5 types of export insurance
Marine insurance
If you are a goods exporter, marine insurance is one of the most important types you should consider. “Financial protection of the shipment of products and goods is known as marine insurance, regardless of whether the mode of transport is over the sea, air, land or post,” says Andrew Clarke, account executive with OAMPS Insurance Brokers. “There are numerous risks to consider when a business is involved in transporting goods, including damage to and loss of the goods.”
Because of the number of permutations a shipment of goods can undergo between seller to buyer—often from factories and storage facilities via airports, wharves, and other terminals—marine insurance is quite complex. As a general rule, however, exporters should aim for a policy that covers them from the time it leaves your premises until your customer has taken possession of it, advises Clarke. “Some business owners have fallen into the trap of not covering goods they are transporting and mistakenly believing their professional carrier’s insurance will cover the goods. Common carriers do not have specialist marine insurance, and the cover is usually limited.”
He adds that exporters also need to check that the insurer is capable of handling a claim globally, “otherwise having a claim paid could become an issue”.
Currency insurance
While there are a number of foreign exchange management strategies an exporter can use to mitigate losses through currency movements, some financial institutions and foreign exchange providers also offer currency insurance against conversion loss. This form of insurance is typical of long-range buying contracts where other strategies such as forward exchange contracts are unavailable.
Product liability insurance
An international product liability insurance product is similar to a domestic one and involves covering the risks arising from litigation or the cost of recall should the product you sell be proved faulty or fail to comply with appropriate regulations.
Exporters need to ensure that they make every effort to comply with any laws associated with selling their product in the destination market, as insurance will not cover uninformed exporters. Compensation is therefore conditional on proving that the exporter unwittingly sold a product that was later deemed faulty or dangerous.
Australian businesses have been increasingly growing trade with emerging economies, many of which represent great risks, but promise great returns. By considering and investing in these five types of insurance, exporters should become more comfortable with the risks of doing business globally, and be able to take advantage of growth opportunities around the world.
Where to buy export insurance
Atradius: www.atradius.com.au
Coface: www.coface.com.au
EFIC: www.efic.gov.au
Euler-Hermes: www.oceania.eulerhermes.com
NCI Brokers: www.nci.com.au
OAMPS: www.oamps.com.au
QBE: www.qbe.com.au
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