A Conversation with Redkik Founder, Chris Kalinski on Transitional Insurance

The topic of uninsured cargo seems to rear its ugly head a lot, especially when incidents of extreme weather or other unplanned interventions hit the headlines. Many loads are not insured because the shipper either doesn’t understand the coverage they need, or else they do but that coverage proves too difficult to obtain. When travelling from point A to point B, a shipment may come across all kinds of jeopardy. For example, containers can fall off a ship due to bad storms. As a shipper, if this happens and you have liability cover in place, you may receive compensation to cover the loss of the container itself. But if the cargo inside is uninsured when the container falls off, you’re likely to have a sizeable problem, particularly if you’ve just lost a vintage Ferrari or the entire contents of someone’s house.

When Redkik founder Chris Kalinski was working as a shipper, one of his bugbears was arranging insurance for his loads. This led to the German-born, US-domiciled, businessman founding a company that aims to take the pain out of the insurance procurement process. Start-up insurance tech company Redkik enables shippers to insure their cargo instantaneously at the click of a button, a great leap from the hoops they have traditionally been used to jumping through.

Kalinski takes up the story: “I started a telematics company in 2005 doing primarily refrigerated temperature monitoring and refrigerator tracking. At that time, we were the first on the market; it wasn’t common like it is now. We were heavily focused on pharmaceutical transportation. Pharmaceuticals are a very specialized, highly regulated business, and very focused, so when we sold it to Orbcomm in 2014, I stayed on as a VP and ran the refrigerated vertical.”

“Then, somehow, I found myself buying 25 refrigerated trailers and starting a trucking fleet as a freight forwarder. That was my first run-in with purchasing insurance. I saw first-hand that buying insurance for trucking fleets is a cumbersome process and takes a long time. It’s always 20 questions, and it’s all based on historical performance, not on anything forward looking. You had to take the quotes at face value and just do and pay whatever the insurer asked.”

“When we scheduled shipments out of our warehouse, I needed at least a week – maybe two – before the cargo left our warehouse to call my insurance agent and get a one-off quote, in order to protect my customer. And it was hugely expensive. The other challenge was that we had to buy our total insurance portfolio upfront. We had 25 refrigerated trailers, and I had the pleasure of signing a cheque for $1.2 million before I could start trucking and solidify customers for revenue to offset that cost.”

Despite these frustrations, the business quickly became one of the bigger pharmaceutical distribution businesses on the US east coast. Using the knowledge of logistics and shipping he had acquired over the years, Kalinski left three and a half years or so later to join the marine cargo innovation team at reinsurance giant Munich Re as its in-house IoT consultant. That move turned the shipper into the insurer, and he was tasked with looking at the cargo market to see if it could be reinvented based on sensors, a seemingly perfect marriage of his former life and his current one.

“We went through an exercise to really analyze the market, asking ‘what does cargo look like today and what should it look like tomorrow?’ With my experience from the trucking side and sensor side, we came up with a parametric triggered product that we envisioned, wrote the technology spec for, built and then rolled it out in three years. That was great, but it taught me primarily that the cargo distribution market is really antiquated. Approximately half of all cargo shipped globally is uninsured.”

Transactional Insurance

This led Kalinski to wonder why the process of obtaining cargo insurance isn’t transactional in a sector where everything else is transactional. “I’m paying the driver by the mile, I’m paying for the truck by the mile, I’m paying for fuel by the mile, I’m paying unloading costs, loading costs, things like that, all on a transactional basis. The entire trucking industry is run on per-mile cost, except insurance. The insurance calculation is projected, meaning I won’t know until the end of the year whether the fleet actually drove the number of miles that I expected it to do and that my insurance costs were calculated correctly.”

Kalinski came up with an idea whereby data from various sources is congregated and accessed whenever a customer is seeking a quote for insurance. In a process familiar to anyone who has purchased insurance at the same time as buying an airline ticket, a price is calculated based on variable factors including value of load, distance to be travelled, weather, congestion, predicted arrival time, or incidence of theft in certain locations. In the case of the latter, the software would incentivize the shipper with a slightly lower insurance cost in order to avoid that route.

Kalinski says: “Another obvious thing is if we know there are going to be storms up and down the coast, we say you can ship today but we know that the storm will have passed next week and when everything is back to normal it’s going to cost you x percent less. We’re adding new data sources every day. So, by design it is evolving and getting smarter every day. A risk score of 14% probability of loss today may not be 14% next week. That’s the inherent dynamic that we’ve built into the back end.”

