Tailor-made product overcomes deficiencies of traditional insurance solutions

RAY SMUTS IGNORANCE, IT would seem, still lies at the heart of the dissatisfaction experienced by most exporters of perishable goods with standard marine insurance, as provided by most insurers, asserts Victor Vaz, MD of Eikos Risk Applications. Poorly advised exporters and their non-specialised insurance brokers with regard to the limitations of conventional “all-risks” marine insurance, is the contributing factor to this dissatisfaction, he says. Durban-based Vaz believes that if one accepts insurance companies do not take kindly to the inevitabality of a loss, it is easy to understand their reluctance to embrace risks emanating from the transportation of perishable cargo, which translate by definition to the inherent ability to ‘perish’. That may well be due to factors such as unreasonable delays, unwarranted change to required surrounding climatic conditions, quality and age of the product, and preparation of the goods in question. “The reluctance by most insurers to provide true ‘all risks’ insurance to perishable cargoes is unfortunately more often than not reflected in claims repudiations, often due to the ignorance of the insurer, cargo owner and/or the insurance broker.” Non-listed Eikos- the word means ‘probability’ in Greek - is only five years old, yet nationally operative with a strong perishable client base and network of specialists. This has resulted in the company gaining extensive experience and knowledge of risks inherent in the perishable cargo industry and implementing insurance solutions catering for the reality of exposure. Through intensive focus on the management of perishable risks, Eikos has evolved its own marine insurance products through specialist insurers, surveyors and recovery agents, to overcome the deficiencies of traditional insurance solutions. Policy wordings have been extended to cater for losses resulting from such vagaries as delays and temperature variations beyond the control of the cargo owner. Financing this type of risk in an optimal manner is achievable only when one merges economically sustainable premiums with tailor-made policy wordings, formal self-insurance and a variety of supply chain control measures. Says Vaz: “Our comprehensive marine insurance product not only manages the physical aspect of the risk but provides specialist maritime legal expertise, allowing the cargo owner and his insurer to recover losses from liable carriers. “The recovery agent’s understanding of maritime law and the perishable shipping industry is directly proportionate to his success rate and works as a safety net in the event that the loss falls within the “excluded perils” element of an insurance policy. Many of our clients have reaped the benefits of this approach whereas they would previously have suffered substantial losses.” It is to be regretted, says Vaz, that lack of expertise and understanding of risks surrounding this industry have resulted in perishable cargo owners facing unexpected financial losses.