Wider insurance cover available – at a premium

The prudent exporter will always act as if uninsured rather than rely on his insurance agent to pick up the pieces in the event of a claim. For perishable cargo the same principle applies – only more so. “Perishable cargo tends to be claims-intensive and if you have a loss it’s substantial,” says Associated Marine chief operating officer Mike Brews. Which is why it’s crucial that perishable exporters ensure that the containers they’re using are sound, that the packaging effectively protects the cargo and that they use reputable clearing and forwarding agents. In terms of risk it ranks with cell phones, and Associated Marine offers a number of cover options – obviously the bigger the company you’re dealing with the wider the cover, says Brews. The preferred option is standard cover which sets a 24-hour limit for breakdown of refrigeration machinery. “If machinery breaks down it gives the shipper 24 hours on the vessel to get it fixed and get the temperatures back to where they should be. There are extension clauses that go beyond the 24 hours and cover deterioration of stock as long as it was loaded in a sound condition,” says Brews. One of the major issues with perishable cargo is ‘inherent vice’ – the inherent perishability of the cargo that will deteriorate in time under the wrong conditions. “The way to avoid it is your packing, refrigeration, and control of CO2 and oxygen gas – so that’s where the refrigeration machinery clause comes into effect.” Bigger clients tend to look for wider cover – and at a premium this is available and takes the exclusion of inherent vice clause out of the cover If the client can prove through PPECB certification that the product was loaded in good condition and it reaches its destination in less than a pristine state, the insurance policy will generally respond. Airfreight is a different story, says Brews, because chilled cargo is generally packed on ice in polystyrene boxes which means there is no refrigeration machinery involved. “We can’t be relied on to pay for deterioration of stock. If there wasn’t sufficient ice for the voyage the cargo will deteriorate. “Airfreight cover therefore tends to be more restrictive in terms of what we can give our clients but again it’s a shorter voyage so if something goes wrong you should know immediately.” He says there’s seldom a problem with airfreight unless cargo gets bumped which doesn’t happen often. And when it comes to strikes – like the recent Transnet strike – they are an exclusion in terms of any policy. “We as underwriters would look at whether the loss would have occurred without the strike. If there’s a machinery breakdown we would cover it. But if the strike is responsible for stock waiting two to three weeks before being loaded, that is strike-related and would be excluded.” Another area that isn’t covered is loss of market which is a standard exclusion. “We can’t predict how much business will be lost in the future as a result of the non-delivery of strikerelated cargo. That’s a business risk, not a physical risk, which is what we cover.”