Another capability Redkik can offer is incentivizing shippers with lower insurance costs to choose routes that use less carbon. If the shipment is time-critical, it goes on an airplane. But if it’s not, it can go on a truck, or a boat and its insurance costs will be lower.

In practice, a shipper can receive an insurance quote instantaneously. Redkik’s API sees all the info that has just been entered in order to organize the shipment, and automatically within 500 milliseconds feeds back an insurance quote, that can be purchased at the click of a button. Once you click the button, you will get an email with all of the policy documents, the certificate of insurance, and anything else that you may need.

The rolling out of the Redkik solution didn’t come without its challenges. For example, putting large-scale contracts together with insurance companies takes a long time. “They’re traditional businesses, and they move notoriously slow, which clashes hard with the speed a startup moves at. So, we’re trying to find a happy medium to get it done. But other than that, I think we’re getting ready to see what the adaptation and conversion rates look like on the integrations, which should be really interesting. We should then be able to start putting customized insurance programs together for trade lanes or commodities that currently cannot get insured.”

So, what is the fun side of the business? “How well adapted my thought processes are to the needs of insurance carriers. That’s amazed me. I thought from the get-go, I’m never going to be able to convince insurance carriers to go along with this. But the response has been overwhelmingly positive. There was not one single meeting that we had with an insurance carrier where they said, this is not interesting for us.”

With an eye on the future, Kalinski says the next big thing could be replicating the solution for motor truck liability. “If my insurance cost per mile is 50 cents based on a fleet of 20 trailers driving 2 million miles a year, that’s ok. But if I can’t get drivers or loads or something else happens, and the fleet happens to only drive a million miles, then the insurance cost per mile is not 50 cents, it’s a dollar and the entire calculation goes out the window. That’s problematic for smaller carriers and especially for those growing a business aggressively that are in a somewhat volatile state. COVID showed us that all of the predictions were completely out of whack. So, if we would be able to transactionalize liability and cargo costs on a per-mile basis, that would be extremely helpful for all of the freight forwarders.”

The big insurers see Redkik’s solution as a win-win; with the guesswork effectively removed from the calculation, their coverage more accurately reflects the risk, whilst the shipper will also be more incentivized to purchase insurance now that the process has been simplified. “So far, the reception from the industry has been really, really positive,” concludes Kalinski. “We’re trying to be the best partner we can to all the insurance companies and then doing a whole mass of integrations into 3PLs, 4PLs and shipper systems. If we can help make that process easier for a large percentage of the shipments, then that’s a good goal.”

www.redkik.com

Source:  Logistics Business Magazine.

Technology Enabling Instant Insurance at your Fingertips.

By: Andy Bauer, VP Sales & Marketing with Redkik

When you think of technology, most don’t immediately associate it with Insurance. Buying insurance remains grossly the same as it did at inception for shippers and carriers alike, with current processes and solutions that are inefficient and lack very much needed automation. If you have started your technology journey through the use of a platform to help operations, you are already in a unique position to modernize the acquisition of insurance, simplify the process and create value.

Redkik is a global software company with the mission to simplify and improve the insurance industry for all parties within logistics and transportation. By identifying the major issues in acquiring insurance, through personal and learned experiences, Redkik decided to tackle the industry head-on so insurance will no longer be the cause of headache and heartburn.

Redkik decided that the only way to move the insurance world forward is with innovation. Artificial intelligence and machine learning elevate the insurance buying experience with per-shipment instant quotes, backed by leading insurance companies, that are based on actual data sets enabling  lower risk and higher coverage for any type of shipment.

Redkik also cares about its partners, knowing personally the struggle as a start-up fleet owner and comprised of experts in the logistics and insurance sectors. Knowing that change is difficult and sharing in the success of the transition to transactional policies is preferred, we offer a revenue share that adds even more value to your company and signals that we cherish your partnership.

Increase your Business with Embedded Cargo Insurance.

Redkik offers its SaaS solution as an easily adoptable API integrations.  Differentiate yourself from the competition with the world’s first fully embedded cargo insurance solution. Redkik has been integrated on 2 continents so far and is capable of going anywhere in the globe that you are transacting business.

Keep your customer where they belong.

When we integrate into your platform, we want you to keep your customer in your system – without redirecting them to external websites or portals.

Allowing your customers to always stay on your platform streamlines the purchase journey and makes sure you never lose the customer mid-way through the process due to hassle, time, or confusion.

Your Customer, Your Brand.

You have worked hard to build a reputable brand for your company. We believe it’s not our place to hijack your platform to promote our brand.

You will stay in charge of your customers’ experience, while getting access to the vast benefits of Redkik’s unmatched software.

