Businesses urged to check cover as strike action possibly spreads to ports
The threat of the ongoing truck drivers’ strike action spreading to South Africa’s ports and harbours as well as the country’s rail network, following the call to action by the biggest transport union, Satawu, has exponentially increased the risk of losse
According to Peter Moodley, Managing Director of CargoTransit Insurance Underwriting Managers, specialists in marine cargo and transit insurance cover and writing on behalf of Compass Insurance Company Limited, it is critical for local businesses to make sure they are adequately and comprehensively protected against any losses they may incur as a result of this action. He says, “It is important to note that while private sector insurers do underwrite risks relating to certain loss, damage or expenses that may be attributed to strike action, there are exclusions to the cover and hence a need for comprehensive and appropriate cover.”
He elaborates, “For example, it is plausible that an insurance claim resulting from damage to cargo that was physically caused by striking workers will be covered. However, under most marine insurance policies, claims as a result of delays caused by strike action will not be recoverable. For example, this would include a possible scenario when truck drivers may be sitting outside the harbour with a cargo that they need to get into the harbour, but are delayed by the strike action in the port and the cargo then begins to deteriorate. Similarly, if the harbour is closed, forcing cargo ships from other countries to sit at outer anchorage while waiting to discharge their cargo, which subsequently begins to deteriorate, this loss due to delay would also not be covered.”
Moodley says that to make sure a business owner is covered for loss or damage due to strikes, they should, firstly, make sure that their insurance cover is comprehensive, and secondly that it has been extended to include cover for loss or damage as a result of Strikes, Riots and Civil Commotion, available through SASRIA, the state-owned insurer and Institutes Stikes Clauses (Cargo).
Moodley continues, “The economic consequences of the strike possibly still reaching as far as the country’s railway network and ports are obviously considerable. Durban is not only South Africa’s but Africa’s biggest port. Paralysing the import and export of goods into and out of the country poses a grave economic threat and a heavy insurance risk. Brokers and insurers can offer clients cover against strikes loss or damages through SASRIA when discussing their business or personal insurance requirements.”
Moodley says that standard exclusions included in policies offered by private sector insurers usually relate to loss, damages or action arising from ‘the absence, shortage or withholding of labour of any description whatsoever resulting from any strike, lockout, labour disturbance, riot or civil commotion’.
He adds, “There is also a marine cargo cancellation clause that applies to strike action. This allows the underwriters, if they deem that the strike action seems to be set to continue for some while, to cancel cargo cover with seven days’ notice on risks other than shipments to and from the United States of America. Here, on cargo relating to the import or export of goods from the US, a cancellation clause of just 48 hours applies.”
According to Moodley, some London underwriters that offer cover on South African goods have already issued a seven-day notice period.
He concludes, “SASRIA was originally founded to provide cover for politically motivated riots. It now covers damage caused by riot (both political and non-political), public disorder, including labour disturbances, civil unrest, strikes and lockouts. It assists business owners substantially in making sure that they are covered from all angles for loss or damage caused by strike action.”
