Page 23 - Insurance Times January 2023

a greater loss despite having some difficulties to stay in the manufacturers or traders that it would not be worth taking
market with the increased cost. The overall cost of the the trouble to prevent losses since their cargo is insured and
company should, therefore, be reduced to generate some their underwriters will compensate all of their losses including
revenue for loss minimisation. trade losses without verifying the details of the claim.
However, the traders or the manufacturers should consider
Types of loss prevention as to whether it will be worth taking for them to adopt some
measures for loss prevention otherwise losses will continue
It is to be understood first as to what does loss prevention
to occur at regular interval.
mean in marine insurance? One definition may say that it is
a systematic procedure to reduce the loss of or damage to
The following are the reasons as to why loss prevention is
the goods during its transit to minimise the loss. If the loss
essential since frequent losses will destroy the growth of the
sustained by the Owner is indemnified by the underwriters,
business and financial stability of the organisation. The nature
the overall loss will be reduced. The premium impact for
of losses of this kind may occur due to poor management of
covering the risks will be less if the losses are properly
the organisation. The details of probability of losses are as
controlled which will ultimately reduce the national waste.
under:
However, the matter is not so simple. The general perception The environment effects like global warming, cyclonic
of the shipper and the underwriters are different. According storm, earthquake, excessive rain fall may be responsible
to the shippers if the loss is indemnified by the underwriters, for substantial losses to cargo which is beyond control of
the purpose of taking insurance is fulfilled but it is often the human being
thought by shippers that payment of premium for covering
The delay in transit due to port congestion, heavy casualty
the risk will be an additional burden on them, if there has
of the vessel or any other conveyances engaged for
been no loss under the policy. The underwriters prefer to
transportation
impose suitable deductible to minimise the losses and impose
Poor standard of packing and methods of stowage
certain conditions and warranties to restrict the cover
compelling the shippers to share some burden of losses on Intentional holding up/ storage of cargo during the
them. course of transit
Transportation of cargo by overloaded vehicle
Although, each party will try to reduce the losses from
Improper handling of cargo without considering the
affecting them, but unlimitedly there may not be any long
nature of the goods
term benefit to the community because the loss itself has
only be shifted and not extinguished. Insurance at best is a
It is not difficult to ascertain the major areas of concern. It is
risk transfer mechanism and is never a risk mitigating tool.
a common phenomenon that theft and pilferage are
commonly happened at the port if supervised discharge of
If individual person or organisation has suffered a loss, the
cargo is not done by the surveyors nominated by the
incentive for improvement of the risks solely would be for
the individual person or organisation. If an individual underwriters. If the accumulation of cargo especially rice,
despatches his cargo by a vehicle with suitable tarpaulin cover pulses, cement, grains are kept in open places like transit
to prevent the cargo from rain water damage, he will be sheds, railway platforms, railway yards etc., the cargo may
able to avoid the losses. be severely damaged due to rain and/or theft or pilferage.
The losses may be prevented if the consignment is stored in a
An employee working for an organisation may be punished godown covered on all sides or may be covered by double
by his employer due to his casual approach for not counting tarpaulin during temporary storage at railway platform,
all the cases while taking delivery of the goods from the railway yards after off loading from the railway wagons at
Carriers and may even be forced to compensate wholly or different stations prior to onward transit.
partially for the loss. Whatever may be the cause of sufferings,
the burden of losses will fall upon either the individuals or the In some cases, the purchaser of the goods may provide
organisation if preventive measures for controlling the losses packing specification to their suppliers and procedures for
are not adequately taken. keeping the materials in the packing cases especially for
fragile goods with an instruction to handle such packages
It is a general perception or psychology of a large section of .during its movement with due care and caution. The outer

20 January 2023 The Insurance Times