Tailored Coverage

In today’s market the customer should be in the driver’s seat. Traditional off-the-shelf policies do not reflect this as they give you little to no flexibility and they rarely cover 100% of yours or your customer’s needs.

Redkik’ s single trip cargo insurance solution gives your customer maximum flexibility, while our AI and machine learning algorithm makes sure they only pay for what they need so that their needs are prioritized, meeting your customer needs with tailored coverage.

One-click Coverage

Through integrating our API with your current online system, your customers will get access to the market’s most seamless cargo insurance solution with market-leading ease of use.

To solidify our case, Redkik recently collaborated with EKA Solutions Inc. to integrate our transactional InsurTech solution. This particular integration empowers small and medium size broker, carrier, and shipper businesses to operate from quote-to-cash with affordable and best-in-class digital tools, enabling the higher performance demanded in tomorrow’s supply chain.

​​​​​ ​​“There is no greater industry need than reducing risk at every level of the supply chain for customers – so EKA and Redkik are kicking off this new year by taking action,” says JJ Singh, Founder and CEO for EKA Solutions, Inc.

“Together with EKA we are combining our visions for an optimized supply chain to offer solutions for the industry’s actual needs without shortcuts. Through this strategic partnership, we are streamlining the process of purchasing insurance with modern and efficient technology that will undoubtedly transform how the industry views insurance products,” said Chris Kalinski, Founder and CEO of Redkik, Inc.

This collaboration enables Redkik developers to better guide you through the entire API integration process and provide you with all the necessary tools.

To learn more about Redkik and our passion for integrating technology with Insurtech solutions to create a better experience, add value with reduced risk; visit us at  www.redkik.com .

Protecting Your Most Vulnerable Assets

By: By: Kevin Ricciotti

Vice President, Business Development Western Region, Avalon Risk Management

Accounts receivable make up almost 40 percent of a company’s assets yet are one of its most vulnerable assets. Non-payment of invoices can affect a company’s cash flow and capital to the point of shutting down its operations. Managing this risk should be a priority for companies especially with inflation affecting the cost everything from household essentials to vehicles.

Economists predict that the U.S. is headed for a recession in 2023. Unfortunately, small businesses are usually the hardest hit during a recession. Most small businesses do not have the financial wherewithal to afford a reduced cash flow due to delayed customer payments. According to a survey conducted by JP Morgan Chase, the average small business holds 27 cash buffer days in reserve. Trade credit insurance is one tool that can help 3PLs prepare for recession.
Trade credit insurance’s valuable protection means having a consistent cash flow and peace of mind knowing that your accounts receivable will be paid. The insurer helps you maintain a robust credit risk management process by continuously reviewing your customers throughout the policy period to ensure their continued creditworthiness. If there are signs that a company is experiencing financial difficulty, you will be notified of the increased risk. Trade credit insurance also provides additional benefits such as sales expansion, providing extra credit to current customers, and ability to obtain better financing terms from lenders.

Trade Credit Insurance Benefits
Sales Growth

Trade credit insurance allows you to expand your business while mitigating bad debt risk. New customers pose a challenge because they still need to establish a credit history, and you need to become more familiar with their operations. However, with trade credit insurance, underwriters provide insights to help you decide on whether to approve credit terms or not.
You may have an existing customer who requests a higher credit limit or who applies for less restrictive credit terms than the usual 30, 60, or 90-day terms of sales. If their receivables are insured, you can be confident in approving an increase in credit or longer credit terms. Doing so can not only grow sales but also strengthen your customer relationships.

Access better financing options

Banks often consider accounts receivable a liability, primarily when open invoices are concentrated among a few large customers. The debt is considered riskier because a default from any one of them would significantly impact on your business. However, when accounts receivable is insured, they can be deemed an asset or collateral since it is secured money.

Reduction in bad debt reserves

To avoid having sudden cash flow interruptions, companies set aside a reserved cash amount if a debt becomes uncollectable. The bad debt reserve is essentially an emergency fund for the business and decreases the amount of working capital available. Smaller 3PLs cannot afford to have $40,000 or $50,000 tied up in a bad debt reserve as they need the monies readily accessible. Having trade credit insurance allows companies to reduce or not have a bad debt reserve since their invoices are insured.

Protect from loss due to non-payment

Trade credit insurance provides indemnification from customer non-payment. Your business is insulated from a customer’s financial trouble, and you can continue operating normally.
While trade credit insurance protects you from problems associated with uncollected commercial debt, its goal is to help your company expand. Make sure to talk to your insurance broker about the benefits of trade credit insurance.

