Five questions for marine insurance expert, Patrick Barco
Transporting materials is a complex process involving numerous parties with competing interests and responsibilities. Global in scope, modern supply chains are fraught with risk as freight forwarders work with cargo carriers to ensure products are transported safely and efficiently from point A to point B, crossing borders and great distances by land, air and sea.
When it comes to the shipment of commercial goods via marine vessels, clients need expert advice to ensure their marine insurance does what they expect and delivers the protection they seek. To learn more about the topic, we caught up with marine insurance expert, Patrick Barco from Burns & Wilcox Canada to ask a few questions.
What type of coverage is available with marine insurance?
There are many types of coverage available. For example, a cargo policy is generally a warehouse to warehouse cover. This is one of the broadest forms of coverages which insures the risk from the time it is shipped from the factory until final delivery to the warehouse at destination. Unique to marine risk, is the General Average extension. This form of coverage effectively insures against any loss arising through a voluntary sacrifice of any part of the cargo, ship or an expenditure, to safeguard the ship and the rest of the cargo on board the vessel, to reach a safe port.
What do clients look for when evaluating marine insurance?
Because marine is such a specialized area, clients are looking for sound advice based on prior experience. In addition to quick bindings, customers have expectations that carriers can offer high limits on specific cargo and for their agents and brokers to have a strong understanding of the logistics of cargo handling and an appreciation of all the critical components that may affect the production line.
Are there any emerging trends in ocean transport that will influence the market for marine insurance?
Marine transport has become an extremely competitive space over the past decade with significant growth among freight forwarders and third party logistics providers. We do not see an end to the price wars that we’ve seen over the past few years. In addition, as commercial vessels and ports increase capacity, underwriters will continually be required to increase their limits.
What options are available to clients?
Typically, marine underwriters can be very flexible in the coverage they provide. Customers can arrange to have all of their shipments covered either for their own account or on a contingent basis based on terms of sale. The premium can be paid on a shipment basis under an open policy contract without an upfront payment at inception. Usually, policies are continuous until cancelled which gives peace of mind to the insured.
What are some of the more unique risks in the marine insurance space?
Marine risks change constantly and depend largely on geography and other factors. Piracy and theft are major risks these days and there have even been situations where mines have floated free from a war zone. Over the years, rogue waves and adverse weather patterns were cited as major problems but now we are also worrying about navigation errors due to reliance on electronics that are susceptible to hackers.
At the end of the day, clients depend on the experience of their agents, brokers and underwriters to ensure that they are properly protected.