Cargo’s storage visibility problem
The visibility of cargo goods and accumulations has drastically improved thanks to the emergence of connected digital applications. These applications are now tackling an ongoing issue with storage, where underwriters often don’t know if multiple assureds are storing goods in the same place. The scale of this issue becomes clear when you consider large logistics companies operate enormous storage locations, that contain goods from a wide range of different clients.
It’s therefore likely that an insurer is covering the goods of multiple insureds at a single location, the only question is where? And how much is the insurer on risk for across all policies? While natural catastrophes are modelled and aggregate limits applied, non-cat losses such as warehouse fires risk exposing insurers to multiple full limit losses in one go at these locations.
What’s currently done?
To manage this issue, underwriters conduct a manual review of a portfolio and focus on specific areas of concern, or known locations where accumulations are likely. This is time consuming and still leaves a huge amount of unknown exposure.
How does digitalisation solve this issue?
Digital applications, such as Quest Cargo, can record and retrieve the latitude and longitude of stored goods within a portfolio, alongside associated data on those locations. Underwriters can therefore scan their portfolio and list significant accumulations within a chosen radius. This reveals the total exposure, number, and names of assured goods in that location.
This visibility helps underwriters make more informed decisions, reduce the impact of large loss events, simplify the management of large portfolios, and optimise reinsurance coverage.
Focusing on the reinsurance perspective, underwriters and reinsurance buyers need to know peak accumulations to set the limit of reinsurance they need (or want) to purchase. Data on the utilisation of that limit can be used to understand pricing and to determine the amount of horizontal cover required.
Find out more on how the latest developments are making cargo storage accumulations more visible here.
