Risk and insurance implications of stockpiling before and after Brexit

As a free trade deal with the EU hangs in the balance and uncertainty has gripped UK industry, ports of entry continue to face serious capacity problems, exacerbated by the run up to Christmas and COVID19 ramifications which will likely extend well in to 2021.

This perfect storm, with no end in sight even after the Christmas period, creates additional risk considerations on stock.

Stockpiling, delays and uncertainty of over import and export protocols and management of increased supplies of raw materials and finished product demand a reassessment of risk, control and contingency planning.

Raw materials and, perhaps to a lesser extent, finished product may well face additional risks associated with the current and continuing upheaval including the availability of insurance to cover those risks.

With many sectors facing the same problems, the cumulative impact on supply chains, warehousing and other storage capacity and the services available to move goods become strained.

Taking a step back from the multiple and concurrent problems, it is worth completely reassessing how you insure stock, mitigate risk and the value of those measures.

Ironically, our first mantra would be to take back control.

When raw materials and finished product are on the move, companies often rely upon the other parties (seller, forwarders, freight companies on land, air and sea) to arrange insurance cover and rely upon the contractual liabilities in place.

This raises many questions with the implications often discovered only after loss, inter alia;

• Was the cover arranged by a third party adequate for my needs?
• Who is insuring and are they reputable and financially secure?
• How much is it costing to transfer responsibility to insure?
• Who is the Insurer working for? Me, as the owner of the goods or the third party? (Invariably the latter)
• Does the cover work in my circumstances?

Taking control of the insurance for your raw materials and stock on the move is invariably the most economical and safer solution.

Current circumstances can also introduce additional risk beyond traditional loss or damage. Delays at port, deterioration of product (raw materials or finished goods) and unexplained loss all carry risks not traditionally insured unless specifically requested.

There are looming issues which will affect all insurances related to stock, particularly goods on the move.

For example, a marine policy will specify what constitutes the journey but will also include a clause which ceases cover if goods are delayed at ports beyond 60 days or airports beyond 30 days; possibilities which have increased significantly.

If goods are being moved through the same port and become stuck, marine insurance policyholders can then be upended by what is known as an accumulation clause which limits the amount of insurance cover being provided up to a relatively low limit.

Another risk is the activities of warehouse keepers in the course of their day to day management of space. Are they moving your goods away from the locations specified by your Insurer? What other impacts may they inadvertently create during a time of unusual, if not unprecedented, chaos and commercial opportunity for them?

Insurers themselves will also be sensitive to perceived and actual increased risk arising from these circumstances. With space at a premium, are unsuitable, riskier solutions being applied? Are there accumulations of insured goods outside our knowledge and understanding?

To add to the woes, property insurance markets in the UK are increasing rates, reducing the amount of cover they are prepared to give and facing increased demand as stocks continue to pile up.

As with all risk, the process should be assess and measure, mitigate and manage.

The best and probably only way to do this is to talk through your circumstances with your insurance advisers and in this instance, a specialist marine insurance broker will be best equipped to advise you and design cover for stock anywhere in the world, ensuring that you have full control.

Despite the myriad problems, a phone call or the now ubiquitous face to face meeting over the Internet will provide straightforward answers to your particular circumstances and put you in a place of much greater knowledge and comfort.

If you would like to discuss any of the above points or have any other questions about your insurance, please contact:

Fiona Dyson
Contact Manager
David Roberts & Partners Insurance
T:          07716 535403
E:         [email protected]

14/12/2020