Companies can no longer sell on cargo insurance to their customers following the introduction of new legislation last month. According to David Riley (below), director of insurance broker Abbott and Bramwell, many freight carriers who sell insurance on to their customers have lost this income stream overnight.
Speaking at a recent seminar in London for freight forwarders, Riley highlighted an innovative solution designed to help companies protect this source of revenue.
As far as the logistics sector is concerned, these changes are absolutely fundamental.
Options for providing an alternative are restricted and to obtain regulation is a lengthy and costly process. It is possible to become an appointed introducer or appointed representative for a regulated provider but to do nothing is just not viable, he said.
And Riley warned that companies who do not comply with the new legislation, may be committing a criminal offence, and any contracts entered into may be unenforceable.
Companies have been reluctant to take action and there has been a low uptake of firms who sell insurance as a secondary activity applying for regulation, probably because the huge amount of red tape involved and the administrative burden that becoming regulated places on what is currently a peripheral service that freight carriers choose to provide.
Abbott and Bramwell has set up a new service – www.freightcover.com – which is an online answer to the secure purchase of cargo insurance that allows logistics companies to collect an introducer fee while reducing their administrative input to nil. The trader will buy its insurance online, complying with the need for a direct contract with the insurance provider and the logistics companies will receive commission on an ongoing basis.
Angela Deane, director of Forward Logistics, says: “This is a great new concept which offers a means of continuity for our customers, allowing them to purchase the same specialist insurance products in a more efficient way. It reduces time-consuming paperwork and protects our income stream. “We are definitely recommending this route to our customers.”