A quick guide to the differences between Carrier Liability and Anansi Shipping Insurance
For retailers in today’s challenging market, safeguarding their bottom line is crucial. As e-commerce continues to grow, businesses can’t continue to be out of pocket on lost or damaged deliveries or continue to absorb the impact bad deliveries have on the brand. One area often overlooked to address this challenge is insurance for goods-in-transit, also known as shipping insurance or parcel insurance. In today’s digital-first world, it’s becoming a vital component in protecting revenue and ensuring customer satisfaction. Here's a quick guide to what is Courier Liability (the traditional approach to shipping insurance) and how Anansi is different will help you understand what solution will be best for your organisation.
The Last Mile Challenge
The last-mile delivery process is critical to the customer experience. It’s the final opportunity to ensure customer satisfaction and build trust. However, this phase is also when shipments are most vulnerable to loss or damage:
Lost Deliveries: According to Citizens Advice, 13.3 million people faced a delivery problem with the last parcel they received in just the last month. And 19 million parcels went missing from porches or other safe places in 2022 - that number has only increased.
Damaged Packages: Items can be dropped an average of 17 times in transit. Large items, like furniture, have a 21% chance of arriving damaged, and even smaller items face significant risks (11% for UPS, 10% for USPS, and 7% for FedEx).
These issues can lead to refund demands, cancellations, or expedited replacements, impacting both your revenue and reputation.
The Insurance Gap
Despite these risks, 90% of goods in transit are underinsured or uninsured. Many businesses mistakenly rely on carrier liability, not realizing its limitations.
What is Carrier Liability Cover?
Carrier liability cover is included in standard shipping costs and protects against loss and damage due to carrier negligence. It’s provided by the courier to cover their own work and is an unregulated insurance product. The reality is, that it's designed to protect the carrier, not the shipper, and comes with strict parameters:
Burden of Proof: The shipper must prove the loss or damage occurred while the goods were with the carrier.
Limitations: Coverage is often limited to a low value (e.g., £50 with DPD but can be as low as £10).
Exclusions: Damage from weather, inadequate packaging, or items on the carrier’s prohibited list is not covered.
Claims Process Challenges
Proving carrier fault and navigating the claims process is cumbersome:
Claims must be filed within a limited time frame (e.g., 14 days for DHL).
Carriers have up to 120 days to respond.
Payments are capped and often don't cover the full retail value of the lost or damaged goods.
Alternatives to Carrier Liability
To ensure comprehensive protection, consider these alternatives:
Enhanced Carrier Insurance: Provides higher coverage limits but still involves manual claims processes and similar limitations.
Third Party Insurance: Offers coverage based on the actual value of goods, with fewer exclusions and no need to prove carrier fault. Automated solutions like Anansi streamline the claims process, providing faster and more reliable reimbursements.
Anansi Shipping Insurance vs. Carrier Liability
Here’s a comparison to highlight the benefits of Anansi’s automated solution:
Transparency on Cost to the Business: Carrier liability is often included in shipping quotes but offers limited payouts and often confusing claims processes. Anansi simplifies charges with 1.5% plus tax for UK shipments and 1.8% for international shipments, with no caps on payouts. One great product has two different coverage levels: 100% retail cost or what we call cost coverage, which is 50% of retail cost. With automated loss claims, our process doesn’t need to be uncoded.
No Stress Claim Filing: Carrier claims are manual and vary by carrier. Anansi automates this process, triggering loss claims automatically when delivery dates are missed. It’s worth diving into this - you could be spending more on salaries and wasted time than what you’re recouping. Saving your teams from the nightmare of chasing claims payments releases them to focus on more productive goals.
Claim Timelines to Manage Cash Flow: Carriers can take months to process claims. Anansi typically resolves claims within 72 hours and pays monthly into your designated business bank account.
Claim Reimbursements that Protect the Bottom Line: Carrier liability covers repair costs or capped amounts. Anansi reimburses up to the full retail value plus shipping costs for lost or damaged items.
You can discover more with a direct comparison of how we differ from standard carrier insurance here.
What’s Covered?
Carrier Liability: Excludes concealed damage, weather, acts of God, and improper packaging.
Anansi: Covers a broader range of items and damages, with fewer exclusions.
Choosing the Best Approach for Your Business
To decide the best insurance strategy, consider:
Average Order Value: Assess whether carrier liability meets your needs based on your average order value.
Loss Frequency: Analyze how often your shipments go missing or get damaged.
Financial Impact: Evaluate the operational and financial impact of carrier claim limitations as well as the impact of claim management; salaries and time spent can often outweigh any claim benefit.
Courier Liability might seem like a great cost-effective solution, but add up the real cost to the business, and it starts to become much more expensive—in most cases, more expensive than Anansi.
Implementation Options
Option 1: Help manage your risk profiles on packages. Use carrier liability for lower-value items and Anansi for goods above the carrier’s cap. If you have large basket sizes where loss is going to impact revenue, insurance makes sense.
Option 2: Cover all items with Anansi for comprehensive protection and simplified claims management. This works well if you have a large number of shipments daily. Taking the stress away from claims management and getting the reimbursement you deserve pays for Anansi itself.
By reviewing your past data on losses and their financial impact, you can tailor your insurance strategy to ensure robust protection for all your goods, safeguarding your revenue and enhancing customer satisfaction.
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