Mitigating Liability in the Logistics Industry

Liability is an ever-present concern in the logistics industry, where complexities in transportation, warehousing, and cargo handling expose companies to significant risks. From accidents to mismanagement of goods, liability issues can disrupt operations and strain financial resources. Companies welcome proactive insurance brokers who get to know a cargo owner’s entire supply chain in order to provide not just the best options, but also make better emissaries for, and customers of, the broker, when it comes to seeking coverages. 

Common Liability Issues in Logistics

Liability in logistics often stems from accidents involving vehicles or equipment, damage to cargo, and delays or errors in the supply chain. For example, warehouse accidents such as forklift mishaps or improper stacking can lead to injuries and damaged goods. Similarly, transportation incidents involving road collisions or improper cargo securement can expose companies to costly claims.

Cargo theft is another growing concern, particularly for high-value and easily fenceable goods. Whether in transit or at rest in storage facilities, theft exposes logistics providers to both financial and reputational risks.

Where Arete Sees Opportunities for Improvement 

Based on the claims which we receive, they can be put into a handful of categories, all of which have room for improvement through better communication, better documenting of processes and knowing where the line is between making a customer happy and creating jeopardy for the insurer and/or their broker. 

  1. Accident Prevention: Ensure proper initial and recurrent training for employees handling cargo, operating equipment, and driving vehicles. Implement regular safety inspections and maintain equipment to reduce the risk of malfunctions.
  2. Contractual Clarity: Clearly define liability responsibilities in contracts with clients, carriers, and suppliers. Ensure that insurance policies cover potential gaps in liability exposure. Perhaps most importantly, do not enter into a contractual agreement that involves redlining and altering your standard terms and conditions without securing the approval of your insurer first. 
  3. Technology Integration: Utilize passive and active tracking and monitoring systems to maintain visibility over shipments and mitigate delays, theft, or mismanagement risks.
  4. Compliance Adherence: Stay updated on industry regulations and ensure compliance with safety and environmental standards to minimize legal exposure.

Insurance Brokers Can Reduce Liability 

Insurance brokers are the first line of defense for the insured and the forwarders seeking coverage on their behalf. At Arete, we have the data to support their efforts to present solutions based on a deep history of the nature and types of claims we have been nominated to handle. They are the professionals in the relationship with their insured. As professionals, they are as much the subject matter experts on liability reduction as their customers are on best routes or customs classifications. 

Arete is pleased to support our customers in ways that are appropriate to our role in the insurance industry and have built up a deep roster of talented individuals and organizations to direct our customers for greater or more specific help if and when the need arises. 

Insurance as a Safety Net

Insurance is a critical component of any risk management strategy. Tailored coverage mitigates financial losses from accidents, theft, or delays. Your insurance broker can guide companies in structuring insurance policies that align with your operational risks, providing a safety net against unforeseen events.

By taking a proactive approach to liability, logistics companies and their insurers can reduce risks, protect their assets, and maintain a competitive edge in a demanding industry. Contact us today to discuss liability risks in logistics and how you may be able to get ahead of the curve.

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Seasonal Cargo Routes and Insurance Considerations

Shipping cargo along seasonal routes requires careful planning, especially considering differing insurance requirements and potential pitfalls. Winter and summer present unique challenges for shippers and forwarders, making it essential to adapt to seasonal conditions and mitigate risks effectively.

Winter Shipping Considerations

Winter cargo routes often expose goods to extreme weather conditions, including freezing temperatures, snow, and ice. Delays caused by storms and hazardous road conditions can increase transit times and the risk of damage. Temperature-sensitive items, such as perishables and electronics, face heightened vulnerability during winter. Shippers must invest in temperature-controlled containers to safeguard these shipments and ensure that insurance policies cover potential losses from weather-related delays or spoilage.

Ports and railways operating in colder climates may experience disruptions, requiring forwarders to plan alternative routes. Comprehensive insurance policies are critical during this season, particularly those covering damage caused by extended transit times or exposure to extreme weather.

Summer Shipping Challenges

Conversely, summer presents its own set of hurdles. Heat-sensitive goods, such as pharmaceuticals and certain food items, are at risk of spoilage during transit. Heatwaves and tropical storms can disrupt schedules and damage goods. Forwarders must prioritize refrigeration and cooling systems for temperature-controlled shipments while securing insurance coverage for risks specific to warmer climates.

High shipping demand during summer’s peak season also strains capacity, increasing the risk of delays and mismanagement. Properly evaluating carrier reliability and maintaining clear communication with insurers can reduce exposure to financial losses.

Tailored Insurance and Risk Mitigation

Each season requires a tailored insurance approach. Freight forwarders should account for route-specific risks, such as extreme cold, heat, or transit delays. Collaborating with your insurance broker ensures that insurance policies align with operational realities and provide adequate protection against seasonal risks.

