Freight Forwarder Insurance - Cruel twist of freight as FSA pulls back.
After four long years the British International Freight Association (BIFA) has succeeded in its campaign to see freight forwarders once again given the ability to provide insurance to their customers. Treasury officials confirmed this month that the Insurance Mediation Directive (IMD) Exemption is now in effect for freight forwarders meaning that they should be able to obtain an open cover freight forwarders insurance policy once again without the having to go through the lengthy and cumbersome Financial Services Authority (FSA) registration. Introduced in January 2005, the Insurance Mediation Directive meant that many freight forwarding companies began to withdraw offers of provisions of insurance to their customers. With the recent exemption in place many of these are expected to now resume offering these services again.
Controversley however, those freight forwarders who have already gained there license from the FSA will continue to be authorised by the body and are still fully liable for fees unless they were able to cancel their authorisation via the FSA website in the six week timeframe that was given.
The exemption also initially only applies to the actual provision of insurance for existing commercial customers. In particular the exemption is not applicable where a freight forwarder or a storage company conducts business with a private individual. In this instance registration with the FSA is still required for the business to be legitimately authorised. In relation to the success of the campaign, Colin Baumont, BIFA Director General was quoted as saying that he was “delighted that our campaign to secure an exemption from the requirements of the Insurance Mediation Directive for freight forwarders, which has involved a change in UK legislation, has been successful.” “BIFA is the primary UK trade association providing effective representation and support for the UK international freight services industry. As such, we provide a conduit through which the views of our members are listened to in many quarters.
“Our success in gaining this exemption was due entirely to our persistence and conviction that we were right to protect the interests of our industry, in the name of freedom to trade and in the face of unfair competition. It is a testimony to the lobbying activities that we undertake on behalf of our members.
“Now, we are investigating the establishment of a Consumer Code of Practice, which, subject to the approval of Ministers, could extend the exemption to freight forwarders’ retail customers at a later date.” With both major political parties discussing the need for change in the way our industry is regulated this latest withdrawal of powers must be seen as a heavy blow for the FSA. With suggestions in some quarters that the body is in need of a vast overhaul if not being abolished completely and replaced with a more industry specific organisation. Against a changing face of European legislation and regulation the United Kingdom General Insurance industry is crying out for a lighter touch in terms of guidance and enforcement regarding Freight Insurance. This latest retreat within the sector could be seen as a final role of the dice by the treasury as they endeavour to make the FSA an organisation that can work in harmony with the industry. However, by leaving a system in place that punishes those that had tried to work with them in the first place, the FSA has once again managed to cause the headlines for all the wrong reasons.
Risk Management - Transport Sector heading in the right direction?
Transport Sector heading in the right direction?
By Insurance Blogger Kris Oldfield
Call it a credit crunch, an economic downturn or just a plain old recession the current financial situation is impacting in some form or another upon just about every single one of us and in many cases we having to adapt to survive. A recent survey by Marsh has highlighted the changes in attitude and strategy that are moving through the transportation and haulage insurance sector with nearly three quarters of Europe’s leading transportation firms set to review their approach to risk management in the near-term.
With just over half the respondents admitting that the Transportation sector had been hit harder than others the general mood is one of caution. Tellingly the research also shows that more than 80% of those questioned felt that Risk Management was of a much higher priority amongst senior management at their organisations since the economic downturn.
However despite the overwhelming majority of respondents seeing the need for re-assessing their risk management strategies, the research suggests that there is not necessarily a reduction in risk appetite as one may assume. The amount of respondents who felt that their board had become more risk adverse was equally matched by those who saw no change in their risk appetite (40%). Interestingly there was also a sizeable faction (14%) who believe that their organisations have actually increased their risk appetite as they look to prosper, by boldly maximising the opportunities created by their competitors caution during the downturn.
Unsurprisingly the biggest concerns in the sector are customer debt and in the near-term, credit risk. Nearly two thirds of the respondents stated that customer debt was their most significant concern with many citing the increased risk of credit lines and delayed or non payment as some of the key challenges they face. Over a quarter of all respondents also admitted that credit risk was a concern for their organization and one in six admitted that their company was either ‘fairly’ or ‘significantly’ affected by the reduced levels of trade credit available at present.
