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Shoddy packaging threatens fashion consignments
Insurers could reject insurance claims
London
NYSE: AOC

LONDON, 17 September 2008 - Poor packaging by the fashion industry could mean that insurers refuse to pay claims for damaged goods in transit - not to mention that replacement clothing and accessories are unlikely to be delivered in time to catch the season. During London Fashion Week, insurance broker Aon is advising fashion retailers to implement better packaging procedures and extend policy wordings to protect both their designs and their bottom line.

Worryingly, surveyors considered goods in 15-20% of containers aboard the MSC Napoli, that was beached at Branscombe Bay, to be unpacked or inadequately packed. This is concerning as a marine cargo insurance policy excludes loss or damage caused by 'insufficiency or unsuitability of packing or preparation of the subject matter insured'. This exclusion means insurers can decline liability for the damage to the cargo plus substantial costs for recovery, re-stowage or destruction during the salvage operation.

In addition fashion importers may not receive the true value for imported goods lost or damaged as the insurance policy is likely to be based on the purchase price from your supplier. This is opposed to the agreed sale price to your customer which is likely to be significantly greater.

Aon is urging the fashion industry to take action by:

1. Examining the robustness of your method of packing and providing clear specifications to contract packers or suppliers;

2. Calling in the services of an expert marine surveyor to undertake a review. The surveyor will understand the forces that a consignment will be subject to during transit, identify weaknesses in your packing process and propose a course of action to resolve;

3. Seeking to remove the exclusion of insufficiency or unsuitability of packing from your cargo policy;

4. Using a packing survey to help your insurance broker negotiate better terms and conditions of cover;

5. Ensuring that goods are insured for their true value to your company.

Tim Rowe, marine manager at Aon, said: "Poor packing isn’t a new problem but as underwriters become more vigilant about the issue, we want to warn companies to take action. Risk management is the most important part of any insurance programme but many may find their cargo cover is worthless if shoddy procedures in their shipping department invalidate the policy.  

"It's interesting to note that the inadequately packed containers are not just dispatched by small, inexperienced exporters but the majority are shipped by large multi national companies that export huge volumes and considerable values during the course of a year.

“We are also aware that many importers in the fashion industry do not insure for the true impact that a lost or damaged consignment will make to their balance sheet. This can be easily resolved by taking time to achieve a full understanding of your true exposure and negotiating an increase in cover to reflect this with insurers."

For more information contact:
Alexandra Lewis
0207 882 0541
Alexandra.lewis@aon.co.uk
http://aon.mediaroom.com

About Aon
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's best broker by Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.

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