Double insurance drives up costs
ALAN PEAT
THE JSE-listed logistics specialist Spectrum Shipping has formed an alliance with one of South Africa’s leading risk managers and consultants to provide appropriate solutions to the risk intrinsic to their clients’ business activities, according to Cape Town based senior executive, Vince Boulle.
“A key element in providing integrated ‘end to end’ logistics solutions - which ensure the seamless flow of products into the market place for importers/exporters
and consumers - is the management
of supply chain risks,” he told FTW, “incorporating marine insurance.”
Looking specifically at marine insurance, Boulle added, it is imperative that it is considered within the context of the overall logistics chain - and not looked at in isolation.
“The primary reason for this is to avoid the possibility of double insurance in a particular process or link in the chain - which has the obvious effect of driving up costs.
“Or, alternatively, under-insuring or not insuring at all - a process which has the potential to substantially increase the cost of risk within the supply chain.”
Boulle stressed that it was also important to understand the scope of cover being purchased or received, and the costs or risks associated with the cover.
“Ideally the importer would require that the cover and related insured value incorporates all costs up to final destination including all duties, port charges and a reasonable profit mark-up.”
From an export perspective, Boulle added, it is imperative for an exporter to ensure appropriate insurance cover is in place to avoid claims or recourse back to themselves.
“It is interesting to note that in the export of perishables more than 50% of losses incurred were temperature related damage - and the traditional/standard cover available would have resulted in approximately 70% of these claims
being rejected.
“This is quite significant when an exporter is under the impression that goods have been adequately insured.”
“Given the complexities of marine insurance, it is critical that both importers and exporters choose their insurance partners carefully - to ensure that they have the specialist expertise and industry knowledge to provide them with optimum solutions to supply chain risks,” he said.
