One Risk Manager expressed it this way. “With the exception of a Letter of Credit, insurance is the only instrument in an international transaction that has the ability to guarantee the satisfaction of both buyer and seller.” According to some successful forwarders, it’s a way to keep the project forwarder happy as well.
Project forwarders are uniquely skilled at engineering complex shipments and getting them to their destinations, safely, and on schedule. In the event that when things don’t go as planned, righting the wrong tends to be expensive.
If done right, insurance reduces the financial pain and softens potential friction between forwarder and shipper. But getting the right insurance for projects takes some understanding. Here are a few tips for project forwarders:
All Projects are NOT Created Equal
All projects are not created equal and neither should your cargo insurance. Reject off-the-shelf insurance solutions, instead, give your insurance provider full details about the project including a list of things that can go wrong. Those details will help them match coverage to the project, rather than making your project fit the insurance.
Be sure to get coverage for the cost to send replacement parts by expedited air freight. There’s nothing worse than a factory sitting idle, waiting for key components.
Get a Copy of the Proposal
Before binding coverage, ask to see a full copy of the proposed wording. Refuse to buy on the broker’s summary proposal. Look especially for two things – the list of exclusions and the word “warranted”. A warranty is something one MUST do in order to be covered.
For example, if you can’t control that the vehicle is never left unattended, that team drivers are used, or that the motor carrier has USD $500,000 insurance, then argue on behalf of your customer for removal of the warranty.
Ensure You have Terrorism Coverage
If the shipment is traveling through war-torn territories, be sure that coverage is extended to cover damage caused by acts of war and terrorism on land. Otherwise, land losses from these perils will likely be excluded.
Save Money by Conducting Your Own Survey
If a loading, stowage and condition survey is required and is at the shipper’s expense, ask permission for your company to conduct the survey. Many project forwarders are on-site anyway and have the skills necessary to carry these out.
Secure Chartering Insurance
If chartering, make sure that charters are covered by insurance. Under certain conditions, vessel charters are excluded.
If the bid includes penalties for a delay in start-up, there is insurance for that. Ask the shipper if they’d like to complete an application for a quote.
Win More Bids
In addition to ensuring the satisfaction of shipper and buyer, project forwarders can also benefit from insurance.
One project forwarder learned that insurance wins projects. Here’s what happened:
A forwarder bid on a twelve-month project to Afghanistan and decided to include insurance in the quote even though not requested in the bid. The project forwarder went at length to include a security plan and specifics with respects to how claims will be settled. Ultimately it was insurance that won them the project. And besides winning the business, they made a little extra revenue as well – actually, they made a lot of extra revenue.
If you are a project forwarder that wants to ensure customer satisfaction, then consider having unsolicited conversations with your customers about project insurance and don’t forget to include your insurance provider.
About the Author: Greg J Kritz serves as a Strategic Advisor for World Insurance Services, Inc.
For more information contact Greg at firstname.lastname@example.org or +1. 954. 632. 1083