Case Background

From July 2018 to May 2019, shield segments with the underlying value of about $7 million were shipped from China to a under river tunnel project in Bangladesh in seven batches. The mode of transportation was inland transport by barge to Luojing Port of Shanghai, then the shipment was sailed from Luojing Port to Chittagong, Bangladesh, finally the loading was transported from Chittagong to the project site.
The shield segments arrived in Chittagong successively. During the unloading process, multiple segments were found to be damaged to varying degrees, and the insured claimed $1 million.

Inspection Situation

Our company had conducted field surveys several times on the shield segment with loss occurred, but there were many divergences with the insured on the cause of the damaged shield segments and whether they could be repaired.
In the course of investigation, the insured was the first time to undertake the production of this type of shield segments, which were found damaged in the port of Shanghai. In addition, the shield segments were not protected by any packaging, and the logistics supplier responsible for the packaging of the segments and the whole process from domestic factory loading to the unloading at the project site had no previous experience in transporting such segments, so the risk rate of the segment was extremely high.
The above-mentioned logistics insured the cargo transportation insurance on the shipment of segments, and the insurer signed a total-to-total insurance agreement with the logistics company. The insurer agreed to waive the claim against the logistics company. The amount of the shipped 7 batches of segments was only 20% of the required quantity of the under river tunnel project. The remaining 80% of segments would be delivered to the project site successively after the completion of production, and there was still the possibility of risk after that.

Solution

According to the site survey and relevant information collected, we were inclined to believe that the damage to the segments were attributable to the quality of the segments themselves, the absence of external packaging protection and the improper use of forklift during loading and unloading. According to the relevant insurance clauses, problems of quality and packing should not be covered. However, the insured refused to accept this view.
For the issue of whether the damaged segments can be repaired, our company sent professional and technical personnel from China to the project site to discuss with the owner, grade those segments according to the degree of damage and counsel the repair plan.
After we communicated with relevant parties for many times on our technical opinions, the case was finally closed with a package of $300,000.
The next year, our company again accepted the risk claim of the segments shipped to the project, at that time, the segments packaging has been improved.

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