Review your current insurance programs, TT Club warns marine, 3PL community

TT Club is warning that too many transport operators, from NVOCCs and logistics providers to terminal facilities, are worryingly uninformed about the extent of their insurance cover, and says that insurance cannot be viewed as a substitute for good business practices. Rather, it is one part of a comprehensive loss prevention program.

C Daniel Negron, vice president in the Americas for the Bermuda-headquartered mutual insurer, urged all operators to review their current insurance programmes to ensure that their liability risks are adequately protected.

Referring to the security legislation now in place, especially on shipment routes touching the United States, the Club said that even three years after September 11, 2001, not all operators understand the changed security and insurance landscape.

Negron drew specific attention to some of the more prominent security-related legislation such as the Bioterrorism Act, the 24-hour Advance Manifest Rule and the International Ship and Port Facility Security (ISPS) Code, and spelt out the potentially business-threatening risks to operators throughout the supply chain.

“Recent security initiatives have put the responsibility for anti-terrorist measures on all participants in the transportation process, from shipper through to receiver,” said Negron. “In the event of a terrorist incident, every link in the chain will be the focus of intense scrutiny. Companies would be well advised to ensure they can withstand that scrutiny,” he said.

“For example, there is a great risk of exposure to third party cargo interests for loss of market or other consequential loss resulting from an incorrect declaration on a manifest. Since there is no direct relationship between an NVOCC and third party cargo owners, there is no benefit of a limitation of liability,” he said.

“In that every shipper with a consignment on a delayed vessel can potentially assert a claim for ‘loss of market’ on the value of his merchandise, on a 3,500 or 4,000-plus TEU ship, the potential exposure can be significant,” he said.