When a parcel goes missing or arrives damaged, most retailers expect the courier to take responsibility.  After all, they handled the delivery, surely they’re insured for that?

Not quite.

Here’s the uncomfortable truth: most couriers are effectively self-insuring.
And that changes everything.

Self-insurance sounds clever. Until you’re the one carrying the risk.

When couriers are offering unregulated courier coverage, they carry the risk themselves, meaning every claim paid out comes directly off their own balance sheet.

So when losses rise, their instinct is to protect their margins.
And that’s why compensation is often capped, delayed, or disputed.

Every denied claim is, in essence, a cost avoided.

Why couriers self-insure in the first place

It’s not because they’re careless, it’s because margins in last-mile logistics are razor-thin.

The last mile is the most expensive leg of delivery, accounting for up to 50% of total logistics costs. With rising fuel prices, labour costs, and customer expectations for free or fast shipping, there’s very little room left to absorb losses.

For couriers, self-insuring is a form of cost control. But it’s also a high-stakes game of risk management:

• No external underwriter to spread or absorb risk
  
  

• No regulatory oversight to guarantee fairness or solvency
  
  

• No regulated claims infrastructure to ensure efficiency and accountability
  
  

When things go wrong, that structure simply isn’t there to protect you or your customer.

The result: lower payouts, longer waits, and higher frustration.

If a courier is holding the risk themselves, every claim becomes a potential loss.

That’s why we see patterns like:

• Tight claim windows, sometimes as little as two weeks to report a loss
  
  

• Requests for excessive proof that delay or discourage claims
  
  

• Capped compensation that rarely covers the full retail value
  
  

• Complex, manual processes that wear down customer service teams
  
  

It’s not just operational friction. It’s a financial strategy. The fewer claims they pay, the better their margins look.

The hidden cost to retailers

When couriers protect themselves, retailers absorb the risk.

That means:

• Customer refunds come out of your pocket
  
  

• Service teams spend hours chasing responses
  
  

• Lost or damaged items quietly erode your margins
  
  

• And customer trust takes the hit, not the courier’s brand
  
  
  

The result? 

Courier coverage from couriers means retailers end up carrying both the operational pain and the reputational cost. Never forget, when something goes wrong, customers ultimately blame the retailer, not the courier.