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Industry Insurance Question: What should a logistics company know about industry insurance before signing on the dotted line? Advantage of a reputable insurance broker A competent insurance broker will be able to obtain competitive premiums and adequate coverage as well as bringing experience, expertise and technical knowledge to assist a client. The broker should be able to identify and use the appropriate underwriter (who decides the price, terms and scope of cover) to achieve competitive pricing, from an ‘A’ rated insurer, with the required breadth of cover to satisfy you and your clients. Your broker can also save you time. Our cargo facility allows us to provide an instant quotation and issue evidence of insurance as soon we receive agreement from the client.
All insurance brokers provide the same premiums No. Underwriters in local, regional and international insurance markets will have different views on the attractiveness of risks, different limitations and appetites on the types and size of risks that they can accept. As such, premiums offered can vary considerably for the same risk. A broker will present all material facts known and will approach underwriters who are known to be interested in certain territories or types of risk. Cost is important, but so is the scope of cover, the limits, the policy exclusions, the size of the excess, payment terms and the reputation that an underwriter has for customer service.
insurance to which logistics firms are typically exposed Logistics firms all know about cargo insurance, which is typical as part of any contractual shipment. But what many might not realise is that war and terrorism may be required, especially with
more logistics firms tendering for projects in emerging market territories. Logistics companies are increasingly contractually bound to hold Commercial General Liability (‘CGL’) insurance before they can secure a tendered contract. In these circumstances a competent broker can use its market knowledge in assessing the insurance clauses contained in a bid document that a logistics company is working on and add value by explaining the contractual obligations and how these may be met at a competitive price.
logistics companies need to know about liability insurance Terminology is key and two common terms in logistics contracts are Third Party Liability and Professional Liability. Public Liability (‘Third Party Liability’) is the class of insurance that provides for a claim arising for physical damage and /or bodily injury caused to a third party. It is more likely that logistics companies will receive such a claim rather than a professional indemnity claim. The limits for this type of coverage within a contract that binds the logistics company will typically be higher than for other liability insurances. Professional Indemnity (‘Professional Liability’) comes into effect where the consultation, guidance or advice provided by the logistics company is Gregory Irgin, head of considered liabilities and aviation to be at AAIB Insurance Brokers
negligent, but it falls outside of the “typical care, custody and control” clause of cargo insurance. There is less exposure here for most logistics firms, but within contract wordings confusion can arise when contracts refer to “professional liability”, when in fact, the obligation solely relates to “care custody and control” and not professional indemnity. Your broker should be well placed to assist you in reading and understanding the contract and helping to remove any confusion.
logistics firms cutting down on insurance costs First, good management practice, risk awareness and a sound health and safety culture applied internally demonstrates a commitment to limiting one’s exposures and encourages the underwriter to provide favourable premiums and terms. Second, choose your insurance broker wisely. Commercial insurance and potential claims can be complex and costly. Your broker should have the technical knowledge, experience, expertise and insurance market contacts to provide you with the insurance policies and claims services that you want. Your broker is there to support and assist throughout the policy period and not simply once a year at renewal.
Insurance specialities across the middle east region Not every brokerage has the ability to deliver specific insurance brokerage throughout the region. Because we are an international insurance broker specialising in emerging and high risk locations in the MidEast and Africa, we are well versed in delivering the right service to our customers. We work in various sectors including logistics, oil, energy and infrastructure to provide solutions tailored to the challenging locations in which they operate such as Iraq and Afghanistan. www.arabiansupplychain.com | october 2011
Published on Oct 2, 2011
What should a logistics company know about industry insurance before signing on the dotted line?