Mark Pollard, head of industry practices for Europe, the Middle East and Africa at Marsh, commented that it was unsurprising that the European Transportation sector felt that it had been hit particularly hard by the recession as the industries primary function is the delivery of goods and passengers – demand for which historically has been shown to decline in periods of recession.
However in addition to this Pollard added that the fact that firms have been able to use the recession as a springboard to make essential reviews to their approach to risk management and improve upon their existing resilience was “extremely encouraging”.
With nearly a third of those surveyed confirming that they anticipate increasing their risk management spend, the signs seem to indicate that Pollard may well be correct – especially as this comes at a time when many other areas of business are being subjected to ruthless budget reviews and cost cutting measures. In fact less than 10% of Transportation companies have indicated that they believe that they will be reducing the expenditure of their risk management budgets, a statistic that seems a clear indicator of the direction in which the sector is now heading.
-------------------------------------------------------------------------------------------- InsuranceBlogger is not surprised that Risk Management in the Transport sector is thriving despite the recession. The recession itself has led to an increase in haulier cargo insurance and marine cargo insurance claims through piracy and modern day Dick Turpin highwaymen. The old adage 'it fell off the back of a lorry' appears to never has been as true, as the rise in cargo and goods in transit theft continues despite major Police offensives. InsuranceBlogger believes that the 'black economy' is the main driving force behind this as consumer spending polarises to the 'boot sale' economy. Watch this space for a detailed look at risks to the haulage industry!
Transport, Marine Insurance and Marine Cargo Insurance
Transport, Marine Insurance and Marine Cargo Insurance - The Oldest Profession By Insurance Blogger Paul Magus
Insurance brokers were already an established feature of the London Commercial and Finance scene by the time of Queen Anne. At the beginning of the Eighteenth Century Stuart and Hanoverian England controlled most of the trade runs around the Globe and the British Empire was in its early heyday.
Insurance Brokers came into existence because the marine insurance of ships (hulls and cargoes) emerged slowly as the part-time occupation of a large and disorganised group of private individuals, some with specialised knowledge such as merchants, ship owners and bankers, but including a wide range of people whose only common characteristic was that they had capital to speculate and large profits were available for risk seekers during these enterprising times of discovery. The first insurance broker was a Marine insurance broker and came into being as a response to a need at the time.
This miscellaneous group of individuals included, at one time or another, such diverse figures as Samuel Pepys, the Admiralty civil servant and famous diarist, and Daniel Defoe, the celebrated journalist and novelist, but no doubt there were hundreds if not thousands of others who, in the gambling spirit of the age, were willing to put their signature to, that is to underwrite, a list of people sharing a risk.
Because of the hazardous nature of marine insurance, no one would gamble more than a fraction of his (or her) fortune on any particular vessel, and so someone had to run round the City to assemble a list of names to provide cover for each of the ships leaving port, the so called Lloyds List provided by an early bookies runner.
As Gibb writes in his Lloyds of London, the brokers were the fixed point in a floating market.
It was they who were the professionals, the full-time men who depended on insurance for their daily work and livelihoods, who kept recognised offices, knew the responsible underwriters and, through long experience, were best informed on the nature of marine risk.
Over the next 300 years of so until the present day, the evolution of insurance broking saw many ups and downs, but was characterised by three outstanding features: the growth, diversification and, most recently, amalgamation of insurance broker firms. Insurance products themselves have followed the insurance broker evolutionary path and likewise responded to the needs of the times.
How Mr Pepys would marvel at the way Insurance is now transacted everywhere across the Internet. Marine Insurance is readily available online today for global cover and risks and can as easily be obtained by the small boat owner seeking boat insurance cover as the large shipping magnate looking for cruise ship insurance. Equally available, Freight Forwarders Insurance and Marine Cargo Insurance advice, risk information and quotes can also now easily be obtained online, as can tracking the progress of shipments.
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Freight Forwarders and Hauliers Insurance at risk?
