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SPOTCHECKINSURANCE


tonne. The cargo weighed 296 tonnes, so the owner calculated the stevedoring costs at USD8,500 and quoted that in turn to the charterer of the vessel. The voyage was duly fixed on that basis. After the cargo had been discharged, the stevedore invoiced the agent for USD130,000. When the cost was questioned by the owner, the agent realised that the USD28.90 rate it had quoted to the owner was the rate per cubic metre, not per tonne.


It was apparent that the agent had simply misread the port tariff document. After discussion with the agent, the stevedore agreed to offer a discount on the costs, and the claim, which was covered by ITIC, was ultimately settled for USD75,000.


ITIC warns over misread tariffs


An international insurance group is urging ‘due skill and care’ in reading tariffs and documents, writes Gregory DL Morris.


A


lthough a far lesser offence than fraud or theft, careless or rushed reading of tariffs and shipping documents also hampers logistics – thus running up costs, causing delays and increasing the cost of insurance. It might seem as though errors and omissions are impossible to interdict – to err is human – but at least one underwriter is making a push to raise awareness in an attempt to drive down costly mistakes. The International Transport Intermediaries Club (ITIC) says the misreading of tariffs in shipping documentation is a common cause of costly claims.


South American case


ITIC cites the case of a South American port agent asked by the owner of a vessel to provide a quote for the costs of discharging a shipment of project cargo. The agent reviewed the port authority’s official tariffs, and advised the owner that the stevedoring costs would be USD28.90 per


www.heavyliftpfi.com


Simple negligence is failure to act with due skill and care. – Charlotte Kirk, director of ITIC


While that instance was settled at a compromise, not all are. In any case, someone has to take the cost, even for an honest mistake. And there are lots of mistakes. “We get claims monthly,” said Charlotte Kirk, director of ITIC. “We are the niche provider of this type of coverage and have been since 1925. And the same types of things have been happening since then. We had a look back to documents from the 1920s. Mistakes were being made when it was all done by telegram.”


Problems Problems are more common in container shipping than in project cargo or breakbulk. “But we see those too,” said Kirk. She added that there are no clear trends geographically. “It can happen anywhere in the world. Simple negligence is failure to act with due skill and care.” Claims through roughly the first 10 months of 2016 ran to USD20 million. While acknowledging that retainers paid to agents are often low, and workloads are always heavy, Kirk stressed that an extra minute of care and caution by an agent will save time and money in the long run. “If there is an error, the best thing to do is admit it quickly and negotiate from there,” Kirk advised. “We might be able to get a reduction.”


ITIC reviews its claims history every six months and rates rise for frequent claims. The underwriter has had to drop clients that are excessive risks. “We try very hard not to wag fingers


and be condescending. If there is a run of mistakes, we issue a circular to all insureds alerting them to the problem. We post the circulars on our website. They are quite a good read.”


January/February 2017


HLPFI 57


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