The top five reasons for insurance claims

The TT Club, an insurance provider for freight forwarders and businesses involved in logistics, recently released a report identifying five types of claims filed by forwarders, logistics operators, shipping lines, ports and terminals, which represent 66 percent of loss incidents and 62 percent of the dollar value over a five-year period.

This analysis, conducted by TT Club and managed by insurer Thomas Miller, involved 7,000 insurance claims, each totaling more than US$10,000, that were recorded between 2010 and 2014. Total losses resulting from the aggregate claims were US$425 million. Of particular interest to TT Club analysts was not the ranking of the risks but “the continuing concentration of these causes.” The same “five generic causes” the group had identified in its previous five-year analysis “continue to disrupt and cost dearly,” the study found.

Topping the list are traffic accidents, totaling $68 million in claims over the past five years. Most of these accidents occur in port or terminal areas, with the biggest issue being quay crane boom and overall stack collisions.

Equipment handling collisions are a close second, accounting for $57 million in claims over the same period. “Many traffic incidents and collisions are due to inappropriate speed, but the detailed case review frequently demonstrates the impact that effective management culture can have on preventing loss,” said Peregrine Storrs-Fox, Risk Management Director of the TT Club.

Theft accounts for the third-highest reason for loss, with $54 million in losses over the five years. Cybercrime is raising its ugly head, too, as thieves are using the internet to identify, track and intercept cargo.

The devastating damage caused by fire comes in at number four. Losses totaled $44 million, said Storrs-Fox, who added that a significant number of fires are caused by design or maintenance issues. In a building, fires are usually caused by electrical problems or mobile equipment fires in hydraulic faults.

Improperly used cargo packing, which is currently a topic of international conversation, is the fifth-leading cause for claims, racking up $41 million in losses. Poor or incorrect packaging, the study found, can lead to fires.

Photo by Official U.S. Navy Imagery