IMPORTERS
How to help yourself, and Australia too.

Importers generally need little convincing for the need to protect their investment in the goods they are importing. They routinely arrange marine insurance against loss or damage in transit.

While modern shipping methods have greatly reduced the hazards of transportation, claim payments on Australian imports amount to tens of millions of dollars annually, and show that marine insurance is still essential for Australian importers.

Unfortunately, and despite the obvious benefits of arranging your own Marine Cargo Insurance, many importers continue to import on c.i.f. (cost, insurance and freight) terms. Every time you do this you are, perhaps without realising it, importing the marine cargo insurance as well as the goods.

As Importers we urge you to discuss with Midas Insurance Brokers, the benefits of always importing on c. & f (cost and freight) terms or FOB (Free On Board) terms rather than c.i.f., and in your own interests arranging marine insurance yourselves in Australia.

This not only benefits the importer but also has the effect of reducing the foreign currency cost of imports. This in turn helps to improve the national balance of trade and supports the "Buy Australian" campaign.

Benefits to importers buying on C & F or FOB terms

1. Control of Premium CostsBy importing on c.i.f. terms, the importer pays a premium in the c.i.f. invoice price, even if a separate charge is not specified in the invoice. The importer has no control over, and often no knowledge of, the amount of this marine insurance premium charge. Marine insurance rates in Australia are very competitive compared with overseas rates, so that in most cases if you insure in Australia you will pay no more for your marine insurance protection. You may even pay less.

2. Policy Conditions
By effecting your own marine insurance in Australia, the importer can arrange the policy on insurance conditions which exactly meet your requirements. When importing c.i.f., you receive an overseas issued insurance policy with conditions which suit the overseas supplier, but which may not suit you. You will also have no opportunity of selecting an insurer who offers top security and specialises in marine insurance.

3. Prompt and Efficient Claims HandlingImporters buying on c.i.f. terms that need to make a claim for lost or damaged goods will have to do so under an overseas issued insurance policy.
Even if the claim is straight-forward, you will find that in most cases you have to wait for weeks and even months while documents are sent overseas and the overseas insurer sends funds for settlement of the claim. If there is any dispute over the claim, you will find yourselves at the mercy of an insurer in an overseas country over whom you have no commercial leverage. Should legal action become necessary, the difficulties of bringing suit in a foreign country will be obvious.

Compare the situation where the importer has purchased c. & f. or FOB and is able to deal with an insurer in Australia: claims can be presented easily, dealt with quickly and any disputes resolved by face to face negotiation.

EXPORTERSHow to help yourself, and Australia too.

Exporters can further help themselves and Australia's balance of trade by exporting services as well as goods.

When an exporter sells goods on cost, insurance and freight (c.i.f.) terms you become responsible for arranging marine insurance for the overseas transit of the goods on conditions of insurance agreed with the overseas buyer.

This insurance policy is issued in the name of the exporter. You assign the policy to the overseas buyer by endorsing the reverse of the policy. It is important this be done before risk in the goods passes from seller to buyer. In case of loss or damage during the overseas transit, the buyer is able to claim under the policy in their own name.

The policy covers (subject to the agreed conditions of insurance) the risk to the seller of loss or damage in transit until the risk in the goods passes to the buyer under the terms of the sales contract. From that point the policy covers the risk to the buyer and to any subsequent buyers provided the policy is correctly assigned before risk passes.

The exporter usually recovers the full cost of this marine insurance from the overseas buyer in the c.i.f. invoice price.

As Exporters we urge to discuss with Midas Insurance Brokers the benefits of always attempting to sell on c.i.f. terms of sale. This not only is of considerable potential benefit to the exporter but also has the effect of increasing foreign currency earnings from exports. This in turn helps to improve the national balance of trade. In effect, it is not only the particular goods which are exported, but also the marine insurance covering those goods.

Benefits to exporters of selling on CIF terms

1. Control of the cost of marine insurance and commercial flexibility in the passing on of this cost to the overseas buyer in the c.i.f. invoice price.
2. Tailoring of conditions of marine insurance to meet the precise needs of both the exporter and your overseas buyer.
3. Avoidance of the need for and the cost of separate marine insurance in the name and at the cost of the exporter to cover his risk in the goods until the time this risk passes to the overseas buyer under the terms of the sales contract.
4. Saving of the need for and the cost of Sellers' Contingency Insurance. This type of insurance protects the exporter against loss or damage to the goods in cases where the overseas buyer fails to take up the goods and the risk in respect of loss or damage remains with the exporter.
5. Information is available to you the exporter from Midas Insurance Brokers in respect of claims paid to the overseas buyer for loss of or damage to the goods. This information can assist the exporter in risk management and in the minimisation of future losses. However, where sales are made on cost and Freight or Free On Board terms of sale, with insurance to be arranged directly by the overseas buyer for their own benefit, such useful details of loss or damage are not usually available to the exporter. You may thus be left with the incorrect impression that your exports are being delivered overseas in perfect condition.