The TIA Bond Program and Bond Claims

By: James Francis, Avalon Risk Management

In case you missed our Annual Bond Webinar hosted by TIA in August, the following is a recap of some of the claim topics covered during the webinar. MAP-21 has been in effect since October 2013 and requires property brokers to be licensed with the Federal Motor Carrier Safety Administration (FMCSA) and establish proof of financial responsibility in the form of a bond or trust fund agreement. A property broker can fulfil this requirement by obtaining a BMC-84 bond or BMC-85 trust fund agreement.

The TIA Bond Program

TIA offers the FMCSA mandated $75,000 Bond (BMC-84) to qualifying property brokers and domestic freight forwarders. In addition, TIA members can obtain bonds with higher limits in the amounts of $100,000 or $250,000. Avalon handles all claims that are submitted in accordance with MAP-21 regulations.

The bond is in place to protect carriers against broker insolvency and a broker’s failure to pay freight charges owed to the carrier for services rendered. The bond is in place only to cover unpaid freight charges and is not able to cover lost or damaged goods, or damage to property. Under MAP-21 regulations, the surety must respond to the claim on or before the 30th day on which the notice is received. 

What happens if a claim is filed against your bond?

If a claim is filed, we will notify you of the open claim. You are given the opportunity to pay the claim or provide a written dispute. If payment has been made or is pending, we will request proof of payment. If there is a dispute over the invoice, the dispute should be supported with agreed upon terms of a rate confirmation or a broker-carrier agreement.

Broker Insolvency

If claims are unresolved after 30 days, the surety must investigate the broker for suspected insolvency.
Insolvent brokers are published for 60 days on our website, in accordance with 49 USC 13906, as amended by Map-21, Division C, Subtitle I, Section 32918.

Payment of claims

According to the regulations passed by MAP–21, the surety may only pay a claim if one of three conditions are met:
(i) subject to the review by the surety provider, the broker consents to the payment.
(ii) in any case in which the broker does not respond to adequate notice to address the validity of the claim, the surety provider determines that the claim is valid; or iii) the claim is not resolved within a reasonable period of time following a reasonable attempt by the claimant to resolve the claim under clauses (i) and (ii), and the claim is reduced to a judgment against the broker.

The surety must pay all valid claims received before or during the 60-day advertising period. After the advertising period has concluded, the surety will review all remaining valid claims received. Payment will be made in whole if total claims are under the bond amount. However, if total claims received are over the bond amount, the surety will issue payment on a pro-rata basis. In the event that the surety issues payment from the bond, the broker is responsible for reimbursement to the surety for any claim payments.

Exclusions

There are instances where a claim may not be considered valid. There are three main exemptions found under 49 USC 14705:
• Claims must be submitted to the surety within 18 months of the shipment pickup date. If a claim is submitted to the surety beyond the 18-month statute of limitations, we are unable to accept the claim.
• The bond cannot cover claims containing exempt commodities. If a shipment contains exempt commodities, mostly produce, agricultural commodities, dairy, and poultry, the claim is exempt from coverage.
• If a shipment does not cross a state or federal line at any point during the shipment, it is exempt from coverage

For a comprehensive list of commodities that are considered exempt, please visit

https://www.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/docs/Administrative_Ruling_119.pdf

Additionally, if the claimant does not have active carrier authority at the time of the shipment, the claim is not considered valid. A motor carrier must be licensed with the FMCSA and have active motor carrier authority at the time that the shipment took place.

Lastly, if a claimant is not a motor carrier or shipper operating as a motor carrier, we cannot accept the claim. The bond language states that the bond is for the benefit of motor carriers and shippers by way of motor carrier. If a claimant is not operating in the capacity of a motor carrier, they are not considered a valid party to the bond.

Best Practices

• Have clearly defined terms and conditions in any contract with carriers.
• Acknowledge receipt of clam as soon as possible and forward to the appropriate party for a response.
• The surety only has 30 days to respond. If there is a dispute, provide information on the dispute as soon as possible for the surety to make a decision and resolve the claim.
• To aid a disputed claim, provide the Broker- Carrier Agreement on file with the carrier and reference any terms of the agreement that support your dispute.
• Since the surety only has 30 days to respond, the sooner you can provide information on your dispute, the sooner we can issue a decision and resolve the claim.

Claim Trends

• A deduction was made against the carrier for late delivery or missed appointments.
• The carrier billed unapproved accessorial charges.
• A deduction was made against the carrier for noncompliance with tracking requirements.
• There is an unresolved damage claim against the carrier and an offset has been placed against them.

