FTA CPD & CBC - Border and Biosecurity Compliance Program April/May/June 2019 Risk Management & Incident Reporting Presented by: James Cotis Insurance Logical Pty Ltd trading as Logical Insurance Brokers Insurance Logic Pty Ltd, ABN 44 002 859 252, holds Australian Financial Services License Number 237633, is a Principal Member of the National Insurance Brokers Association and is a network broker of Steadfast Group Limited . Logical Knows Logistics Insurance 1
GENERAL ADVICE WARNING This is the fine print for the presentation by James Cotis of Logical Insurance Brokers. This is obviously a PowerPoint presentation, and this is just an aid to the presentation; so don’t overstate its importance. Any case studies presented are also just aids to understanding certain concepts. Any reference to your circumstances is entirely coincidental. James is going to say more in the presentation, some of it may be important and will put these PowerPoint notes & case studies into context. This is also pretty obvious but some need to be told this, so this is what this is now doing. Therefore, any advice contained in this presentation is general advice only. What does all of this mean? Again it is pretty obvious, James is a General Insurance Broker and he is saying general things about the topics, not specific things that you can take and apply to your own circumstances and expect James to be responsible for any stuff-up. Common sense suggests that if you want to rely on what someone says, you should obtain from them specific advice where you make the facts clear to them and they are aware that you are clearly going to make decisions based on what he/she said, whether orally or in writing. Of course, you pay for this. Got it? Good, now let’s get on with it. With thanks to Peter Bobbin – The Argyle Partnership Logical Knows Logistics Insurance 2
General Observations As business owners/managers, what’s keeping you awake at night in terms of your obligations, risks and ethics? The The Trading Cashflow Employees Government competition partners economy Logical Knows Logistics Insurance 3
Managing Risks - Liability SOLAS Certificates of Origin Full Import Declarations Rotterdam Rules Piggy Backing Hague-Visby Rules INS Asbestos TAs Territorial Laws Australian Border Force Australian Trusted ChAFTA Traders Program Admiralty Law Standard Trading Terms and Conditions JAEPA General Average KAFTA Salvage TCOs Bill of Lading Chain of Responsibility Logical Knows Logistics Insurance 4
Australian Border Force Activities • Increased investigation, inquiry & prosecution activities • Infringement Notices • Liability to pay customs duty • Possible suspension or revocation of customs broking licences Logical Knows Logistics Insurance 5
Scope, Context & Criteria for Risk Management • Identify; opportunities to improve/reduce risk Risk While you understand your assessment statutory obligations and associated ethics of being a licensed customs broker, it is • Likelihood; consequence imperative that you examine Risk analysis the full magnitude of risk exposures: • Impact; balance sheet strength; retention Risk evaluation • Avoid; manage; transfer; insure Risk treatment Monitor & review Logical Knows Logistics Insurance 6
Risk Transfer to an insurer • Transferring risks to an insurer • There is no substitute for a well designed insurance program Logical Knows Logistics Insurance 7
Getting the Insurance Program right Importance of discovery meetings: • Take the time with your insurance advisers so they can gain deep understanding of the business activities and business objectives • The more they understand about your business activities the better advice they can provide Logical Knows Logistics Insurance 8
Case Study 1 – Getting insurance program right • In June 2018, we were invited to advise on the liability insurance program for a Melbourne based logistics business • Head office in Melbourne • Branches in Sydney, Brisbane & Adelaide • Number of staff: 90 • Activities included • Freight Forwarding, turnover: $20 mill • Customs Broking, turnover: $3 mill • Warehousing & Transport, turnover: $6 mill Logical Knows Logistics Insurance 9
Case Study 1 – Getting insurance program right Discovery meeting: • Gathered information, including current insurance policy(s) Identified issues within the current policy wording: “Logistics Liability Insurance Policy” • Logistics Activities means Your activities conducted within the Territorial Scope in respect of the Logistics Operations described in the Policy Schedule but, does not include Customs Broker Activities . • EXCLUSIONS THAT APPLY TO ALL SECTIONS OF THIS POLICY: Customs Broker Activities • Customs Broker Activities means consultancy services and activities of a licensed custom broker/agent including interpretation of customs regulations and classification of goods, customs advice or recommendation, processing and/or payment of duties or taxes. Logical Knows Logistics Insurance 10
• Customs broking activities were excluded • ABF’s retrospective powers Logical Knows Logistics Insurance 11
In March 2019, the business contact us seeking assistance with an incident: • Goods not meeting the precise description in Tariff Concession Orders • Licenced customs broker simply got it wrong • Hundreds of entries going back over 3.5 years • Under payment of duties and Infringement Notices required payment Logical Knows Logistics Insurance 12
Case Study 2 – know who you are dealing with • Importer engages Licenced customs broker (LCB) • LCB aware importer had “broker hopped” three times during the last 18 months • Importer explained that other LCBs were “incompetent” • New LCB commences trading with importer, unaware that importer deliberately misrepresenting nature of the goods • It was subsequently discovered by the new LCB that the importer had been the subject of an ongoing compliance assessment by ABF, including: • Incorrect tariff classifications • False & misleading statements & declarations • Unpaid dumping duties • Unpaid GST • Amounts involved over $1m • New LCB assisted ABF with their inquiries • New LCB harboured real concerns that Infringement Notices may be issued and a threat existed (imagined or real) of suspension or revocation of their customs broking licence Logical Knows Logistics Insurance 13
Lessons: Discovery/Engaging/onboarding customers • Ask questions to understand the prospective customer’s requirements • Ask why they are inviting you to assist them • Ask about dealings with previous Forwarders/Brokers/ABF • Accurately document & agree the services to be provided to customers Have robust risk management strategies & processes in place and regularly review them • Strong set of STCs - incorporate them (signed by your customers) • Consider Tariff Advices where appropriate • Undertake customer due diligence audits where appropriate • Review processes & procedures • Engage independent consultants to review & advise • Do not admit or accept liability • Communicate immediately with ABF (benefits of voluntary disclosure) • Keep accurate records • Advise liability insurers immediately • Above all, get your insurance program right Logical Knows Logistics Insurance 14
• An insurance brokers job isn’t just about arranging insurance • It also includes education regarding the risk exposures for your particular business • Consider working with expert consultants in your industry Logical Knows Logistics Insurance 15
Managing Risks Use Insurance as part of an overall Risk Management Strategy Logical Knows Logistics Insurance 16
General Insurance Broking Our services to the logistics industry include: • Freight Forwarders & Customs Brokers Liability Insurance • Property (buildings, stock and contents) Insurance • Business Interruption Insurance • Motor Fleet / Truck Insurance • Carriers Load Insurance • Trade Credit Insurance • Cyber Insurance • Corporate Travel Insurance You can visit our website to find out more: www.logicalinsurance.com.au/logistics 17
ANY QUESTIONS… JUST ASK! Logical Knows Logistics Insurance 18
Contact details James Cotis Insurance Logic Pty Ltd trading as Logical Insurance Brokers Suite 21 Level 2, 8 Hill Street Surry Hills NSW 2010 02 9328 3322 jamesc@logicalinsurance.com.au jcotis@FTalliance.com.au 19
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