Shippers and forwarders can ensure smoother operations and financial stability throughout the year by understanding seasonal challenges and proactively managing risks. Internally discussing and better understanding your company’s own trading routes is essential for mitigating seasonal cargo risks.

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Preserving Evidence: The Key to Successful Cargo Claims

Shipments moving internationally travel long distances across multiple modes of transportation. Depending upon the mode – sea, air, rail or truck, cargo is subject to different forces. Sea freight has the rise and fall from waves and the pitch and yaw of the ship. Containers on rails are jarred forwards and backwards as trains accelerate and decelerate. If the packing is substandard or space is left for the goods inside to move freely, the potential for damage is present and possible. Add a heightened and active environment of cargo theft as it exists today, insuring cargo is more important than ever. 

In the event of damage or even a partial or total loss in transit, proper evidence preservation is crucial for ensuring a smooth claims process and maximizing your chances of being made whole for the loss. 

Arete offers this simple ten-point checklist, which we have refined over time, to help you cover your bases and quickly settle a claim. This allows us to pursue possible subrogation against the entity that had the cargo in its possession at the time.

  1. Document the Damage Immediately

As soon as you discover any damage or loss, document it thoroughly. Take clear, well-lit photographs from multiple angles, capturing both the overall scene and close-up shots of specific damage. Everyone these days has a phone with a camera that can be used to take photographs. 

Be sure to sign the delivery receipt with appropriate, detailed exceptions such as “hole in container” or “all cartons crushed.”These visual records are invaluable for claims adjusters.

  1. Keep All Packaging Materials

Don’t discard any packaging, even if it seems undamaged. The condition of boxes, crates, and internal packing materials can provide vital information about how the damage occurred.

  1. Maintain a Detailed Inventory

Create a comprehensive list of all damaged or lost items. Include descriptions, quantities, and, if possible, individual item values. This inventory will be essential for accurately assessing the claim’s value.

  1. Segregate Wet from Dry Cargo

Sort wet from dry cargo and thoroughly document the interior condition of the shipping container. Close the doors and see if light enters the container and document the location. Contact your adjuster directly for additional guidance.  

  1. Collect and Organize All Relevant Documents

Gather all paperwork related to the shipment, including:

  • Bill of lading
  • Commercial invoice
  • Packing list
  • Insurance certificate
  • Any correspondence with the carrier
  • Signed delivery receipts noting any visible damage.
  1. Record Witness Statements

If anyone witnessed the damage occurring or discovered it, obtain their written statements while the event is fresh in their minds.

  1. Notify All Relevant Parties Immediately

Because of strict time limits to report claims, it is important to inform your insurance provider, the carrier, and any other involved parties in writing as soon as possible. Many policies have strict time limits for reporting claims.

  1. Mitigate Further Damage

While preserving evidence, take reasonable steps to prevent further damage to the cargo. This might include moving goods to a dry area or applying temporary protective measures.

  1. Keep a Chronological Record

Maintain a log of all actions taken, conversations had, and decisions made regarding the damaged cargo. This timeline can be crucial for the claims process.

  1. Consult with Claims Professionals like Arete

On each insurance certificate, you’ll find the adjuster’s name to contact in the event of a claim. Our role is to establish the facts and determine the payable amount of loss so that the insurer can pay the claim. 

Following these evidence-preservation steps significantly increases the likelihood of a successful cargo claim. Remember, the more information and evidence you can provide, the easier it is for claims adjusters.

At Arete Adjusting, we understand the complexities of cargo claims and have established a network of surveyors and representatives who, if required, can physically examine the loss to ensure complete capture of the facts. To learn more about the role adjusters play in a cargo claim contact us today.

Posted in ClaimsTagged in ,

What Makes a Contract Special?

From a risk management perspective, this question is answered by the contractual terms that make the policy holder pay more when they have a claim compared to when standard trading conditions apply.

Standard trading contracts are often taken from other industries that are unsuited to the transportation and logistics sectors. Signing these contracts can lead to significant financial losses, the possibility of no insurance coverage, and even bankruptcy.

The following scenarios found within standard contracts are important to pay attention to, as they can have very high-risk outcomes for the policy holder:

“You are responsible for all claims.”
What it means: Strict liability regardless of any fault or negligence.

“You are responsible for the full value of the cargo.”
What it means: No weight or package limitation, including high value cargoes.

“You are responsible for delays and consequential losses.”
What it means: No limit to freight charges and time crucial delivery.

“You have no defenses to claims.”
What it means: No reference to protection for matters beyond your control.

“You have no recovery against responsible carriers.”
What it means: Certain clauses make you fully responsible for all carriers in the chain.

