Insuring Perishables – A Challenge

By Johan Van der Meirsch, Manager Marine Department/Surveyor, DP Survey Group N.V., IUMI Professional Partner,

Perishables - a word that can make any underwriter shiver and tremble. Transport and perishables, is it a dangerous cocktail and a recipe for bad loss ratios?
Perishables are any products of which the quality deteriorates over time. Furthermore, due to their physiological characteristics, irreparable damage can be caused if the transport temperature is not kept consistent.

To ensure perishables are kept in excellent condition, from “field to fork”, requires a complex high quality logistics chain. Complicated by the fact that each and every perishable needs a different temperature and ventilation setting, and all have a different shelf life.
It certainly remains a high risk commodity, but in my opinion, risks can be mitigated if the following key factors are considered when shipping perishables such as fruits for example.

Pre-shipment quality of the product needs to be excellent! Proper pre- and post-harvest treatment, careful handling, packing, etc. Although a sensitive product, sound fruits can endure quite some transport related stress.

Transport characteristics of the product: each perishable has its own transport requirements with respect to ventilation, temperature, humidity,etc.

Choice of trusted logistics companies with regular contact as to pricing, routing, new technologies, strong contractual agreements in case of claims / transport damages, claims handling and recovery, etc.

Use of cargo interest owned devices such as portable temperature – humidity – ethylene, CO2 recorders.

The last mile problem: Government regulations at destination regarding infestation, residue limits, quality requirements. Liability limitations of local warehouses, carriers, etc. Knowledge of particular claims related costs (sorting out, dumping, re-packing, loss of market value, ozonising, brand protected, donation possibilities, import duties, etc).

Independent specialists such as surveyors with in-depth knowledge can assist underwriters in evaluating the risks involved. Loss prevention audits of plantations/orchards, logistic screenings, profound product knowledge will produce additional and valuable information for the underwriters.

It all comes down to knowledge. Know the product, know the carriers, know the costs and risks. My advice to the insurers willing to write the risk; don’t go bananas when insuring perishables, but know what you are talking about and cooperate with experienced assessors, and preferably with an IPP marine surveyor.

The recording of IUMI’s webinar on “Insuring Perishables – A Challenge” is available here.