Having a bond through the TIA Bond Program allows you the peace of mind that claims are not automatically paid and are handled in accordance with MAP-21.
For more information on the application process, please visit www.tianet.org/tiabond.

If you have any questions regarding claims against your bond or MAP-21 regulations, you may contact the TIA claims department at (847) 235-6283 or via email at claims@tiasuretyclaims.com

The Illegal Practice of Double Brokering

 

Double Brokering occurs when a carrier accepts a load and then rebrokers it to another motor carrier. This is not a legal practice. Likely, the motor carrier that rebrokers the load is not authorized or in compliance with Federal Motor Carrier Safety Administration (FMCSA).

There are many challenges when this practice occurs. For example, it is easy for fraud to be committed. The motor carrier initially hired can keep the payment and leave the second motor carrier on the hook for shipping expenses.

The broker of the load does not know who is hauling the load. The carrier hired to move the load could be vetted to the broker’s standards but then gives the load to his friend, and that motor carrier might not have the proper authority or safety rating to move the load. This puts the broker and the shipper at significant risk of any liability, loss, or claim that could occur through the actions of an unqualified motor carrier.

Double brokering is frowned upon by shippers and brokers due to the hazards of this practice. Transportation agreements often do not allow double brokering or re-brokering. Frequently, the trucker transporting the freight has little or no communication with the original broker, and the trucker must fight to be paid if they are paid.

It is said that double brokering scams are costing our industry over $100M annually.

MAP-21 laws (which were passed in 2012 and implemented in 2016) say that if you broker a load and do not have authority with the FMCSA, you are subject to a fine of $10,000. At this time, the FMCSA has not enforced this section of the regulation.

Insurance Implications

Unfortunately, accidents happen, and when double brokering occurs, insurance matters get complicated. Here is a claim example showing the complexities. A load was initially picked up on May 2, 2022, in Vernon, CA, and intended to be delivered in Lansing, MI, on May 7, 2022. This load was booked with Motor carrier A on May 2, 2022, who then brokered the freight to Motor carrier B. Motor Carrier A does not have brokerage authority. Motor Carrier B then brokered the load out to Motor carrier C. Motor carrier C added an extra pickup and stop to this shipment. The initial load was supposed to only have bedding and comforters. However, Motor Carrier C added pallets of rice cakes to the load. Per the original Broker, the rate confirmations were exclusive use.

While Motor Carrier C was in transit and in possession of the goods, he was rear-ended by another tractor-trailer. The accident resulted in a trailer fire and a fatality. The truck and trailer were towed to a tow yard in Winslow, AZ, where the trailer and product sat for months. Motor carrier C did not have the proceeds to pay for the tow bill and would not help salvage the product. Motor carrier C’s insurance adjuster sent out an inspector who said the product was not damaged. Luckily, the Broker found a secondary market to salvage the comforters for $6,552.00 and was able to offset some of the linehaul amounts. The total amount owed was $11,068.00. Motor Carrier A and Motor Carrier B will not cooperate.

Best Practices

There are things you can do to prevent this from happening:

The claim example mentioned above illustrates the importance of reporting the bad actors and staying diligent in the motor carrier selection and vetting processes. Do not hesitate to contact Jodie Maher, Account Executive with Avalon Risk Management if you have any questions or would like to review your insurance coverages.

The TIA Bond Program and Bond Claims

We hope you benefited from our Annual Bond Webinar hosted by TIA. In case you missed it, the following is a recap of some of the claims topics covered during the webinar.

MAP-21 has been in effect since October 2013 and requires property brokers to be licensed with the Federal Motor Carrier Safety Administration (FMCSA) and establish proof of financial responsibility in the form of a bond or trust fund agreement. A property broker can fulfil this requirement by obtaining a BMC-84 bond or BMC-85 trust fund agreement.

The TIA Bond Program

TIA offers the FMCSA mandated $75,000 to qualifying property brokers and domestic freight forwarders. In addition, TIA members can obtain bonds with higher limits in the amounts of $100,000 or $250,000 and Avalon handles all claims that are submitted in accordance with MAP-21 regulations.

The bond is in place to protect carriers against broker insolvency and a broker’s failure to pay freight charges owed to the carrier for services rendered. The bond is in place only to cover unpaid freight charges and is not able to cover lost or damaged goods, or damage to property. Under MAP-21 regulations, the surety must respond to the claim on or before the 30th day on which the notice is received.

What happens if a claim is filed against your bond?

If a claim is filed, we will notify you of the open claim. You are given the opportunity to pay the claim or provide a written dispute. If payment has been made or is pending, we will request proof of payment. If there is a dispute over the invoice, the dispute should be supported with agreed upon terms of a rate confirmation or a broker-carrier agreement.

