What is Marine Cargo Insurance?
The Marine Cargo Insurance industry is one of the oldest branches of Insurance, or you could say this is where insurance mechanisms were invented. Marine insurance is an agreement whereby the insurer promises to indemnify the insured for damage or loss to goods/cargo during transit.
This insurance is massive in terms of domestic and international trade as a lot of contracts that are formed by logistics partners or the clients state that there needs to be sufficient cover for the goods either by the buyer or the seller against the loss or damage of the goods whilst in transit.
Who should have Marine Cargo Insurance?
- Freight forwarders
- Logistics providers and their clients
- Anyone involved in international trade
Essentially anyone who has an insurable good should have marine cargo insurance in place. Usually, a claim or a loss on a policy will be for an entire shipment. As an example, if there is a cargo ship and a container is damaged or lost, this would usually mean a claim for that entire shipment. More often than not when there is a claim it is substantial as a claim for two or three retail items would not happen often because of a deductible/excess in place to cover the insurer.
Why would I purchase Marine Cargo Insurance as it is an additional cost?
This is a question that comes up often. It depends on the number of shipments, margins on the product, whether you are the buyer/seller, what is the total value of shipments, what your contract requires you to provide amongst many other reasons. The cost of insuring the goods really depends on the route, locations, what is being shipped and how it is transported. You can insure goods to a non-sanctioned preferred region with good shipping routes and no war risk for 0.095% of the value of the goods. This is next to nothing considering if you are shipping $20mn worth of goods a total loss could be catastrophic for the buyer or seller.
If you are a logistics provider/freight forwarder the likelihood is that you will have a marine open cover in place whereby your clients can choose to opt-in on a policy with agreed rates. Logistics providers may then add margin in so that they are also earning because of the administrative cost.
Overall is Marine Cargo worth purchasing?
Given the amount of international spending, consumers moving more online and e-commerce growing at an astonishing rate it is becoming imperative for these suppliers to insure against losses. The Suez Canal incident in the last few months showed how much one shipment can make a global impact, these goods were not even lost and the insurance claims are in the millions of dollars. If you have a reputable logistics partner then they will offer marine cargo cover as standard to a contract they offer. If you are a logistics provider that doesn’t have marine cargo open cover in place then you are likely missing out on additional margins you could be making whilst keeping your clients happy and insuring them against losses.
Who do we work with to provide marine cargo insurance?
We work with a number of the best local and international insurers to provide marine cargo cover, open cover, and specialist one-off shipments. Working with reinsurers in London also gives us the ability to insure the more specialised cargo such as retail electronic items in high-risk zones.
If you are a buyer or seller and need this cover or want to renegotiate your current cover, make sure you speak with a qualified professional who can help you and provide you with further information.