
l Competitive premiums;
l Simple, time-saving procedures. One-risk, one-premium and one-transaction at the time the rail tariff is agreed;
l Customised protection and professional risk management;
l Independent claims settlement through insurance professionals, according to the terms of the internationally accepted Insititute Cargo Clauses;
l A projected target claim settlement period of 30 days or less.
It should also be noted, Booysen added, that Spoornet's Freight Protection facility is not (as said by a commentator in the FTW, February 13 article on the scheme) a parastatal insurance operation.
But, rather, he said, it is a cost-efficient, risk financing vehicle underwritten in its totality by SAIA (SA Insurance Association) members.