Broker Insolvency
If claims are unresolved after 30 days, the surety must investigate the broker for suspected insolvency.
Insolvent brokers are published for 60 days on our website, in accordance with 49 USC 13906, as amended by Map-21, Division C, Subtitle I, Section 32918.

Payment of claims
According to the regulations passed by MAP–21, the surety may only pay a claim if one of three conditions are met:
(i) subject to the review by the surety provider, the broker consents to the payment;
(ii) in any case in which the broker does not respond to adequate notice to address the validity of the claim, the surety provider determines that the claim is valid; or, (iii) the claim is not resolved within a reasonable period of time following a reasonable attempt by the claimant to resolve the claim under clauses (i) and (ii), and the claim is reduced to a judgment against the broker.

The surety must pay all valid claims received before or during the 60-day advertising period. After the advertising period has concluded, the surety will review all remaining valid claims received. Payment will be made in whole if total claims are under the bond amount. However, if total claims received are over the bond amount, the surety will issue payment on a pro-rata basis. In the event that the surety issues payment from the bond, the broker is responsible for reimbursement to the surety for any claim payments.

Exclusions
There are instances where a claim may not be considered valid. There are three main exemptions found under 49 USC 14705:
• Claims must be submitted to the surety within 18 months of the shipment pickup date. If a claim is submitted to the surety beyond the 18 month statute of limitations, we are unable to accept the claim.
• The bond cannot cover claims containing exempt commodities. If a shipment contains exempt commodities, mostly produce, agricultural commodities, dairy, and poultry, the claim is exempt from coverage.
• If a shipment does not cross a state or federal line at any point during the shipment, it is exempt from coverage

For a comprehensive list of commodities that are considered exempt, please visit https://www.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/docs/Administrative_Ruling_119.pdf. 

Additionally, if the claimant does not have active carrier authority at the time of the shipment, the claim is not considered valid. A motor carrier must be licensed with the FMCSA and have active motor carrier authority at the time that the shipment took place.

Lastly, if a claimant is not a motor carrier or shipper operating as a motor carrier, we cannot accept the claim. The bond language states that the bond is for the benefit of motor carriers and shippers by way of motor carrier. If a claimant is not operating in the capacity of a motor carrier, they are not considered a valid party to the bond.

Best Practices
• Have clearly defined terms and conditions in any contract with carriers.
• Acknowledge receipt of clam as soon as possible and forward to the appropriate party for a response.
• The surety only has 30 days to respond. If there is a dispute, provide information on the dispute as soon as possible for the surety to make a decision and resolve the claim.
• To aid a disputed claim, provide the Broker- Carrier Agreement on file with the carrier and reference any terms of the agreement that support your dispute.
• Since the surety only has 30 days to respond, the sooner you can provide information on your dispute, the sooner we can issue a decision and resolve the claim.

Claim Trends

An analysis of our claims data indicates an increasing number of claims received for the following reasons:
• A deduction was made against the carrier for late delivery or missed appointments.
• The carrier billed unapproved accessorial charges.
• A deduction was made against the carrier for noncompliance with tracking requirements.
• There is an unresolved damage claim against the carrier and an offset has been placed against them.

Having a bond through the TIA Bond Program allows you the peace of mind that claims are not automatically paid and are handled in accordance with MAP-21.
For more information on the application process, please visit https://www.tianet.org/tiabond/.

If you have any questions regarding claims against your bond or MAP-21 regulations, you may contact the TIA claims department at (847) 235-6283 or via email at claims@tiasuretyclaims.com .

Author: James Francis, Avalon Surety Claims Lead, Education Dept.

Where Are All the Freight Broker Insurance Markets Going?

Insurance in the 3PL space has evolved over the past decade. Does it sound backwards that exciting innovations in this arena have led to wariness among insurance providers, supported by an unprecedented cadence of claims? Innovation should be enthralling, though it has caused some big pivots for insurance providers of 3PLs.

What this means is that a traditionally static industry has become fluid in order to accommodate the changing landscape of risk management. It has been highly publicized that freight brokers and their insurance partners are being named in lawsuits and claims in which they may not even be liable. Freight brokers are easy targets in litigation being directly involved with a majority of the over-the-road shipments in the US. This necessitates their having to respond to claims which is a financial burden on both brokers and insurance companies.

