Insuring Project Cargo

The term “Project Cargo” refers to the transportation of over sized materials and equipment which are critical components of large-scale infrastructure projects. The logistics involved are almost invariable complex and challenging, in no small measure due to the fact that many of these construction jobs are underway in developing countries.

Whether it is a wind farm being built in Malaysia, a coal-fired power plant in China or off-shore energy platforms being installed in the Campos Basin off the coast of Brazil, the values being shipped and the potential for large claims due to physical damage to critical components and the potentially greater cost to the project because of a delay in start-up (DSU) can be daunting. For these reasons, a common feature of project cargo enterprises is the requirement for insurance to be in place before financing for the project can be arranged.

One definition of “risk” is uncertainty concerning loss. Risk underscores every aspect of the projects described above. Managing that risk is the job of skilled professionals working together to minimize the potential for loss while also arranging the appropriate insurance to indemnify the Principal in the event of financial loss should the worst occur.

Project cargo “risk managers” include:

The assured

The cargo underwriter

Experienced risk control personnel (normally an employee of the insurance company directing the efforts of marine warranty surveyors at every step of the transit).

The insurance broker

The insurance broker’s role is critical to the success of the project, since it will not go beyond the initial planning stages unless comprehensive and cost effective insurance is arranged which protects against both direct and consequential losses. The intricacies of even simple Project Cargo Risks require unflagging attention to detail in order to ensure that the complex exposures and huge dollar values at risk are properly protected.

By Scott Darragh

About the author

With over 30 years experience as insurance brokers and reinsurance intermediaries in all facets of marine and non-marine insurance, Nausch Hogan & Murray Inc. (NHM) are experts in arranging the insurances needed to completely protect the myriad exposures and uncertainty concerning loss which project cargo risks present.

As one of the few US-based insurance brokers who are also accredited Lloyd’s of London brokers, NHM has access to the global markets which specialize in Project Cargo business. With offices on four continents, the staff includes licensed brokers who are skilled in all areas of insurance, claims experts and average adjusters, admiralty attorneys and licensed merchant marine officers. The combined wealth of experience, innovative thinking and uncompromising commitment to meeting and exceeding the client’s insurance needs sets Nausch Hogan & Murray apart from their competition.

NHM takes great pride in continuously providing that level of service to their clients for more than three decades. Experience, expertise and an uncompromising commitment to excellence are the hallmarks of Nausch Hogan & Murray’s service to their Project Cargo customers.