Updated: Mar 24, 2021
Joe Klobus, OEC Group’s Lead Claims Analyst and Insurance Specialist, is one of the industry’s experts on Cargo Insurance. He shares his views on the recent spate of container losses in the industry and offers advice on what clients should be doing to protect themselves.
Q. Based on industry standards, total or partial loss of goods by theft or damage is a frequent occurrence. How do you help clients protect inventory in transit, especially when the costs to ship their goods are at historic highs?
A: At this moment there seems to be just one solution for protecting inventory, and that is cargo insurance. This is especially true today because the increase in costs associated with shipping further drive the need to insure cargo. However, insurance does not only protect cargo. Using certain policies, associated freight and duty costs can also be recovered along with the cost of goods. This helps shippers protect their entire investment.
Q. What are some common misconceptions importers have about insurance for overseas shipping?
Many importers assume that the carrier will cover their losses, which is often not the case. Carriers have many legal protections that limit their liability. Maritime law is often very clear on those limits, meaning if an incident occurs and a client does not have insurance, then that client will legally suffer the entire loss.
Q. What are your thoughts on the investigation process associated with cargo loss incidents?
A: On the ground, professionals will be dispatched to conduct thorough investigations, and on the back end, loss adjusters will analyze all the data that has been gathered. The process can be very slow and arduous, often taking many months to conclude. When everything is finished, the findings of these investigations are not always made public. This standard practice leaves many shippers wondering what caused the loss and if that issue has been addressed for future shipments. However, proper insurance coverage alleviates that burden. The right policy affords shippers peace of mind that coverage and settlement is not contingent on the results of an investigation.
Q. What’s the most important thing for shippers to know about these thorough inspections?
A: The biggest impact that shippers will experience is further delays of their cargo. Investigations will remove their inventory from production or secondary sale that they’re conducting in the U.S. or elsewhere. Lengthy delays can bring any future plans for your goods to a halt.
Q. Why is it more advantageous to use an in-house insurer rather than a third party?
A: When a customer chooses to insure in-house, there is a more connected one-on-one relationship. Your partner will have a vested interest in neutralizing every shipping risk. There is extra incentive to act and settle all claims quickly and extensively. Also, consolidating your shipping operations in one place is very effective. Your customized information is at the fingertips of experts across every logistical team, including the insurance department. In-house insurers can organize a formal claim on your behalf with minimal involvement on your part. Your partner will take the burden of organizing even the most complex claim.