He sold his own insurance office some years ago, and to prevent getting bored he specialised in non-covered or insured damages. At an outdoor café, in the cool of a sunshade, Jan Robyn from TempSurvey talks about the almost impossible situations he has to deal with. Examples are joined together as a warning string: be careful with insurances and be careful with claims.
After a lifetime in the world of insurance, both marine insurance and transport insurance, Jan has gained an enormous amount of knowledge. Marine insurance for, for example, air and sea freight is a completely different world than ‘regular’ transport insurance for road transport. One example of this is general average, which means everyone pays to proportion to get a ship to the port. Should a fire break out or a ship run to ground, the bill is presented to the companies with cargo on board in proportion to the value of the products on board.
Jan’s first tip, therefore, is to always prevent lawyers working on insurance claims. Because of the enormous differences between the insurance worlds, only high-priced lawyers have enough knowledge of marine insurance. Besides, court procedures are often not needed. “I try to get the story behind the damages out in the open, and to make all parties the least unhappy,” Jan sums up his job.
Purchase conditions decide ownership
Years ago, Jan used a temperature logger and RFID chips to find out where damages originate in cold supply chains that had many damages. “A closed circuit is needed for that, or it won’t work,” he explains. The loggers and pallets with the chips have to come back to the first party in the chain. Yet he had good results, and he managed to turn a loss-making policy into a profitable one for the insurance company. The number of damages declined considerably. “It takes time and money, and it’s only profitable for products with a high added value,” the insurance expert continues. Many fresh produce products don’t fall into that category. Jan mentions potatoes and onions as risky products, especially because the margins are very small.
“Prevention starts with the purchase conditions,” Jan explains. However, he knows from experience that the knowledge about purchase conditions is ‘very bad’ for a lot of companies. Importers and exporters pay too little attention to purchase conditions according to him, even though they determine who is the owner of the goods at which point, and who is therefore responsible for the goods. Jan exemplifies this with an extreme example: an exporter who has to deliver a product from Europe to the interior of Congo knows that the situation in that country is incredibly bad. It’s therefore very risky if the exporter remains the owner of the product until the customer’s front door. It’s better to transfer ownership in the port. The risks of transport in the interior are then with the importer.
Getting insurance or not?
For large transport jobs, it’s not always necessary to take out insurance for the goods, if the goods are cheap. With a few hundred lorries on European roads, a company would be smarter to internally cover the risks by setting money aside. The law of large numbers comes into play then, Jan explains. It’s different for a ship’s cargo. With multiple containers on a ship, damages are much more significant, and the law of large numbers no longer applies.
For that matter, people continue to be the weak link, so that mistakes will be made. Fork-lift truck drivers that hit the cooling of the container and break it, so that the container no longer has air circulation. Or a reefer’s temperature that is set to +18 ºC instead of -18 ºC. It may sound a bit extreme, but “it happens,” Jan emphasises. Another example: according to some policy conditions, temperature loggers have to be placed in the container, or the damages aren’t covered. “But the logger does have to be switched on, or an expert can’t do anything with it.”
Shipping companies prefer keeping the reefer data to themselves, because there’s an added danger when it comes to temperature loggers, Jan knows. “When temperature registration shows a product deviates a few degrees but it doesn’t have an effect on the product, a buyer can still claim it does. You’re better off without registration in that case.” Besides, Jan also sees a connection between the buyer’s claim amount and how much a product is needed. He gives an example: when the weather’s good, catering services buy a lot of beer, but when temperatures are higher than 25 ºC people don’t drink beer, but water. When the weather changes, consumption also drops, so there’s not much demand. When a pallet arrives with a few bottles out of place, that can be enough to file a claim. When the outdoor café is filled with people ordering beer, those out of place bottles are served without a problem. A complaint often heard in this perspective is that the packaging isn’t good. “That often means the buyer has bad intentions. Problems with packaging are never covered.”
Finally, Jan has some tips for settling a claim. “Make sure you never open the container without the presence of an expert,” he says. And it’s best to retrieve the shipment concerned right away. “That makes it easier to decide what should happen, and always try to think along with the party making the claim. What would you do if you weren’t insured?” Should a shipment be completely total loss, it’s important to take the destruction of the products into your own hands. That way you prevent the product ending up in a dump shop in the next village, Jan explains. “Your name is on the product, after all.”
It’s also worth it to check the cost for destroying the product. “Goods never have a zero-value, but they can have a negative value,” Jan says. For example, when packaged lettuce is offered as feed, the product still has a value, but when all bags have to be opened it costs a lot of money. Jan calculates: “The destruction of a container with frozen product is €800. Recycling those products costs €1,800.”
Eastern European drivers and stowaways
The refugee problem in Calais, France, has caused more reports of damages. Stowaways who hide in lorries stack boxes in front of the cooling motors, so they don’t get hypothermia. Besides, the cargo is often also damaged. Broken packaging, urine and excrement, the shipments are often practically completely damaged. European authorities often judge the shipment to be total loss, and that it has to be destroyed. British authorities are more careful with those kinds of claims, and judge part of the shipment to still be good.
Because Eastern European drivers are used more often for international transports, more problems occur. “These drivers are exploited, and are often away from home for months at a time, you can’t expect them to keep their mind on the job.” Besides, some drivers do “things that aren’t legal,” Jan means, for example, allowing stowaways in the lorry. That causes trouble as soon as a claim is filed. “They don’t speak the language or they don’t want to understand you,” Jan concludes. Because of that, it’s practically impossible to find out what happened.