Even the ways in which a 3PL may be found liable have shifted, causing insurance markets to have to pay out on a broader variety of claims situations or deny their trusting clients’ claims altogether. These changes and innovations have reformed the ways in which insurance providers are willing to work with clients, and have even changed the roster of insurance providers willing to write 3PL coverages – companies keep bowing out altogether.

Where did it start? With the misconceptions of insurance agencies.

Like with any trend generating revenue, property/ casualty insurance agencies who didn’t have a firm grasp on transportation risk jumped at the thought of 3PLs being lucrative clients. Several of these markets jumped head first into the logistics pool customizing coverages which sound like logistical coverages, but don’t necessarily respond as described. Think of an experienced market writing a true Contingent Cargo form versus a less experienced but eager market writing a Contingent Property in Transit Floater coverage. Their Floater coverage may be seen as more of a business personal property coverage for goods in transit, but isn’t created to necessarily respond in the same fashion or cover the full value of brokered goods. In a land grab, many of these inexperienced in transportation markets wrote coverage for as many 3PLs as possible without having seen true loss history or knowing the premium to claims ratio they would experience.

Cue reality – policies designed by emulating true logistical coverages had to decide how they would respond to the variety of claims which were being filed against freight brokers. Workers Compensation markets struggled to reconcile an employee who works out of an office but is closely connected to over the road truckers. As claims began to stack up, some markets took major losses at a higher frequency than anticipated. These losses would impact their pricing for the core business outside of transportation as well, raising their premiums across the board. This unappetizing loss ratio was becoming a common occurrence as freight brokers were increasingly looped into nuclear verdict cases which have put both transportation companies and their insurance providers in the most challenging situations.

On the other side of the coin, some markets decided to limit their liability and cost by exercising an OPTION to defend their 3PL clients instead of a DUTY to defend clients in the event of a claim, which is now more common. Freight Brokers could see that many of these insurance markets didn’t offer true protection in their policies and claims were getting denied at a high frequency.

What was the result of clients feeling misled by weak coverages and standard property/ casualty insurance companies being in over their skis on claims? An exodus of insurance markets able to write these coverages. In the past seven years, numerous reputable insurance markets have pulled out of the 3PL game and each time they do, other agencies are either strengthened in absorbing their clients or weakened in dealing with more losses and then having to sell at higher premiums to offset said losses.

There are fewer insurance companies writing coverage for the modern 3PL and it may be speculated that another few insurance markets could be dropping out of writing coverage in the coming years. The direct response to the limited number of insurance companies currently playing ball and their higher number of losses is increased premiums across the board.

Freight brokers have asked, “If I have no losses and my revenue hasn’t increased, why are some markets quoting higher prices than last year?”

While most insurance quotes will be rated on the gross freight receipts of a 3PL, the sheer volume of losses has raised the rate at which many 3PLs will be rated. This means that even if the same GFRs are maintained year over year, losses on cargo could raise every company’s cargo premium across the board in a certain market.

Reliance Partners

Does this mean that the freight broker insurance landscape is becoming monopolistic with fewer major players?

Not necessarily, and with good news attached. Most of the market leaders who have pulled to the top of insurance underwriting are specialized in their approaches to risk management. As with evolution, the strongest are forefront and able to absorb the large cadence of claims and continue to support their transportation clients. We are seeing the strongest and most innovative coverages on everything from usage-based cargo solutions to auto liability limits of coverage extending higher than were previously attainable for the price. Even if insureds only have their pick of the 4 – 7 top insurance markets, their broker/agents have the task of knowing coverages and market highlights in order to assign clients the best markets for their needs.

What we may see is a deeper loyalty to insurance markets from their clients and agents. Doing right by a client is as effective as ever in winning and keeping business. Conversely, those same insurance markets doing wrong by clients could lead to fewer submissions, binds, and less financial stability. There are exciting times ahead as insurance continues to pace with the innovation of 3PLs. Risk may be evolving, but risk management is making leaps and bounds to predict the coming trends in what was once seen as a more static industry. Finding the right broker/agent to help navigate the changing landscape is crucial now more than ever to ensure a 3PL isn’t getting an “off the rack” policy which may look great on a COI but has so many exclusions it excuses itself from many claims situations.

Reliance Partners is the nation’s fastest-growing and most diverse insurance brokerage with a sole focus on the logistics and transportation space. Their Logistics Team writes coverage for 50 of the top 100 freight brokerages in the country as well as that of the ambitious new venture and everything in between. Reliance leverages its relationships with the top insurance markets to find the best coverage for each 3PL client. Graham Gonzales manages Reliance Partners’ non-insurance partnerships and is a licensed insurance agent for the modern 3PL.

