As the U.S. economy continues to move forward, one of the fastest-growing industries is Logistics and Freight Forwarding. While the term “freight forwarder” is used loosely, it encompasses a broad spectrum of services with respect to logistics, supply chain, and the direct or indirect transportation and warehousing of goods worldwide. More and more freight forwarding startups are entering the space, resulting in a highly competitive environment.
Shippers look to avoid any paperwork, bureaucratic procedures, border issues, insurance requirements, and all possible hassles associated with the transportation of goods, both domestically and internationally. If a freight forwarder, while acting as direct or indirect carrier or transportation intermediary (broker), manages to become a “one-stop hub”, its portfolio is sure to grow. To successfully achieve this, the broker or carrier must have the option to offer “All Risk” Cargo and Warehouse insurance coverage to their clients or prospects, thus insuring the shipper’s interest.
In essence, both Cargo and Shipper’s Interest policies cover goods against all risk of physical loss or damage from any external cause (subject to certain basic exclusions), but there are some key differentiators.
Shipper’s Interest coverage serves both domestic and international forwarders and transportation intermediaries, regardless of the size of their operation.
All freight forwarders, whether asset or non-asset based, should always retain (when applicable) the following coverage:
The purpose of the Shipper’s Interest section under their policy is not to undermine the necessity of these essential coverages, as they protect and defend freight forwarders in cases where they are legally or contractually liable. However, when an insured accepts coverage under the Shipper’s Interest policy that is primary in responding to such a loss, it is beneficial for all coverages to be kept under a single insurance carrier to provide a cushion against damaging their loss history, simplify the claims resolution process, and reduce the potential for gaps in coverage.
Freight forwarders and shippers operate in a very competitive environment and require comprehensive insurance solutions. Added services, such as Shipper’s Interest policies, are a key differentiator between a forwarder and their competitors. While this growing market segment provides a business growth opportunity for retail brokers, this is a complex coverage, and risks can differ for each freight forwarder depending on the specific services they provide. To learn more about the varying roles of a freight forwarder and the associated risks, view the article found here.
AmWINS Specialty Logistics Underwriters (ASLU), an AmWINS Group company, is a managing general agency specializing in the complex risk factors of the logistics and cargo industry. ASLU is dedicated to offering a high level of service to their clients through a unique balance of industry knowledge, responsiveness and technology. To learn more, visit amwins.com/aslu.
This article was written by Alex Rosas, Executive Vice President of AmWINS Specialty Logistics Underwriters (ASLU).