A consultant to specialist liability insurer TT Club has stressed the need for Cold Chain operators to adopt more disciplined loss prevention strategies.
“If claims and losses are not kept under control the high cost of insurance combined with secondary, uninsured costs will have a direct influence on the profits of the operating company,” said David Heather, citing the case of a dairy produce distribution company that was reported to have suffered costs of insured and uninsured losses equivalent to 1.8% of its operating costs in one year. Because of the low margins inherent in the transport sector, these losses equated to some 37% of the company's profits.
Heather’s seven-point strategy of disciplines and actions should help mitigate loss, as well as offer proof that a company is a good insurance risk. The plan includes recognition of high-risk operational areas along with appropriate contingency plans, and acceptance of a level of self-insurance through deductibles plus an accurate assessment of equipment values.
Since the value of Cold Chain transport equipment is a critical factor in the setting of premiums, Heather said that operators need to review the tendency to over-value refrigerated containers for insurance purposes. “A good example is a 40 ft reefer container, which appears on claims as having an original new value in excess of US$28,000. This is the value on which premiums are assessed. However, for the last four to five years the new built cost for a 40ft reefer has been in the range of US$18,000 to US$20,000. If the high value is used, it is a de-facto 30 - 35% increase in value as compared to original purchase value.”
