On June 15, the Latin American Association of Marine Underwriters (ALSUM) held its Forum with industry experts for the first time in Madrid.
Among their panelists, they had Inmaculada Pinel, senior underwriter of MAPFRE Global Risks and member of the ALSUM Cargo Committee, to open the session.
She was responsible for introducing and analyzing Project Cargo from the underwriter’s perspective, potential insurance gaps, the importance of Risk control, and finally, how to pass on liabilities in the event of a potential claim.
Definition: What is a Project Cargo?
A Project Cargo is a mode of transportation of certain goods that, due to their dimensions, weight or complexity, cannot be contained and therefore require a special transportation system. The goods that we are talking about, in general, are pieces of equipment of the industrial and energy sectors, which additionally need special stowage, lifting and handling.
Project Cargo can be carried out by sea, river or land, using specific vessels, barges or special modular platform trucks, prepared to transport large loads, which are impossible to transport as contained cargo.
These pieces of equipment are typically sourced from different suppliers, and consequently they may be transported from different parts of the world. This process entails a high logistical complexity, in which block chain technology has (and will increasingly have) much to contribute. “By block chain technology, we are referring to the unchangeable recording of data that provides immediate, shared, chronologically ordered and fully transparent information, to which authorized participants in the supply chain anywhere in the world have access, reducing risk and costs for all those involved.”
Why do we need to insure a Project Cargo?
The answer to why we need to insure a Project Cargo is logical: because there are risks involved and in Project Cargos the risks are very high.
Losses in the event of a claim can be significant, either due to direct damage to the Cargo – given its high value in many cases – or due to the cost of all expenses incurred as a result of a delay in the commencement of a project, resulting from a claim during transportation.
Taking out insurance for Project Cargo transportation provides peace of mind for the companies that are carrying out the project – the policy is effectively a guarantee.
From my point of view as an underwriter, I would say that approximately 30% of the time is spent on plain underwriting and the remaining 70% is spent on risk control. It is a priority that sufficient advance notice of all project information and planning be provided to carry out an accurate risk assessment and control.
Identification of critical equipment:
- Individual value of the equipment
- Uncontained load
- On-deck load
- Shipping period close to the commencement of the project
To do this, a Survey Warranty must be included in all Project Cargo policies, which determines the insured party’s obligation to inform the insurer about the shipment of the main critical equipment, so that the insurer can coordinate its inspection at the times of loading and unloading, during its transportation. Failure by the insured party to observe this obligation may result in coverage restrictions.
Continuing with risk control, it is also key to know the infrastructures for land transport in destination, location and conditions of the storage place or stockyard areas. Carrying out a Project Cargo in the Andes is not the same as in Australia or in Ghana. In short, a number of factors that make up the risk we intend to insure must be taken into account.
For this purpose, meetings prior to the start of the project between insurers, broker, insured party, and cargo inspectors are essential.