Marketplace- Reliance Partners

Do You Need More Than Just Travel Insurance These Days? (Hint YES)

By John Gobbels
30-Year Health and Public Safety Expert / Chief Operating Officer of Medjet

Despite the current geopolitical tensions in Europe, and the emergence of BA.2 (the newest Omicron variant) in the news, many people will nonetheless be heading out on spring and summer travel abroad. If there’s one thing the pandemic taught us, it was the value of travel insurance, especially “Cancel for Any Reason” insurance (commonly known as CFAR) and medical coverage. But is additional travel protection necessary?

Air medical transport and travel security memberships have been receiving a lot of attention in the media lately, are they really worth the extra cost? For most travel experts, the answer is an emphatic “yes.”

Travel Insurance Has Limitations

Travel insurance is important. The best will cover a good chunk of money back should you not be able (or feel safe enough) to go on the trip. It will cover trip interruption (extra hotel nights if you get delayed, or test positive for your return), medical expenses should you become ill or have an accident, and medical evacuation should you require medevac to the nearest hospital capable of treating you. But even with the best policies, that’s likely where you’ll stay.

You should always read the fine print in your travel insurance plan because the medical coverage is always limited to some extent. Medical treatment costs are capped at a certain dollar amount, transfer by air ambulance to a hospital at home (“repatriation”) is typically only done if “medically necessary”, and “hospital of choice” is frequently misread as “hospital of choice at home” (but really only means hospital of choice in the city you’re currently in).

Membership in a medical transport program like Medjet is affordable, and gives travelers greater control over where they receive medical care. Getting moved to a hospital at home becomes your choice, not left up to an insurance company to determine whether the current facility is “adequate” or not, and whether moving you is “medically necessary”. As medical professionals, you also understand the importance of getting back into a system of care you trust, and back under the higher limits of your own health insurance coverage.

Should you incur treatment costs above covered limits, or desire services not covered, the financial responsibility lies with you alone. A serious injury can quickly turn into a serious out-of-pocket bill, and a single medical transport to get moved home can range from $30,000 (domestic) to $180,000 (international).

Compared to a $99 Medjet membership, you begin to see why so many experts recommend this additional protection.

Security Threats Abroad

While tensions in Europe obviously have travelers nervous, violent crime is also on the rise globally. The pandemic stressed many economies, but perhaps the hardest hit were countries whose economies relied heavily on tourism. Crime has always been present in tourist destinations, but since the pandemic the U.S. Department of State’s Travel Advisory system has shown elevated security warnings for many areas typically thought of as “very safe”.

Medjet’s elevated membership, MedjetHorizon, adds a 24/7 security response line benefit, with in-country response to a wide variety of safety threats: Terrorism, political threat, violent crime, disappearance, kidnap for ransom, natural disaster and more. While travel insurance may also cover some security evacuations, they typically wait for the government to officially issue a mandate to evacuate, which puts you in the same last-minute scramble to get out as everyone else. MedjetHorizon members have access to security responses any time they begin to feel threatened.

It’s Not Just For “Dangerous” Travel

Travelers often dismiss the idea of getting a supplemental travel protection because they aren’t planning excursions like cage diving with sharks or participating in events like Spain’s annual Running With the Bulls. The extra protection doesn’t seem necessary if they’re just sightseeing. In reality, unexpected injuries and emergencies can happen at any time, and to anyone, not just people who are going on potentially “dangerous excursions” or participating in extreme sports or activities. If those types of activities ARE in your travel agenda, again, read the limitations of your insurance policy because many won’t cover injuries sustained while doing them. Medjet has no “adventure travel” exclusions (and no pre-existing condition exclusions under age 75).

Accidents Happen Close to Home Too

An added bonus of being an annual Medjet member is that it covers domestic travel as well, any time you venture more than 150 miles from home. Most of our members buy our protection for the “big international trip” but many of our transports each year end up being for accidents like a slip and fall at a wedding, or a serious illness landing a member in a hospital just a few states away. Right now, we’re inundated with spring skiing accidents and summer will likely bring its typical heavy load of downed motorcycle transports. People don’t think about our program for domestic travel because most health insurance covers emergency treatment in other states. But it can be just as unsettling to be stuck in an unfamiliar hospital a few states away as it is to be stuck in one halfway around the world.

 

TIA members receive discounts on annual Medjet Memberships by using the link Medjet.com/TIA, or by calling 800-527-7478 and mentioning Transportation Intermediaries Association (TIA).

 

TIA is the premier organization for third-party logistics professionals in North America and abroad. Membership at TIA adds value to your business and provides resources for growth.
Learn More

Alliances