News then that research by an insurance broker called Aon has found that one in ten insurance claims by clothing suppliers could face non-payment due to insufficient cover. This could mean companies' balance sheet take a hit for loss or damage to goods at times when credit is most scarce.
Aon's research notes the top three most common gaps in cover for clothing companies in a standard cargo insurance policy include:
1. No brand protection in the event of damaged goods having a potential reduced or salvage value. Ordinarily insurers would deduct any reduced or salvage value from a claims settlement. However, where this can harm a brand’s reputation, a cargo owner may elect to have the goods destroyed and seek payment of the full invoice value
2. Payment of the purchase invoice value, rather than the final sales contract value in the event of loss
3. Cover for damaged items only, rather than an entire consignment in the event of
damage/soiling by stowaways or other ‘unauthorised occupants’ in a container or trailer.
Aon recommend that cargo owners check their policies for potential gaps in cover. In addition to securing broad insurance cover, cargo owners should also focus on improving their risk management and reporting procedures to help prevent these incidents in the first place and ensure the successful resolution of claims. This includes:
- putting in checks for correct packaging for you and your suppliers;
- holding your carriers liable in writing, without delay, for loss/damage in transit;
- noting damage on delivery notes on arrival to evidence damage in transit.
And if we're to get rid of this pesky credit crunch that insists on hang around, perhaps some big party would be good? Yes, some big, fun, fancy party with awards to be won, and a chance for the clothing industry to come together and prove Mr Credit Crunch he won't dampen our spirits. Now if only someone would go and host such an event...