“You agree to a claimant supportive legal system.”
What it means: Certain legal regimes are less favorable to logistics providers.

For More Information

Please contact our specialists: info@areteadjusting.com.

Arete Adjusting, LLC is a member of the +8 Partners ecosystem. This article was authored by Phillip Emmanuel, Chief Operating Officer at +8 Partners.

Disclaimer: All claims are subject to the terms, conditions and exclusions of the relevant product disclosure statement and/or policy.

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The Importance of Salvage

If you have a claim under your cargo or liability insurance, salvage can be a major headache for the forwarder.

When an accident occurs, the merchant is understandably upset. Their cargo is damaged, but there also may be other implications to the supply chain. Often, they will prefer to abandon the cargo and re-order a new shipment. Such behaviour can be extremely costly for both merchant and even the forwarder.

The forwarder must ensure they try to get the cargo to destination before arranging any survey or inspection. If an incident happens in the port and the cargo is deemed damaged, the merchant will most likely not want their cargo. And may not want to spend time salvaging with the belief that this is the cargo insurer’s responsibility under subrogation.

However, this is not the case. The duty to mitigate/salvage is on the merchant – not the insurer. Subrogation is only after the insurers have settled the case.

This misunderstanding may result in expensive storage / demurrage / disposal / labour charges that insurers are unlikely to compensate. Therefore, we would always recommend ensuring the cargo arrives at destination before any survey is undertaken.

Any delay may also prejudice the claim, especially if it involves perishables. The insurer’s surveyor may help, but if the merchant refuses to cooperate, then this will be a total loss in a very short time. Whilst insurers will not override a decision by the health department to condemn cargo, often the discretion is on the insurer to decide. Perishables may be condemned for human consumption, but they will have a secondary market under animal feed, and this is where complications occur. There is still salvage, and it is not deemed a total loss.

Ultimately, speedy action on finding salvage buyers results in the claim being paid faster with less costs. It’s also common for the merchant to make a salvage offer for cargo that may fall outside its original market, but they still have a use for. This can make adjusting the claim even quicker and simpler.

Salvage is the number one reason for delay on claims adjusting, so it is imperative to involve the broker as soon as a dispute arises.

For questions or more information regarding salvage, please contact our specialists: info@areteadjusting.com.

This article was written with +8 Partners member company World Insurance Services, Inc. and authored by Richard Kamppari Baker, Claims Director at World Insurance. Arete Adjusting, LLC is a member of the +8 Partners ecosystem.

Disclaimer: All claims are subject to the terms, conditions and exclusions of the relevant product disclosure statement and/or policy.

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Litigation Funding and Talent Shortages

“Big issues for the industry says this new arrival”.

Arete Adjusting recently launched operations in North America, fixing its sight on the marine and logistics insurance market.

In an interview with Insurance Business America, Arete’s CEO, William (Liam) Richards, discusses the decision to enter North America and the need for a better claims adjusting experience.

Click here to read the full article.

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Arete Adjusting Launches Operations in North America

Experienced leadership, technical differentiators key to underwriter customers.

Arete Adjusting, LLC (Arete), a Third Party Administrator (TPA) member company of insurance ecosystem +8 Partners, announces its entry into the North American claims market.

Arete will utilize people, technology and its fellow +8 member companies to provide a comprehensive and insightful claims management service to the cargo and logistics insurance industry. The company’s data-driven approach, end-to-end claims management and customized solutions are committed to delivering more profitable, sustainable portfolios for underwriters in the North American logistics sector.

William “Liam” Richards, chief executive officer of Arete, lays out the company’s vision: “We are focused on ‘intelligent adjusting.’ Claims management is not just about navigating the complexities inherent in those claims, but today is about delivering pioneering insights that will redefine industry standards. Arete’s multi-node, cloud-based architecture “Crux©” and 360-degree data analytics will empower our clients with the tools to run sustainable, profitable portfolios.”

Richards previously held senior positions at WK Webster Overseas Ltd. in the UK and US. Juliet Good is Arete’s vice president, bringing more than twenty-five years industry experience, fully half of which was in marine and legal liability claims resolution for transportation intermediaries.

“Data-driven decisions lead to smarter outcomes for our clients, reinforcing the importance that sophisticated analytical tools play in claims resolution and overall portfolio profitability,” adds Good.

Philip Bilney, executive chairman of +8 Partners, said: “Arete catapults the TPA scene into a new era with the most imaginative and robust technology offering in the sector, an intelligent and nuanced offering epitomizing the philosophy of +8.”

“Liam and Juliet are already well known to many of our clients, and their leadership and experience will provide the focus and commitment necessary for the delivery of genuinely intelligent adjusting solutions.”

Arete will work closely with Cornice Claims Associates to extend the +8 Partners platform and support its existing and fast-growing logistics insurance business in North America.

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