Perishable insurance comments draw fire

I refer to the article headlined “Consult a specialist to cover all insurance bases” (FTW December 6, 2002). That a specialist needs to be consulted by exporters of perishable products is beyond dispute, but not for the apparent reasons stated in the above referenced article. I am working off the pretext that the above referenced article is a rather bad misquote of the author’s comments as it could lead one to believe that sinking of a conveying vessel or the dropping of a box by stevedores is not covered under a policy covering perishable products. This of course is not true at all as even the most basic of “perishable products” policies will most definitely respond to loss resulting from either one of these perils. The time limitations for breakdown of refrigeration equipment can also vary from 24 hours according to the “standard” clause to as little as six in certain circumstances, and can in fact be waived altogether. The problem with most standard form perishable product policies does indeed (as pointed out by Mr Veldhuizen) relate to temperature variation. Obtaining wordings to cover these various dangers however is not the challenge, there are Institute Cargo Clauses (the Frozen Food Extension Clause) available which give substantially more cover than given by the Institute Frozen Food Clauses (A) clearly being referred to. To intimate that the solution to the exporter’s risk related problems begins and ends with insurance is however over-simplification as experience will no doubt have demonstrated to any exporter of these products. Insurance is in fact never the whole solution and in certain instances (perishable products being one of them) actually responds quite dismally to the real risks that are faced in everyday trade. Proper management of this type of risk entails thorough understanding of supply chain risk in its broadest sense. Sound relationships with the chosen carriers and involvement by them in the risk management effort is also crucial. Contrary to Mr. Veldhuizen’s view there are in fact one or two brokers left in South Africa who do understand all aspects related to the risk of moving perishable products. One of them even has on its staff an attorney, however we would not dream of advising clients not to use the legal profession for legal advice. Surely the trading of risk in the market place is best left to the insurance professional who understands the dynamics of risk (not just insurance) and the dynamics of what is becoming an increasingly difficult market globally. Exporters should indeed consider very carefully when looking to insure their cargo what sort of expertise is required. Hugh Reimers, Director : Eikos Risk Applications, Johannesburg.