Question

In: Operations Management

Why is cargo insurance is a challenge?

Why is cargo insurance is a challenge?

Solutions

Expert Solution

Answer: There are a number of factors that makes cargo insurance a challenging job. It is not always easy for the insurers for estimating the risk factors and the charges that are associated with cargo insurance. Firstly there are a number of techniques that are used for measuring the type of risks as there are different types of cargos that have different risk profiles. There are unique terminologies that are used in the cargo insurance and many of the techniques uses are old and not as per the new requirements of the industry. This is mainly because the various stakeholders in the industry are not well connected looking into the international nature of the industry and therefore the traditional techniques are still in use. There is also a lack of a comprehensive and effective regulatory regime in the sector. Often there are different regimes and regulations that are applicable on the movement of cargo at both domestic and international level. All these factors make cargo insurance a challenge.


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