Marine insurance can be risky business


Marine insurance specialist Australian Risk Applications reveals the intricacies of
working within the fresh produce insurance segment.
Marine insurance is a niche industry and only accounts for a small per cent of the
premiums spent on the general insurance market, according to the country’s largest
specialist marine insurance brokerage Australian Risk Applications (ARA).
Marine insurance for fresh produce, particularly for transportation related risks is a
further specialisation within the marine insurance area and insurance premiums
spent on fruit and vegetables comprise 40 per cent of the company’s business
dealings, which represents Australia’s largest fresh produce insurance portfolio.
ARA communicates with brokers and underwriters, the latter of whom take the
insurance risk, issue the relevant policies and then pay the claims. “Brokers are
responsible for representing their customers, who are seeking insurance, to a market
and will approach us so we can then assess the risk.
ARA has the specialist skills to advise the customer as opposed to the customer
trying to advise the broker on what they think they may need to insure. ARA
assesses the customers general risk profile and appetite for risk and then offers the
risk to the most suitable and capable underwriter to establish their interest in taking
the risk(s).
However, ARA notes that business owners should have a detailed understanding of
what risks are involved in their field and of the particular risks they feel their business
is equipped to absorb financially.
The most common risk that occurs in the fresh produce insurance field is categorised
as ‘high frequency, low severity’ and relates to physical loss or damage during
transportation. “The number one risk during transit is the deterioration in quality of
the product, which often occurs if it is not treated carefully for import or export.
The most common risk that occurs in the fresh produce insurance field is categorised
as ‘high frequency, low severity’ and relates to physical loss or damage during
transportation that has a relatively low value but occurs frequently. “The number one
risk during transit is the deterioration in quality of the product due to one or more
factors such as pre and post-harvest processing, storage, time, transportation
conditions and/or quality selection.”
However, whether or not the produce quality is declared as inferior depends on the
destination. “You may be dealing with a depressed market that is unable to sell the
produce at the optimum price and importers will therefore examine the produce more
closely for signs of deterioration.
Quarantine related risks are treated as additional risks and attract an additional
premium.
Cold sterilisation is a temperature fluctuation risk and the more effectively the
exporter can measure what the exact fluctuation is, the greater the likelihood of an
underwriter becoming involved.

Oct 28, 2019 - Posted by Probhai.com

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