This page contains a Flash digital edition of a book.
SPOTCHECKINSURANCE


implications so that the underwriters can make a judgment as to the risk’s insurability, which will depend on a full loss prevention analysis and on what is known about the companies involved and the scope of the project.


Non-negotiable contracts mean exactly what they say and there is usually little point in attempting to change them to fit a forwarder’s insurance cover. Instead, the cover, if the risk is deemed acceptable, has to be fashioned around the contract. One of the alarming aspects is that sometimes the contracts do not even carry a traditional force majeure clause for eventualities such as hurricanes, government requisition, violent attack or withdrawal of labour. In this case we would seek to have at least a rudimentary clause inserted. An early course of action would be to ascertain the level of liability and whether or not there is any derogation from international law. This might involve the no-fault limitations, mentioned above. These may look frightening at first sight, but on analysis it could transpire that the contracting party may not be liable to anyone and as a result the forwarder may not face phenomenal exposure after all. If the assignment is not the normal sort of risk the insurer is comfortable with, it might be necessary to seek an additional premium. Alternatively, it could be necessary to reinsure the risk, or part of it, through a third party. There are rare occasions when liability cover cannot be arranged and freight forwarders are advised to obtain straight cargo insurance. Normally, however, a solution is at hand, provided the issue is tackled at an early stage.


The potential severity of the effects of a project forwarder being under-insured can vary in different parts of the world. One example, where project activity is high, is Russia. Here, because of the nature of liability regulations, a number of additional


When the transport service provider is then contracted to break down or in any way split the load for delivery within Russia, any attempt to limit liability contractually on cargo loss for the domestic leg may cause difficulty.


Project forwarders are being increasingly required to operate in the more challenging parts of the world.


challenges are often encountered when seeking adequate cover. In helping project forwarders in this market, access to experts with a thorough knowledge of Russian law is essential for an insurer as well as an ability to draw upon reinsurance resources at an international level.


Russian case study


Here is an example to illustrate these requirements: a project shipment from Germany to the Russian oilfields. Sizeable in volume and with a high value, the equipment needed liability cover up to a USD10 million limit over the extent of the three-month project. Such extended liability cover demanded by the German shipper required an international capacity. In this case, the TT Club in London was able to provide this capacity and supply the local knowledge and understanding of the underwriting and claims situation through its agent in Moscow. The required provision of cover was therefore arranged.


The complexity of the Russian case arises in part because the usual international freight transport conventions that limit liability for transport operators, including freight forwarders, only apply in Russia to inbound cargoes from foreign countries.


In an environment where project shippers, who are moving goods in increasing volume into Russia, are also demanding that the forwarder takes responsibility for more and more domestically based transport and logistics functions, international transport conventions may not be applicable. Project forwarders need to be aware that they may be open to increased liability in these circumstances. They need in particular to understand the terms of the contracts that they are agreeing with international shippers, who themselves are seeking to take advantage of Russia’s current surge in buying power, particularly in the energy sector. Today any project forwarder – in whatever part of the world it is operating – is under pressure to agree to deliver services within tight operational and financial margins, and typically will face harsh financial penalties for delays. As a consequence of providing these services, whether sub-contracted out or provided within their own operation, forwarders are clearly taking on ever-growing exposure to risk. They should be acutely aware of the possible additional risks that they may undertake in order to win their share of the expanding trade in project cargoes in a sustainable fashion. Expert and specialist advice on the complexities of liability in this competitive commercial environment is crucial. HLPFI


Please note, this article is intended for guidance only. Whilst every care has been taken to ensure the accuracy of the contents, no responsibility will be accepted by the publishers for any errors.


Shipowners, Operators, Brokers A family owned shipping company


108 July/August 2013 www.heavyliftpfi.com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132  |  Page 133  |  Page 134  |  Page 135  |  Page 136  |  Page 137  |  Page 138  |  Page 139  |  Page 140  |  Page 141  |  Page 142  |  Page 143  |  Page 144