Supply-chain chaos is raising a number of concerns over the adequacy of existing cargo insurance contracts, a leading insurance broker has warned.
WTW said that the potential loss exposure for many shippers had changed along with the delays and congestion at many ports around the world and policies should be reviewed.
"Logistical challenges can alter the risk exposure," WTW said in a report authored by marine risk consulting and claims advocacy group leader Charles McCammon.
He said risk managers need to "ensure existing cargo coverage adequately addresses potential losses".
The insurance broker said that claims-handling resources, such as insurance adjusters and independent marine surveyors, are currently stretched because of a series of catastrophic events over the past 18 months.
This could impact on the ability of insurers to process claims. "If your organisation faces a catastrophic event, it could take a considerable amount of time for an adjuster or surveyor to be assigned following notification of a loss," WTW said.
With the shortage of containers, WTW said many shippers are looking to move cargo in break bulk on pallets.
Coca-Cola recently said it had been forced by the shortage of containers to ship its products on bulk carriers rather than container ships. According to WTW the change in storage conditions could invalidate cover and underwriters need to be informed.
Cargo policies also set a maximum limit on liability for a loss in a single conveyance or place.
However, an accumulation of goods, caused by port congestion, could see those limits exceeded, putting cover at risk.
Limits of liability might also be exceeded if shippers have chartered vessels, or blocked booked sections of cargo space. Major shippers including Walmart, Costco, Ikea, John Lewis and Amazon are reported to have taken such action during the crisis.
As cargo owners look for alternative ships to move product WTW is also urging them to check that their cargo is being carried on a vessel that complies with conditions of cover on classification society, age limits and weight.
It also warned port and ship delays could mean time limits on cargo insurance policies may run out.
"Given the various logistical challenges shippers are experiencing around the globe, these standard provisions may be insufficient given the increased likelihood for delay," WTW advised.
