ISO Could Be Key to Lower Insurance Rates
February 5, 2014 When you last looked into your “business mirror,” did you like what you saw?
Objectivity is tough. You may intend to do your best, but unless your company is public, you may be on your own to when it comes to effecting the particular standards and processes that will help you achieve systematic business improvement.
Rekerdres & Sons decided in 2005 to find out what systems might provide us particular, confidential, and objective measurements and results that would enable us to gain traction beyond our insurance peers.
We found that many of our brethren in textile, manufacturing, logistics, finance, and retailing industries use the International Organization for Standardization (ISO) discipline. The ISO is the world’s largest developer of international standards for users in a variety of industries.
When we began the ISO audit process, our first auditor noted that we were “structured enough to initially qualify but at each annual renewal, the ISO bar would only go higher.” In addition to quality control, the other outcome we sought was a customized and objective “standard of service” we could promote to clients, some of whom consider ISO be a prerequisite.
Our company has two main standards:
1. With counter-parties, underwriters, surveyors and adjusters, our criterion refers to both timeliness and use of our electronic claim system.
2. With clients, the time to handle each claim, create and transmit both policies and bank endorsements, and inspect locations.
A Little Cotton Insurance Secret?
So, would you expect that ocean carriers in ISO feedback loops might more effectively address environmental protection, pollution response and mitigation, and might just deserve our insurance attention?
Of course!
In a world where ocean vessels are routinely engorged to 15,000 twenty-foot equivalent units (teu) and sometimes more, routine maritime losses have become catastrophic events. At 15,000 tons, the combined value of cargo and vessel can easily exceed $1 billion!
Just 20 years ago when dealing with Panamax-size vessels, this number would have been 1/10th that amount and we could expect to handle and quickly share the expenses of an engine fire, groundings, even collisions promptly within the obligations of General Average (GA) and the Hague-Visby Rules of carriage.
But as vessels have grown ever larger, there has been an alarming upsurge in GA-type losses. We believe there may be a correlation between non-ISO carriers and both higher loss frequency and loss severity.
In short, preference to ISO-compliant ocean carriers might just be an antidote to cargo insurance rates chasing ever-larger maritime losses!
ISO standards:
- work for the smallest to the largest carrier,
- can be adapted to virtually any company interested in excellence,
- can be a vendor qualification, and
- can be used as a risk management tool.
Since going ISO (cert. WCS 4944), Rekerdres & Sons has never worked harder – but equally, our work product has never been more effective.
And the ISO auditor knows where we keep our mirror.
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