By tonnage, the bulk of insured transit exposures for many commodity producers are made up of production delivered on a “cost, insurance, and freight” (CIF) basis. In this context, risk management comprises both careful selection of tonnage and an appropriate survey program to provide assurance.

The historic evolution of marine insurance law and the allocation of liabilities is such that a commodity producer cannot only concern itself with risks of damage to cargo. General average (GA) is a key risk exposure for mining companies selling on a CIF basis, under the GA regime, cargo owners and vessel owners contribute to actions taken to save a vessel and cargo relative to the value of their interests at risk; in other words, cargo owners may find themselves responsible for the larger share of vessel repairs required mid-voyage.

A recent multi-million dollar cargo claim where the shipowner made a declaration of GA before the vessel had left is loading berth, highlights the significance of both cargo risk management, risk transfer, and the and the ability to manage the potentially competing interests of specialist service providers, such as cargo owners, vessel owners, charterers, insurers, and GA adjusters in the context of complex claims.

While GA risks are at their greatest for bulk commodity and precious metals producers, diamond and gemstone producers also face transit and storage exposures requiring specific expertise and risk transfer products. Goods in transit and vault risks are addressed by specie insurance products.