Finance
How can merchants protect their bottom line in the current economic climate?
Global Banking & Finance Review®
Company
By Megan Bingham-Walker – Co-founder & CEO at Anansi
Megan Bingham-Walker, Co-founder & CEO, Anansi
Cover offered by couriers is not sufficient
With many ecommerce merchants overlooking the level of cover required for their goods-in-transit, couriers continue to bear a huge amount of responsibility when it comes to customer experience. Merchants will often rely on the free cover from couriers to insure their goods-in-transit, however, this is often operated under limited liability and, in the majority of cases, this means that goods are not insured for their full retail value. Some couriers do offer enhanced protection for merchants, for an additional cost, but often the maximum amount that can be claimed is capped to a specific figure or a small percentage of the total item value. It is also rare that this protection will cover other events such as delays, and so the one-size-fits-all approach to insurance is a dangerous gamble.
It’s the seller, not the courier who bears the loss
Although the coverage offered by couriers does support ecommerce merchants with a level of protection that would otherwise not exist, and items are covered up to a certain value against loss or damage, merchants often experience a number of pain points, largely in the couriers’ claims process. There can be significant admin to gather the information required to make a claim, particularly where evidence of the cost price of the item is needed. With many policies, this information all needs to be submitted within a 14 day window or the policy will expire and prevent merchants from successfully filing a claim. The latter can be particularly problematic; as the courier is focused on customer retention, it’s not unheard of for them to file pre-emptive claims for customer items on the off-chance that they are lost or damaged in transit. This increases the admin on both sides. Furthermore, many merchants raise disputes on the level of compensation provided – many feel that they are still making a loss, due to the full retail value not being paid. That being said, it goes against any sensibility to expect compensation for the loss or damage of an item that costs hundreds (or thousands) of pounds when shipping costs a fraction and the cover provided is free-of-charge.
A better solution for all
Goods-in-transit insurance, procured from independent non-courier providers, who aren’t offering conflicted services (shipping carriage and the protection of shipping mishaps occurring during the shipping carriage) better supports ecommerce merchants in terms of coverage, and can also remove the burden of administration and claim frustration. Coverage for the last mile has historically been underserved by the insurance industry, with less than 10% of goods insured in a $33B goods in transit insurance market, due in part to the lower values and premiums per shipment when compared to traditional policies such as home insurance. But the main issue is, there simply hasn’t been a fair or flexible solution available to merchants. They have either had to pay rip-off fees to couriers or engage a specialist broker losing valuable time and money.
A new solution is parametric goods-in-transit insurance, as offered by Anansi, which offers full and fair coverage to merchants. It’s both digital and automated thereby removings huge amounts of cumbersome admin. It uses shipping tracking data to determine the status of parcels during transit, which enables parametric cover for lost and delayed claims, which means that merchants’ claims are automatically created. Claims don’t need to be submitted for damaged items within a tight two week timeframe, as for many of the courier offerings, although, the sooner the claim is submitted, the quicker it can be approved by the platform for payment. For items that are lost, a provider such as Anansi can offer compensation of the full retail value plus the shipping cost, which is a gamechanger for ecommerce merchants and the ecosystem of partners that support them.
About Author:
Megan Bingham-Walker is the Co-Founder & CEO of Anansi, the embedded insurance distribution platform that makes it easy for; third party logistics partners, ecommerce and shipping platforms, fulfilment firms, and online marketplaces to offer their merchants direct access to the Anansi goods-in-transit insurance product, from within their own frontend environment, via an API.
Goods-in-transit insurance is a type of coverage that protects merchants against loss or damage to goods while they are being transported from one location to another.
Parametric insurance is a type of coverage that pays out benefits based on predefined parameters or triggers, such as delays or loss of goods, rather than requiring a traditional claims process.
Limited liability in courier services refers to the maximum amount a courier company is liable to pay for lost or damaged items, which is often less than the item's full retail value.
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