Problem

Excessive costs of transport insurance

Incidence:

[Land-locked countries] The particular problems faced by the land-locked developing countries in the promotion of their international trade - such as the need for transshipment of transit cargo in some cases, and the extensive delays in transit resulting from cumbersome customs inspection procedures - often lead to the loss of and/or damage to the cargo. This, in the end, gives rise to higher premiums for cargo insurance. Moreover, as the loss experience is not favourable, many importers and exporters encounter difficulties in obtaining the types of cover they desire, particularly warehouse-to-warehouse policies. Such non-availability leads them to accept segmented policies, one covering ocean marine transit, the second covering the inland leg in the neighbouring country and the third covering the final transit in the country itself. Comparatively, such segmented cover costs shippers much higher premiums.

The basic difficulties of land-locked countries in the marine cargo insurance field are obviously of a structural nature and are beyond the scope of insurance. Insurers can do very little to overcome them. Measures that could be taken by insurers to ease these constraints are neglected. These include the local covering of external trade risks whenever this is possible, to enable shippers to obtain protection that is tailormade to their requirements; and the implementation of loss prevention programmes in cooperation with insurers in the coastal countries through sharing the business with them on a co-insurance or reinsurance basis. Specialized loss prevention firms which take care of and survey the loading and discharging of goods in transit are not employed and there is no experience rating system for shippers to induce them to take all the necessary measures to reduce their losses and thus, their premiums. The above problems are aggravated by a lack of cooperation among insurers in the land-locked country and between insurers in the land-locked country and those in the coastal countries, through which trans-shipments usually take place.

Values:
Excess
Problem Type:
E: Emanations of other problems
Related UN Sustainable Development Goals:
GOAL 11: Sustainable Cities and CommunitiesGOAL 12: Responsible Consumption and Production
Date of last update
06.05.2019 – 19:47 CEST