Most cargos charred in HSIA fire unlikely to be compensated

All insured goods incinerated in the import-cargo-village fire at Hazrat Shahjalal International Airport (HSIA) may not be compensated as most consignees had 'Air Risk Only' insurance coverage.

This insurance policy covers only four specific risks: air crash, hijacking, forced landing, and on-air collision with another object.

In contrast, there is another insurance option called 'Air All Risks' coverage, which includes not only in-flight incidents but also extends protection for 30 days after the cargo lands.

This broader coverage includes storage at the cargo village and damage to imported goods during that period.

On Sunday, this correspondent visited the C&F agents' office located just 100 metres from the import-cargo village at HSIA in the city. A review of 15 insurance documents revealed that only three consignments were covered under 'Air All Risks', while the remaining consignments had only 'Air Risk Only' coverage.

Insurance executives told The Financial Express Tuesday that only those who had opted for Air All Risks coverage will receive compensation for the goods destroyed in the HSIA import-cargo-village blaze.

Consignees who chose 'Air Risk Only' coverage will not receive any compensation.

Md. Imam Shaheen, Managing Director and CEO of Asia Insurance PLC, said: "Those consignees who took 'Air All Risks' coverage will get full compensation for the loss or damage of their imported goods."

Consignees who chose air-risk-only coverage will not receive anything because they deliberately opted for lower-value insurance to save on premiums, he explains the compensation conundrum.

"The premium difference between 'Air All Risk' and 'Air Risks only' is significant," says the insurer.

"Many pressure us for higher commissions and choose cheaper coverage."

A premium-rate document shows 100-percent export-oriented industries pay 0.14-percent premium for air-risk only vs. 0.54 per cent for air-all risks.

BTMA-member industries (local): 0.27 per cent for air-risk only vs. 0.81 per cent for air-all risks.

Solar-power systems: 0.11 per cent for air-risk only vs. 0.45 per cent for air-all risks.

Power plants: 0.18 per cent for air-risk only vs. 0.30 per cent for air-all risks.

Md. Khaled Mamun, Managing Director and CEO of Reliance Insurance PLC, told the FE that importers or exporters often only think of insurance coverage when they arrange bank financing or open letters of credit.

"Corporate clients usually take full coverage, whether by vessel or air," he said, adding: "My clients had at least 98-percent full risk protection."

"Our marketing teams always encourage 'Air All Risks' coverage, but many still choose 'Air Risk Only.' They must now face the reality that they will get nothing in case of damage."

Mr. Mamun said his company had already received notifications of around 80 damage claims, totaling approximately Tk 250 million, related to the fire incident.

"I believe all my parties have followed the required rules and regulations. My company will settle the valid claims after the survey report," he added.

jasimharoon@yahoo.com