OREANDA-NEWS. October 26, 2009. The city of St. Petersburg has hosted a roundtable discussion "Current State of Affairs in Insurance Coverage of Intercity and International Cargo Haulage". It became a closing event in a series of specialized transport insurance events launched by ROSNO this year, reported the press-centre of ROSNO.

The roundtable discussion was held jointly with the business magazine "Expert North-West" and PR agency "Press Papje". The event was attended by transport and logistical companies, representatives of the insurance community, lawyers and journalists, including: Sterkh Corporation, GSK UMIAT, Midas, Union of Insurers of St. Petersburg and North-Western Region, Duveruna Legal, and others.

Given the general slump in 2009 of the volume of domestic and international transportation noted by the roundtable participants, the cargo transportation insurance market has been inevitably shrinking as well. According to experts, the market has dropped by up to 50%. The insurance companies wishing to avoid losing their clients must re-focus their products by tailoring those to fit certain cargo segments. As noted by the carriers themselves, insurance coverage still plays an important role for such segments as electronics and excised goods, while the medium category goods will be covered by insurance to a lesser extent in line with the cost cutting trend prevailing among the market participants.

"As regards the state of affairs in the cargo insurance market, we agree that, as noted by our colleagues, the market is shrinking. While previously insurers assessed volumes, as a rule, based on 4 to 8 roundtrips of one vehicle, now cargo turnover is much lower, with 4 roundtrips being the maximum and 2 to 3 roundtrips being the average", noted in her speech Ms. Anastasia Lukyanova, Deputy Head of ROSNO’s Transport Risks Insurance Department. "In our client portfolio, the ratio of domestic to international carriers has changed somewhat. However, when comparing September 2009 to September 2008, there is a positive dynamics. There are carriers who continue buying vehicles despite losing freight volumes and experiencing other complications. On the border, one can increasingly see truck queues, providing certain hope that the condition of our transport companies will improve, sooner or later". In general, according to ROSNO experts, cargo haulages are not actively insured, accounting for no more than 35% of the total volume of shipments made by the companies operating in Russia. For comparison, in Europe, the same indicator reaches 85% despite the current crisis.

According to the estimates made by the experts of ROSNO’s Transport Risks Insurance Department, the annual volume of cargo insurance market in the North-Western Federal Okrug (excluding captive insurance) reached 400 to 500 mln roubles prior to 2008. Also prior to 2008, the annual Russian market growth exceeded 10%, providing a total figure of 60% to 70% in 5 years. The road transport insurance sector has been growing most rapidly.

Now, the market growth may become mainly driven by domestic transportation insurance: the domestic carriers, being smaller then their Western counterparts, are by far no so robust, making the insurance policy the most economical way of solving problems associated with unforeseen expenditures resulting from traffic accidents or theft.

According to Ms. Anastasia Lukyanova, the largest demand is for coverage of risks associated with damage to, or loss of, cargo as a result of a traffic accident during transportation, or theft. The Top 3 cargo types most attractive to malefactors are quickly sellable items such as household appliances, mobile devices, meat and meat products. Criminals know many cargo stealage schemes, from road piracy to various types of fraud.

The hottest debate among the roundtable participants sprung at the discussion of the need for, and methods of, insurance protection of transport operators while the current law did not contemplate pure insurance coverage of carrier’s liability. "The lawmakers’ position is understandable, since the issue is based on the legal grounds for carrier’s liability. (Fortunately, the new cargo insurance policy developed by ROSNO for transport operators (consignment note / CMR insurance) proved to be a convenient insurance protection tool and a convenient solution to the problems arising from the absence of legislative permit for liability insurance. Such a policy creates genuine partner relations between transport operators and insurance companies, since, unlike liability insurance contract, it does not entail negative consequences of contractual invalidity. The policy developed by ROSNO is more transparent and comprehensible to the client, it does not allow for ambiguous interpretations which may be acceptable under liability insurance contracts", stated Ms. Anastasia Lukyanova, Deputy Head of ROSNO’s Transport Risks Insurance Department.