Page 22 - Insurance Times January 2023

Loss

Prevention

Sumon Ganguly
(Consultant - Marine Insurance)
Salasar Services ( Insurance
Brokers) Pvt Ltd
Axiom Insurance Brokers Pvt Ltd

If reasonable precaution is taken by the prudent shippers for their goods in transit, they will be
able to reduce their cost on insurance and may not suffer losses which would have otherwise
happened due to wrong approach of the shippers towards lost cost control of their goods.

Introduction due to non arrival of the goods in time at the customer's
place and additional cost may have to be incurred for return
The manufacturer or trader may suffer substantial losses if
shipment if the customer has refused to accept the goods.
the risks are not adequately covered by Insurance. In addition
to the physical losses, in some cases they may also suffer
It is an admitted fact that, the possibility of loss cannot be
financial losses due to economic depression, political
ruled out even if the goods are despatched with utmost care
disturbances in the country, labour unrest in their
because the transit hazards like Fire, collision, grounding,
manufacturing unit etc, but such losses would not be
stranding of the vessel may happen during long ocean transit.
indemnified by the Insurance policies.
Since there are many risks associated with the carriage of
If the manufacturer or trader is reluctant to control losses goods around the world, transit insurance is not compulsory
with an intent of cutting cost and trying to increase margin, but the need for it is very real.
the losses are bound to happen at a even more frequent
pace and thereby ultimately reduce the margin and defeat Obstacles to Loss Prevention
the very purpose. The underwriters will not show interest
It is difficult for the manufacturers or the traders to take a
to write the policy due to poor loss records and even if they
reasonable steps for loss prevention and incur some expenses
do they will charge higher rate of premium with restricted
for the same due to stiff market competition.. The expenses
terms and conditions of the policy. However, if reasonable
incurred for loss prevention will certainly increase the cost of
precaution is taken by the prudent shippers for their goods in
the goods of the manufacturer or trader which may lead to a
transit, they will be able to reduce their cost on insurance
commercial loss to them.
and may not suffer losses which would have otherwise
happened due to wrong approach of the shippers towards
However, cargo risk management is applying the same
lost cost control of their goods.
commercial sense of loss minimisation which the
Moreover, there exist a risk of loss of reputation in the market manufacturer or trader should adopt during transit to avoid
The Insurance Times January 2023 19